Real gross domestic product rose 1.9% in 2nd quarter

Real gross domestic product – the output of goods and services produced by labor and property located in the United States – increased at an annual rate of 1.9 percent in the second quarter of 2008 (that is, from the first quarter to the second quarter), according to advance estimates released July 31 by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.9 percent.

The bureau emphasized that the second-quarter "advance" estimates are based on source data that is incomplete or subject to further revision by the source agency. The second-quarter "preliminary" estimates, based on more comprehensive data, will be released on August 28.

The estimates released today reflect the regular annual revision to the national income and product accounts (NIPAs), beginning with the estimates for the first quarter of 2005. Annual revisions, which are usually released in July, incorporate source data that are more complete, more detailed, and otherwise more reliable than those previously available. This release includes the revised quarterly estimates of GDP, corporate profits and personal income and provides an overview of the effects of the revision.

The increase in real GDP in the second quarter primarily reflected positive contributions from exports, personal consumption expenditures (PCE), nonresidential structures, federal government spending, and state and local government spending that were partly offset by negative contributions from private inventory investment, residential fixed investment, and equipment and software. Imports, which are a subtraction in the calculation of GDP, decreased.

The acceleration in real GDP growth in the second quarter primarily reflected a larger decrease in imports, an acceleration in exports, a smaller decrease in residential fixed investment, and an acceleration in PCE that were partly offset by a larger decrease in inventory investment.

Final sales of computers contributed 0.12 percentage point to the second-quarter growth in real GDP after contributing 0.05 percentage point to the first-quarter growth. Motor vehicle output subtracted 1.07 percentage points from the second-quarter growth in real GDP after subtracting 0.41 percentage point from the first-quarter growth.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 4.2 percent in the second quarter, compared with an increase of 3.5 percent in the first. Excluding food and energy prices, the price index for gross domestic purchases increased 2.2 percent in the second quarter, the same as in the first.

Real personal consumption expenditures increased 1.5 percent in the second quarter, compared with an increase of 0.9 percent in the first. Durable goods decreased 3.0 percent, compared with a decrease of 4.3 percent. Non-durable goods increased 4.0 percent, in contrast to a decrease of 0.4 percent. Services increased 1.1 percent, compared with an increase of 2.4 percent.

Real non-residential fixed investment increased 2.3 percent in the second quarter, compared with an increase of 2.4 percent in the first. Non-residential structures increased 14.4 percent, compared with an increase of 8.6 percent. Equipment and software decreased 3.4 percent, compared with a decrease of 0.6 percent. Real residential fixed investment decreased 15.6 percent, compared with a decrease of 25.1 percent.

Real exports of goods and services increased 9.2 percent in the second quarter, compared with an increase of 5.1 percent in the first. Real imports of goods and services decreased 6.6 percent, compared with a decrease of 0.8 percent.

Real federal government consumption expenditures and gross investment increased 6.7 percent in the second quarter, compared with an increase of 5.8 percent in the first. National defense increased 7.3 percent, the same as in the first. Nondefense increased 5.3 percent, compared with an increase of 2.9 percent. Real state and local government consumption expenditures and gross investment increased 1.6 percent, in contrast to a decrease of 0.3 percent.

The real change in private inventories subtracted 1.92 percentage points from the second-quarter change in real GDP after subtracting 0.02 percentage point from the first-quarter change. Private businesses decreased inventories $62.2 billion in the second quarter, following decreases of $10.2 billion in the first and $8.1 billion in the fourth.

Real final sales of domestic product – GDP less change in private inventories – increased 3.9 percent in the second quarter, compared with an increase of 0.9 percent in the first.