Our Cooling Economy

From Holden:

Feel the Bush Boom, as the rate of growth in the quarterly Gross Domestic Product fell by a whopping 3.1% between the first quarter of 2006 and the second quarter of the year.

The U.S. economy grew at a 2.5 percent annual pace from April through June, less than expected, as business investment in equipment fell for the first time in three years and consumers reined in spending.

The government’s first estimate of the quarter’s gross domestic product, the value of all goods and services produced in the U.S., compares with a 5.6 percent gain in the first three months of the year, the Commerce Department reported today in Washington. A measure of core inflation accelerated.

[snip]

Economists expected a 3 percent gain in GDP last quarter, according to the median estimate of 74 estimates in a Bloomberg News survey. Estimates ranged from 2 percent to 3.8 percent.

Consumer expenditures rose at an annual rate of 2.5 percent last quarter, as a slowdown in the housing market discouraged spending, compared with a 4.8 percent pace in the previous three months. Economists expected a 2.1 percent gain, based on the survey median. Consumer spending growth has averaged about 3.4 percent a quarter the past 30 years.

With today’s report, the government also revised GDP data going back to the first quarter of 2003. The economy grew at an average annual rate of 3.2 percent from 2003 through 2005, or 0.3 percentage point less than previously estimated.

Yes, they did overestimate the growth in GDP in each of the past three years. Here are the revised figures, from the Bureau of Economic Analysis press release.

The percent change from the preceding year in real GDP was revised down for all 3 years: From 2.7 percent to 2.5 percent for 2003, from 4.2 percent to 3.9 percent for 2004, and from 3.5 percent to 3.2 percent for 2005.

[snip]

The percent change from fourth quarter to fourth quarter in real GDP was revised down for all 3 years: From 4.0 percent to 3.7 percent for 2003, from 3.8 percent to 3.4 percent for 2004, and from 3.2 percent to 3.1 percent for 2005.