New figures released Wednesday by the Commerce Department show the gross domestic product grew by a 1.1% annual rate April through June. That’s in contrast to a revised 5% annual expansion rate during the first quarter of the year, down from a first reported 6.1% increase.
The latest revised version of this total measure of output of goods and services produced in the United States shows that during 2001 the economy expanded at a mere 0.3% rate, compared to earlier figures that showed a 1.2% increase.
Spending growth in the U.S. economy was halved in the second quarter. This, along with a 24% annual rate increase in imports, cut GDP growth to only 1.1% for the quarter, says Newport Communications Senior Economist Jim Haughey.
“The quarterly change in imports reduced GDP growth by 2.8 percentage points in the second quarter," he says. "But the 10% drop in the international value of the dollar in the last few months has already started to reverse the flood of imports."
Haughey notes for the second quarter the weakest sectors were nondurable consumer goods (growth declined from 7.9% in the first quarter to minus 0.6% in the second quarter) and state and local government spending (growth slipped from 4.6% to minus 1.1%) due to lower tax collections that forced budget cuts.
The strongest sectors were consumer durables (up from -6.3% to +2.4%), exports (from 3.5% to 11.7%) and business equipment (from -2.7% to +2.9%.)
“The mix on changes in the economy is typical for the third quarter of a recovery period,” explained Haughey. “This pattern strongly suggests that the recovery is proceeding normally, with stronger growth in the 3% range still likely for the rest of the year.”
Meantime, newly revised figures show the GDP contracted for three straight quarters during January through September last year, rather than just during one quarter as originally reported. GDP shrank at an annual rate of 0.6%, 1.6% and 0.3% percent, respectively, in the first three quarters. In sharp contrast, the economy expanded more than first reported in the final quarter of 2001, growing at a revised 2.7% annual rate, up a full percentage point.
Haughey says this drop is due to new lower estimates of consumer spending for durable goods and services and construction spending.
“These new estimates now make it clear that the economy would have begun recovery last summer had it not been for the events September 11th,” he said.