By Manuel Gutierrez, Consulting Economist to NKBA
Decline of 0.9 percent follows 1.6 percent drop in the first quarter, resulting in an output decrease of $125 billion for the first half of the year.
- The reduction in GDP was mainly caused by a very sharp drop in investment, which fell by 13.5 percent for the quarter.
- Consumer spending, the largest component of GDP, grew just 1 percent vs. the historical average of 3.3 percent.
- The modest gain in consumer spending was the result of an increase in consumer services spending offset by a decrease in the purchase of goods.
- Both business and consumer components of investment fell, with business, the primary driver of future economic growth, by 3.9 percent, while consumer investment was down a sharp 14 percent, reflecting the slowdown in new home construction.
- On the plus side, exports jumped by 18 percent in the quarter while imports were virtually unchanged.
