Q2 growth was revised down to 1% from 1.3%.
This is basically in line with expectations of 1.1%.
Goldman economist Jan Hatzius responded to the release on CNBC noting a rise in business investment and a slightly better composition of GDP. Hatzius says this number reinforces his expectation of a weak economy that may need another round of QE.
Economist Justin Wolfers notes that GDP growth in the first half of 2011 is now below population growth. He also notes a good spot: “Much better news if you look at the more reliable GDI data: Q1 +2.4%, Q2 +1.5%. GDI says the economy grew steadily at about 2% over 2010/11.”
Futures remain slightly negative, as everyone waits on Bernanke.
Real gross domestic product — the output of goods and services produced by labour and property located in the United States — increased at an annual rate of 1.0 per cent in the second quarter of 2011, (that is, from the first quarter to the second quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.4 per cent.
The GDP estimates released today are based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 1.3 per cent (see “Revisions” on page 3).
The increase in real GDP in the second quarter primarily reflected positive contributions from nonresidential fixed investment, exports, personal consumption expenditures (PCE), and federal government spending that were partly offset by negative contributions from state and local government spending and private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP in the second quarter primarily reflected a deceleration in imports, an upturn in federal government spending, and an acceleration in nonresidential fixed investment that were partly offset by decelerations in PCE and in exports and a downturn in private inventory investment.
The market expects a preliminary Q2 revision down to 1.1% from the already-dismal 1.3%.
Bloomberg‘s consensus ranges from 0.7% to 1.6%.
Dow futures were down 20 points before the release.
A miss on the advance Q2 along with a downward revision to Q1 growth helped to set off three weeks of dramatic selling around the world. Since then data has been generally disappointing, with a rise in initial claims yesterday.