Q2 GDP Growth = 1.3%

It was another bad quarter for the economy. For the second three months of the year, the economy grew by just 1.3% in real terms. On top of that, growth for the first quarter was revised down to just 0.4%.

The first estimate of the economy’s benchmark indicator for the second quarter showed growth was supported largely by business investment and exports.

But consumer spending, a big engine for the U.S. economy, made a much smaller contribution to growth. Spending edged up by an annualized rate of 0.1% in April through June, the weakest it has been in two years, after a 2.1% gain in the first quarter.

Americans have had to spend more for gasoline amid higher prices, leading them to cut purchases for other things. Sales last month by U.S. retailers excluding car and parts dealers were unchanged, with declines reported by furniture stores; electronics and appliances stores; restaurant and bars; health care stores; and sporting goods, hobby, book, and music stores.

Also restraining consumers is a high jobless rate. Big companies have been announcing job reductions. At Delta Air Lines Inc., for instance, more than 2,000 staff have accepted voluntary redundancy job cuts. The carrier, stung by fuel prices, announced a 58% drop in second-quarter earnings.

Here’s a look at real GDP growth during the first term of some recent presidents. Note that the line is extended back to include the election year preceding the presidential term.

The government also revised the quarterly GDP series. Here’s what the old and new series look like side-by-side. We still haven’t surpassed the previous GDP peak.

Posted by on July 29th, 2011 at 9:04 am

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