GDP growth for the second quarter was lower than expected, with the nation's output increasing at an annual rate of 1.3 percent from April through June, according to numbers released this morning by the Commerce Department's Bureau of Economic Analysis.
Though a marked increase from the first quarter's 0.4 percent growth, the figure shows that the nation's economic recovery remains tepid. According to Ben Herzon, senior economist at macroeconomic consulting firm Macroeconomic Advisers, a survey of economists his firm conducted on July 22 had predicted growth of 2.1 percent in the second quarter. Ryan Sweet, senior economist at Moody's Analytics, told U.S. News that he had predicted 1.8 percent.[Read about the growing political will for corporate tax reform.]
However, other factors were a weight on growth. Spikes in energy prices, as well as supply chain disruptions resulting from Japan's massive earthquake in March, likely constituted a significant drag on GDP. According to Herzon, supply-chain effects alone affected automobile production enough to subtract a full percentage point off of second-quarter GDP growth. [Check out political cartoons about the economy.]
"Today's first look at GDP in the second quarter confirms what we already knew: The economy isn't growing as fast as it needs to," Commerce Secretary Gary Locke said in a statement released to the press.
Also included in today's release were revised GDP figures showing a deeper recession than previous numbers had suggested. The new numbers show that, for 2007 through 2010, GDP decreased at an average yearly rate of 0.3 percent. Previous estimates had shown an average annual increase of less than 0.1 percent. Likewise, GDP percent change was revised down 0.3 percentage points for 2008 and down 0.9 percentage points for 2009. However, it was revised upward 0.1 percentage points for 2010. According to Sweet, lower revisions show that "we have a bigger hole to climb out of." That knowledge, he says, "might nudge policymakers to reach an agreement" in the debt ceiling fight and take greater notice of the nation's economic troubles.