Economy Grew 3.3% in 2nd Quarter,
Much Higher Than Initial Reading
By JEFF BATER and BRIAN BLACKSTONE
August 28, 2008 9:22 a.m.
WASHINGTON -- The U.S. economy was much stronger in the spring than first thought because of better exports and less inventory liquidation by businesses, according to a government report that surprised economists.
Gross domestic product rose at a seasonally adjusted 3.3% annual rate April through June, the Commerce Department said Thursday in a new, revised estimate of second-quarter GDP.
Originally, the government had estimated second-quarter 2008 GDP climbed 1.9%. First-quarter GDP increased 0.9%.
Separately, the number of U.S. workers filing new claims for unemployment benefits fell slightly as expected last week but remained at elevated levels consistent with more declines in nonfarm employment. Meanwhile, total continuing claims hit a nearly five-year high, suggesting the weak economy is making it much tougher for the unemployed to find new work.
Corporate profits rose weakly in the second quarter, a sign that rising commodity prices are squeezing businesses. Profits after taxes climbed by 1.0% to $1.361 trillion in the second quarter, after falling by 7.7% in the first quarter. Year over year, profits decreased 5.9% since second-quarter 2007.
Price inflation gauges were basically unchanged in the government's revisions to the economic data.
GDP is a measure of all goods and services produced in the economy. Wall Street was surprised by the adjustment to second-quarter GDP; economists surveyed by Dow Jones Newswires estimated a 2.7% increase....
Second-quarter spending by consumers climbed 1.7%, up from a previously reported 1.5% increase and above the first quarter's 0.9% gain. Spending got a jolt in the spring from federal income-tax rebates given to spur an economy fighting high oil prices and shrinking payrolls. But the last of the checks rolled out in July and the lift given by the stimulus payments will fade, erasing the support to GDP that had been provided during the second quarter.
Consumer spending accounts for about 70% of economic activity. It contributed 1.24 percentage points to GDP in the second quarter; the original estimate was a contribution of 1.08 percentage points....
