WASHINGTON – Real gross domestic product increased at a 1.6% annual rate in the second quarter of 2010, according to the preliminary estimate, which revised lower from the advance estimate, on an increase in imports and decreases in inventory investment and exports, the Commerce Department reported today.
Consumer spending, which accounts for about 70% of real GDP, increased 2.0% for the quarter, revised higher from the 1.6% gain estimated in last month’s GDP report. An increase in electricity and natural gas usage pushed consumer spending higher. Consumer spending was up 1.9% in the first quarter.
The 1.6% increase in real GDP equaled the growth rate for the third quarter of 2009. Real GDP increased 3.7% in the first quarter of 2010 and increased 5.0% in the fourth quarter of 2009.
Inventory investment was revised lower, contributing 0.63 percentage point to real GDP, down from a 2.64 percentage point contribution in the advance estimate. It was the lowest inventory investment contribution in a year.
The trade deficit between imports and exports widened to $536.0 billion for the quarter, up from $518.2 billion deficit in the advance estimate. Imports jumped 32.4%, the largest increase since 1984, and up from the 28.8% increase in the advance estimate. Imports of goods increased by the largest percent since 1975. Imports subtracted 4.45 percentage points, the largest subtraction on records dating back to 1947.
Export gains were revised lower for the second quarter to a 9.1% increase from a 10.3% jump in the advance estimate.
Business investment was revised lower to a 25.0% increase from a 28.8% rise in the advance estimate. Government spending was revised slightly lower to a 4.3% increase from a 4.4% gain in the advance estimate.
Core personal consumption expenditures were unchanged from the advance estimate of a 1.1% increase for the quarter. It is the smallest increase since the first quarter of 2009.
Economists estimated GDP would increase 2.4% for the quarter and that core personal consumption would increase 1.1%, according to the median forecast from Thomson Reuters.
Current production corporate profits for the second quarter, first reported in today’s GDP estimate, increased 4.6%, or $72.7 billion. Corporate profits increased 10.5%, or $148.4 billion, in the first quarter. It was the largest dollar increase on record for quarterly corporate profits.
