NEW YORK — The first estimate of second-quarter 2012 GDP growth in the United States came in at an annualized 1.5 percent, which marked moderation from the upwardly revised 2.0 percent and 4.1 percent gains in the first quarter of 2012 and fourth quarter of 2011, respectively, RBC Economics reported today.
The main contributor to the moderation was slower consumer spending growth of 1.5 percent in second quarter of 2012 following revised 2.4 percent (was 2.5 percent) and 2.0 percent (was 2.1 percent) gains in the first quarter of 2012 and fourth quarter of 2011, respectively. As well, a 6.0 percent rise in imports offset a 5.3 percent rise in exports thereby resulting in net trade subtracting 0.3 percentage points from GDP growth compared to an addition of 0.1 percentage points in the first quarter of the year.
Business investment climbed 5.4 percent, boosted by a 7.2 percent gain in equipment and software spending, while residential investment, encouragingly, posted a fifth consecutive quarterly gain, rising 9.8 percent although this still marks moderation from the 20.6 percent surge in the first quarter of the year. A pick up in the pace of inventory accumulation provided a 0.3 percentage point support to second-quarter 2012 GDP growth after subtracting 0.4 percentage points in the first quarter.
Government spending declined 1.4 percent in second quarter of 2012; however, this still marked moderation from the revised 3.0 percent (was 4.0 percent) and 2.2 percent (was 4.1 percent) drops in the first quarter of 2012 and fourth quarter of 2011, respectively. We had assumed government spending would be roughly unchanged after subtracting an average 0.5 percentage points from overall GDP growth for the previous three quarters.
Along with the advance release of second-quarter 2012 GDP growth, today’s release included annual benchmark revisions to the data going back to the first quarter of 2009. The decline in annual GDP in 2009 is now estimated to have been 3.1 percent rather than the previously reported 3.5 percent; however, this upward revision was offset by a downward revision to 2010 growth to 2.4 percent from 3.0 percent previously. Annual growth in 2011 was revised slightly higher to 1.8 percent from 1.7 percent. On net, this left the level of GDP in the first quarter of 2012 a modest 0.1 percent higher than the previously reported level.
“Today’s report confirmed that the pace of growth slowed in second quarter of 2012 with the reported gain notably below the average 2.2 percent quarterly increase since the recession trough,” said Nathan Janzen. “One bright spot was continued improvement in residential investment, which has now grown for five consecutive quarters after falling for the better part of the previous six years. This suggested that one of the major drags on GDP growth in recent years is easing. As well, early indications that auto sales remained relatively solid in July suggested that underlying momentum in consumer spending is not as modest as implied by the relatively weak second-quarter 2012 reading.
“Risks surrounding potential spillover from the European debt crisis and concerns about US fiscal consolidation will likely continue to cloud the economic outlook; however, we continue to expect GDP growth to pick up modestly during the second half of this year, which would be consistent with our current forecast for an average 2.4 percent rate,” he added.
SOURCE: RBC Economics press release