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Economy in Brief

U.S. GDP Growth Is Decelerating and Modest
by Tom Moeller  July 27, 2012

It remains a problematic growth environment. Real GDP advanced at an expected modest 1.5% annual rate during Q2'12 following 2.0% Q1'12 growth and a 4.1% Q4'11 advance. The gains continue to make this the weakest economic recovery on record. Data revisions extended back three years. Growth last year was little changed at 1.8%, but 2010 and 2009 were revised to 2.4% and -3.1% from 3.0% and -3.5%, respectively.  

Inventory building added a modest 0.3 percentage points to GDP growth last quarter following small subtractions extending back through last year. Foreign trade deficit deterioration subtracted 0.3 percentage points from Q2 growth after a minimal addition in 2011. Exports grew at a 5.3% rate (4.3% y/y) while  imports rose at a 6.0% rate (4.7% y/y) rate.

Domestic demand growth continued meager overall at 1.5% (2.0% y/y) although business fixed investment advanced at a firm 5.4% annual rate (10.2% y/y). Consumer spending grew at a modest 1.5% rate (1.9% y/y) led by services, up 1.9% (1.3% y/y), and nondurable goods, up 1.5% (1.1% y/y). Durable goods consumption spending fell at a 1.0% rate (+7.3% y/y), led by a 10.6% drop (+7.2% y/y) in motor vehicles consumption. Spending on apparel and home furnishings also fell q/q. Good weather and low interest rates helped residential investment advance at a 9.8% rate (10.7% y/y). Government spending continued to fall, last quarter at a 1.4% annual rate (-2.4% y/y). Federal spending was off 0.4% (-3.3% y/y) while state & local spending fell 2.1% (-1.8% y/y) 

Price inflation as measured by the chain-weight price index rose at a moderated 1.6% (1.7% y/y) rate.

The latest GDP figures can be found in Haver's USECON and USNA databases; USNA contains basically all of the Bureau of Economic Analysis' detail on the national accounts, including the new integrated economics accounts and the recently added GDP data for U.S. Territories. The Consensus estimates can be found in AS1REPNA.

 

.Chained 2005 $,% AR Q2'12 (Advance) Q1'12 Q4'11 Q2'12
Y/Y
2011 2010 2009
Gross Domestic Product 1.5 2.0 4.1 2.2 1.8 2.4 -3.1
 Inventory Effect 0.3 -0.4 2.6 0.3 -0.2 1.5 -0.8
Final Sales 1.2 2.4 1.5 1.9 2.0 0.9 -2.3
 Foreign Trade Effect -0.3 0.2 -0.6 -0.1 0.2 -0.4 1.0
Domestic Final Sales 1.5 2.2 2.1 2.0 1.8 1.3 -3.3
Demand Components
Personal Consumption 1.5 2.4 2.0 1.9 2.5 1.8 -1.9
Business Fixed Investment 5.4 7.5 9.5 10.2 8.6 0.7 -18.1
Residential Investment 9.8 20.6 12.0 10.7 -1.4 -3.1 -22.4
Government Spending -1.4 -3.0 -2.2 -2.4 -3.1 0.6 3.7
Chain-Type Price Index
GDP 1.6 2.0 0.4 1.7 2.1 1.3 0.9
Final Sales of Domestic Product 1.6 2.0 0.4 1.7 2.1 1.3 0.9
Final Sales to Domestic Purchasers 0.7 2.5 0.9 1.6 2.5 1.6 -0.2
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