Second Quarter GDP: Not as Bad as Expected

By July 31, 2009Economy

The Commerce Department report on second quarter Gross Domestic Product (GDP) was better than expected, showing the economy fell only 1 percent – less than the 1.5 percent drop that was expected – and significantly less than the revised 6 percent decline for the first quarter. (Commerce news release.)

Exports declined only 7 percent in the second quarter after falling 30 percent the quarter before, and business investment fell 8.9 percent after declining 39 percent the quarter before. Coupled with the increase in durable goods orders reported earlier this week, these are positive signs that suggest the economic decline is leveling off.

On the other hand, the private sector is still struggling. If you factor out government spending, the GDP actually fell by 2 percent in the second quarter. And consumer confidence fell again, a cause for concern.

The overall trend is positive and suggests business will improve in the third quarter, but probably not enough to move the economy into positive growth.

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