US GDP Data: Growth for Q2 2011 Revised Upward, But Still Weak

U.S. GDP growth for the second quarter of 2011 was revised upward to a 1.3 percent annual rate from the 1.0 percent second estimate reported last month. The upward revision, which returned GDP growth to the same rate as the advance estimate released in July, was a relief to some observers, even though it was still very weak . About 2.5 percent growth is generally considered necessary to keep unemployment from rising, when growth of the labor force is taken into account.

Although a recovery has been underway for two years, the level of U.S. real GDP has not yet reached its peak level of mid-2007, before the recession. When GDP finally reaches its previous peak, the economy will have been considered to make the transition from the recovery phase of the business cycle to the expansion phase.

Investment remained a relative bright spot in the GDP data, accounting for .79 percentage points of the 1.3 percent growth in the quarter. Business fixed investment was relatively strong while housing investment remained weak. Consumption grew by about 0.49 percentage points, with personal expenditures on healthcare services leading the way. The government sector contracted. Federal defense expenditures rose, but they were more than offset by decreases in federal nondefense spending and in state and local government purchases. Net exports performed better than previously estimated. Exports were revised upward and imports downward compared with the August report.

Follow this link to view or download a set of classroom-ready slides with graphical presentations of the latest GDP estimates.