By Greg Robb
July 30, 2010, 10:44 a.m. EDT
WASHINGTON (MarketWatch) — The U.S. economy lost momentum in the second quarter of the year, according to figures released Friday, which may raise concerns of an extended soft patch if not an outright contraction.
Real gross domestic product — the inflation-adjusted, seasonally adjusted value of all goods and services produced in the United States — rose at a 2.4% annualized rate in the second quarter, well below the average 4.4% increase over the last six months.
The 2.4% increase in GDP was close to the 2.5% expansion expected by economists surveyed by MarketWatch. However, the rate of expansion in the first quarter was revised up to a 3.7% rise compared with the prior estimate of a 2.7% increase. Read full government release.
Economists believe that the growth was fairly strong in April and May but hit a rough patch in June. So the economy is going into the second half of the year with little momentum.
“The post-recession rebound is history,” said Bart van Ark, chief economist at the Conference Board.
“We don’t foresee a double dip,” he continued, “but we do expect growth to slow even more markedly” — to what he pegged as a 1.6% annualized rate for the second half of the year.
Investors initially reacted negatively to the report, with losses deepening in futures on the Dow Jones Industrial Average after the data were released.
Bond investors, confident the coast remains clear as far as inflation goes, bought U.S. Treasurys as two-year note yields sank to record lows.
Annual revisions released at the same time as the first estimate for second-quarter GDP show that the Great Recession was deeper than previously thought.
During the recession, real GDP decreased at a 2.8% average rate, down from the prior estimate of a 2.5% rate.
At the same time, the recovery, already one of the slowest, has been a bit slower. From the third quarter of 2009 to the first quarter, the economy grew at a 3.4% annual average rate, just below previous estimate of a 3.5% increase.
Although the increase in GDP in the quarter was not as strong as the first quarter, many of the details of the report were positive. Much of the deceleration was due to the trade sector. Consumer spending was only slightly weaker than the first quarter.
Now that the revisions have been released, the National Bureau of Economic Research may move to make a formal call on the end of the recession. Most economists think the recession ended in June 2009.
Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold
