GDP Decline Slows to 1 Percent

The decline in gross domestic product slowed dramatically in the second quarter, giving hope the recession may indeed be coming to an end.

The government measure of the nation’s output of goods and services decreased at an annual rate of 1 percent in the second quarter, easing from the 6.4 percent dive, revised from 5.5 percent, in the first quarter, according to the "advance" estimate released July 31 by the U.S. Bureau of Economic Analysis.

Higher spending by local and federal government was a major contributor to the much smaller decrease in GDP. Other positive factors included much smaller decreases in nonresidential fixed investment, in exports, and in private inventory investment, BEA said. There was also a smaller decrease in residential fixed investment.

Continued problems in the economy were revealed in a much smaller decrease in imports and a downturn in personal consumption expenditures, which had been positive in the first quarter.

Motor vehicle output added two tenths of a percentage point to the second quarter change rather than subtracting 1.69 percentage points as it did in the first quarter.
Business inventories fell by $141 billion in the second quarter.

Contact Thomas L. Gallagher at tgallagher@joc.com.