Gross Domestic Product | Change from Preceding Quarter, Seasonally Adjusted Annual Rate
Second quarter GDP grew at an annualized rate of 2.4 percent, down from an upwardly revised 3.7 percent in the first quarter. Although the report was disappointing, it was in line with expectations and with other indicators showing that the recovery has slowed. All of the major sectors expanded, led by a surge of 27.9 percent in residential construction that was related to the now-expired housing tax credit. Business spending on equipment and software soared by 21.9 percent; some of these expenditures may have been in lieu of adding staff, which would help explain the anemic pace of job creation this year. Imports and exports both grew sharply, but import growth handily outpaced export growth, which subtracted 2.8 percentage points from GDP. The big fly in the ointment was personal consumption expenditures, which account for 70 percent of GDP. This category expanded by just 1.6 percent, down from 1.9 percent in the first quarter, suggesting that households remain cautious. Revisions to historic data revealed that the recession was deeper than previously thought. For commercial real estate, the sluggish economy could restrain the nascent recovery in leasing markets that was evident in the second quarter.