United States: GDP slows less than expected in the second quarter
July 27, 2012
The economy expanded at a seasonally adjusted annualised rate (saar) of 1.5% in the second quarter, according to the advance estimate released by the Bureau of Economic Analysis (BEA) on 27 July. The reading was below the revised 2.0% expansion recorded in previous quarter (previously reported: +1.9% saar) but overshot market expectations, which had anticipated the economy would grow 1.2%. The deceleration over the previous quarter was mainly caused by slower growth in both private consumption and fixed investment as well as by a deterioration in the external sector. Personal consumption expenditures grew at a 1.5% annualised rate, down from the revised 2.4% expansion recorded in the first quarter. Meanwhile, fixed investment increased 6.2%, down from the 9.8% rise observed in Q1, primarily driven by a sharp slowdown in residential fixed investment (Q1: +20.6% saar; Q2: +9.8% saar). On a positive note, higher stockpiling added 0.3 percentage points to overall growth in Q2, after having subtracted 0.3 percentage points off economic growth in the previous quarter. On the external side of the economy, exports accelerated from a 4.4% expansion in the first quarter to a 5.3% rise. Imports, however, grew at a sharper pace, increasing 6.0% (Q1: +3.1% saar). As a result, the external sector's net contribution to overall growth deteriorated from a 0.1 percentage-point contribution in the first quarter to a 0.3 percentage-point detraction in the second. Along with the release of quarterly GDP data, the BEA also published revised figures for the 2009-2011 period, which showed that both the recession in 2009 and the subsequent recovery were softer than previously estimated. According to these data, GDP contracted by 3.1% in 2009, up from a previous 3.5% estimate. GDP expanded a revised 2.4% in 2010 (previously estimated: +3.0%) and 1.8% in 2011 (previously estimated: +1.7%).