Re: Nnuut's Account Talk
Looks like were on, but will it freak the Market thinking wee won't get the Interest Rate drop they are expecting from the FED?
U.S. Q2 GDP up 3.4%
Fastest pace since Q1 '06, consumer spending slows
By
Greg Robb, MarketWatch
Last Update: 8:30 AM ET Jul 27, 2007
WASHINGTON (MarketWatch) - After hitting a pothole in the first quarter, the U.S. economy rebounded in the second quarter, growing at an annual rate of 3.4%, the fastest pace since the first quarter of 2006, the Commerce Department said Friday.
The increase in the nation's real gross domestic product was slightly below market expectations of a gain of 3.6%, according to the survey of economists conducted by MarketWatch.
See Economic Calendar.
The GDP had risen just 0.6% in the first quarter.
Economists said the weakness in the first quarter and the subsequent strength in the second quarter are both overstated and the best way to understand the economy was to average the growth rate over the past six months. This produces a 2.0% average growth rate in the first half of the year.
Some economists have concerns that the second half of the year will be slow as consumers are tired and under pressure from the weak housing sector. But other economists believe these fears are overblown.
The improvement in the second quarter was concentrated in a stronger trade performance, faster government spending and a rebuilding of inventories after significant reductions in the past two quarters. These offset a sharp slowdown in consumer spending.
Consumer spending increased 1.3% in the second quarter after a 3.7% gain in the first.
The inflation picture was mixed. The core consumer price index (excluding food and energy) retreated to a 1.4% annual rate in the second quarter from 2.4% in the first, pushing the year-over-year gain down to 2.0%, the top of the Fed's perceived "comfort zone" on inflation.
But headline inflation accelerated to a 4.3% annual rate, the fastest pace since the fourth quarter of 1990.
Real disposable income fell 0.8% annualized in the second quarter, after rising 5.9% in the first quarter. The savings rate was 0.6% in the second quarter, down from 1.1% in the first.
Details
Imports, which are a subtraction from the calculation of GDP, fell 2.6% in the second quarter, while exports rose 6.4%. The trade deficit added 1.2 percentage points to growth.
Government spending increased 4.2% after falling 0.5% in the first quarter. Federal spending rose 6.7%. Defense spending rose 9.5% in the second quarter and nondefense spending rose 1.3%. State and local government spending rose 2.9%. Government spending contributed 0.8 percentage points to growth.
Businesses added $3.6 billion to their inventories after adding only $100 million in the first quarter. The change in inventories added 0.15 percentage points to growth.
Final sales to domestic purchasers, GDP less the change in private inventories, increased 3.2% in the second quarter, compared with a 1.3% increase in the first quarter.
Residential investment fell 9.3% in the second quarter, the smallest decline since the first quarter of 2006. Investment in residences subtracted 0.49 percentage points from second quarter growth, compared with 0.93 percentage points from first quarter growth.
Business investment increased 2.2% in the second quarter after falling 4.4% in the first. It was the first increase in the past five quarters. Business investment contributed 0.83 percentage points to growth.
Investments in equipment and software increased 2.3% after a 0.3% gain in the first quarter. It was the fastest growth in equipment and software investment since the third quarter of last year. Investments in structures jumped 22.1%, the fastest pace since the second quarter of 1994.
Greg Robb is a senior reporter for MarketWatch in Washington.(More)
http://www.marketwatch.com/news/sto...d={12F1D9EB-D4C6-427B-8300-CEA0AD066C38}&dist=
