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

According to the second* estimate, annualized GDP growth in the 2nd quarter was 1.6%. This marks a downward revision from the previously reported advance estimate of 2.4% growth. Growth in the first quarter of 2010 was 3.7%, and 5.0% in the 4th quarter of 2009. The BEA will release its third estimate for 2nd quarter GDP growth on September 30th.

Highlights:

The downward revision to 2nd quarter growth (0.8 percentage point, or $25.0 billion) was due primarily to an upward revision to imports and downward revisions to exports and private inventory investments. These were partly offset by an upward revision to personal consumption expenditures.

The 1.6% 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 1st quarter, was primarily due to a steep acceleration in imports and a steep 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 acceleration in nonresidential fixed investment and in federal government spending.

• The change in real private inventories added 0.63 percentage point to the change in 2nd quarter GDP, compared to a contribution of 2.64 percentage points in the 1st 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.