September 28, 2006

Final GDP Growth for 2nd Quarter: 2.6%

Filed under: Economy,Taxes & Government — Tom @ 9:48 am

From AP (official release is here):

Economic growth clocked in at a 2.6 percent pace in the spring, even slower than previously thought.

The latest reading on the gross domestic product, released Thursday by the Commerce Department, reinforced expectations that the economy is settling into a spell of somewhat sluggish activity.

The growth rate was weaker than the 2.9 percent figure estimated for the April-to-June quarter a month ago. Many economists were predicting that this estimate would hold and thus there would be no revision to the overall GDP figure.

Gross domestic product measures the value of all goods and services produced within the United States and is considered the best barometer of the country’ economic standing.

This is the first quarter in quite a while where the final revision did not go up. In a previous post, I noted that the second quarter had a surprising reduction the federal spending component of GDP that I would not expect to repeat itself in future quarters. Today’s release says that this component went from a 4.5% increase in the first quarter to a 8.9% decrease — a swing of over 13%. The final 2.6% figure reported today means that the rest of the economy grew at about 3.0% in the second quarter.

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