The Bureau of Economic Analysis (BEA) released the advance estimate of real GDP growth for the second quarter of 2012 and their regular annual revisions which cover the first quarter of 2009 through the first quarter of 2012.
In the second quarter real GDP grew at a seasonally adjusted annual rate of 1.5 percent, down from 2.0 percent in the first quarter. The main factor in the slowdown was personal consumption expenditures (PCE) which slowed from a 2.4 percent growth rate last quarter to 1.5 percent this quarter.
The revisions beginning in 2009 show that GDP growth was modestly stronger in 2009, with less contraction in the first half and more growth in the second half, weaker but more stable in 2010, and marginally stronger in 2011, but more volatile. Growth in the first quarter of 2012 was revised up to 2.0 percent from 1.9 percent.
We expect GDP growth to strengthen in the second half of this year and through next year, but progress will be slow with growth below 3.0 percent until the second half of 2013. Even this tepid pace of recovery is based on optimistic assumptions about the two major threats to growth. We assume that we will avoid the looming fiscal cliff at the end of this year, and that the Eurozone avoids any major setbacks that destabilize financial markets.