Second Quarter GDP Disappoints at 1.2%

Real GDP grew at an annual rate of 1.2% during the second quarter of 2016, according to the Bureau of Economic Analysis’s “advance” estimate, up from the first quarter’s growth rate of 0.8%. The increase reflected positive contributions from personal consumption expenditures and exports, which were partially offset by negative contributions from private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending.

Consumption was the largest contributor to GDP, accounting for 2.8% of growth, up from 1.1% during the first quarter. Consumption spending grew by $190.1 billion during the second quarter of 2016, compared to $59.2 billion during the first quarter. Net exports also contributed to growth, adding 0.2% to GDP during the quarter.

Private domestic investment was one of the largest negative contributors, subtracting a total of 1.7% from GDP growth, driven by slower growth in both fixed investment and private inventories.

Government spending slowed during the quarter, subtracting 0.2% from GDP, as both federal and local government spending increased at a modest rate of 0.4%.

Read the GDP release.