Revised 2nd Quarter GDP No Real Improvement

After a stunning 32.9 percent plunge in 2nd quarter gross domestic product, analysts hoped yesterday’s revised numbers would paint a more optimistic picture. It didn’t.

The Bureau of Economic Analysis reported real gross domestic product decreased at an annual rate of 31.7 percent in the second quarter, according to the “second” (revised) estimate. In the first quarter, real GDP decreased by 5.0 percent.

With the second estimate, private inventory investment and personal consumption expenditures decreased less than previously estimated. The decrease in real GDP reflected decreases in PCE, exports, nonresidential fixed investment, private inventory investment, residential fixed investment and state and local government spending that were partly offset by an increase in federal government spending. Imports, a subtraction in the calculation of GDP, decreased.

Revisions were minor in terms of the underlying components,” said Jay Bryson, Chief Economist with Wells Fargo Securities, Charlotte, N.C. “Still, the revised swoon in second quarter real GDP remains by far the steepest rate of decline on record. The next steepest drop of 10.0% occurred in 1958. “

However, Bryson noted recent monthly indicators suggest real GDP could bounce markedly in the third quarter. “The revisions to the spending components were miniscule in the context of the unprecedented contraction in the economy,” he said.