GDP Growth Revised Up to a 2.9% Annualized Rate in the 2nd Quarter

The Bureau of Economic Analysis released its “preliminary” estimate of growth in the inflation-adjusted (“real”) gross domestic product (GDP) for the 2nd quarter of 2006 (available at http://www.bea.gov/bea/newsrelarchive/2006/gdp206p.pdf).



GDP growth in the 2nd quarter was revised up to a 2.9% annualized rate from an earlier estimate of 2.5%. GDP growth moderated in the 2nd quarter, as expected, from the rapid 5.6% rate of growth in the 1st quarter.



Highlights:

- The upward revision in real GDP growth for the 2nd quarter primarily reflected upward revisions to exports of goods, investment in non-residential structures, inventory investment, and state and local government spending.

- The slowdown in GDP growth relative to the 1st quarter primarily reflected reduced growth in personal consumption spending, business equipment and software spending, exports, federal government spending, and a larger decrease in residential investment.

- Real GDP growth has averaged over 3.7% since tax relief was enacted in 2003, in contrast to the tepid 1.1% average between the beginning of 2001 and the 2nd quarter of 2003.

- Real GDP growth has averaged over 3.6% in the year ending with the 2nd quarter of 2006.





Jeffrey Wrase

Chief Economist to the Vice Chairman

Joint Economic Committee

G-07 Dirksen Senate Office Building

(202) 224-2335

jeff_wrase@jec.senate.gov