The Bureau of Economic Analysis (BEA) released its advance estimate of growth in the inflation-adjusted (“real”) gross domestic product (GDP) for the 2^nd quarter of 2010.

According to the advance* estimate, annualized GDP growth in the 2^nd quarter was 2.4%.   This is lower than the 3.2% rate of growth predicted by the Blue Chip Consensus in July and compares to growth rates of 3.7% in the 1^st quarter of 2010 and 5.0% in the 4^th quarter of 2009 (as part of the regular annual revisions to the national income and product accounts (NIPAs), 1^st quarter GDP growth was revised upwards to 3.7%, from a previous estimate of 2.7%, and 4^th quarter growth was revised downwards to 5.0%, from a previous estimate of 5.6%).  The BEA will release its second estimate for 2^nd quarter GDP growth on August 27^th. 

Highlights:

• The 2.4% rate of growth primarily reflected positive contributions from nonresidential and residential fixed investment, exports, personal consumptions expenditures, private inventory investment, and federal government spending.  Imports, which are a subtraction from GDP, increased.
• The deceleration in GDP growth, from a rate of 3.7% in the 1^st quarter, was primarily due to an acceleration in imports and a deceleration in private inventory investment.  These were partly offset by an upturn in residential fixed investment and in state and local government spending, as well as an acceleration in nonresidential fixed investment and federal government spending. 
  • The change in real private inventories added 1.05 percentage points to the change in 2^nd quarter GDP, compared to a contribution of 2.64 percentage points in the 1^st quarter of 2010.

*Technical Note: the BEA changed its designations for GDP estimates from “advance,” “preliminary,” and “final” to “advance,” “second,” and “third.”  It was felt that the “preliminary” designation was not clear, and the “final” estimate was not really final as it remains subject to annual and comprehensive revisions.