Meet the Author

Brent Meyer |

Economist

Brent Meyer

Brent Meyer is a former economist of the Federal Reserve Bank of Cleveland.

08.11.08

Economic Trends

Real GDP: Second-Quarter Advance Estimate and Benchmark Revisions

Brent Meyer

Real GDP increased at an annualized rate of 1.9 percent in the second quarter of 2008, according to the advance estimate released by the BEA, 0.1 percentage point higher than its growth over the last four quarters. Personal consumption, aided by the stimulus checks and driven mostly by consumption of nondurables, rose 1.5 percent during the quarter. Durable goods consumption fell 3.0 percent during the second quarter, slightly less than the 4.3 percent loss experienced in the first quarter. Business fixed investment posted its smallest quarterly gain since the fourth quarter of 2006, rising 2.3 percent. Even though residential investment fell 15.6 percent in the second quarter, this is much better than last quarter’s 25.0 percent loss.

Real GDP and Components, 2008:Q2 Advance Estimate

Quarterly change
(billions of 2000$)
Annualized percent change, last:
Quarter
Four quarters
Real GDP
54.6
1.9
1.8
Personal consumption
31.4
1.5
1.3
  Durables
−9.3
−3.0
−1.2
  Nondurables
23.8
4.0
1.3
Services
13.1
1.1
1.8
Business fixed investment
8.2
2.3
4.2
  Equipment
−9.4
−3.4
0.1
  Structures
11.1
14.3
12.9
Residential investment
−15.9
−15.6
−22.2
Government spending
17.2
3.4
2.5
  National defense
9.3
7.4
5.9
Net exports
66.8
  Exports
33.5
9.2
10.2
  Imports
−33.4
−6.6
−1.7
Change in business inventories
−52.0

Source: Bureau of Economic Analysis.

Real imports and real exports were the largest contributors to real GDP growth in the second quarter, adding 1.3 percentage points and 1.2 percentage points to growth, respectively. It has been nearly 28 years since net exports contributed that much to growth. Business inventories shrank by $52 billion in the second quarter, subtracting 1.9 percentage points from growth. Stimulus–aided consumption added 1.1 percentage points to real GDP growth, slightly higher than its contribution over the past four quarters.

Looking forward, professional forecasters are expecting a slightly weaker second half of 2008, before a rebound in 2009 toward trend GDP growth. Compared to the June Blue Chip Economic Forecast, 28 of the 50 respondents marked down their 2009 forecast.

The annual BEA benchmark revisions, which cover the past three years (back to the first quarter of 2005), were released along with the second-quarter advance estimate. Over the entire time period, real GDP growth was revised slightly down. The revision to the fourth quarter of 2007, from 0.6 percent to −0.2 percent, garnered far more interest and renewed some recession speculation.