This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

GDP Growth Revised Lower to 1.6%

Stocks in this article: ^DJI ^GSPC ^IXIC

WASHINGTON ( TheStreet) -- Economic growth in the second quarter was even more tepid than originally reported, the government said Friday, which more or less validates other recent economic indicators pointing to a slowdown in the recovery.

The government said further revisions to trade stats and inventories were the main factors weighing on the GDP figures.

The Commerce Department revised its quarterly gross domestic product estimate sharply lower to a seasonally adjusted 1.6% annual growth pace. Though the slowing growth pace is still disappointing compared with the red-hot growth experienced at the end of last year, the figure still came in slightly ahead of the expectations of market observers. Many were projecting the growth pace to slow further to 1.4%, according to consensus projections provided by

This was the second estimate on the nation's economic picture for the quarter. Back in July, the government initially said GDP grew at a 2.4% pace during the second quarter.

The government explained the difference between the two readings reflected several specific revisions between the two. For one, the trade deficit widened even more than expected. Imports, which act as a drag on GDP and were originally thought to have surged 29% according to the advance estimate, were revised higher to show a 32.4% jump in the second quarter.

Firms eased back on liquidating inventories and began restocking their shelves coming out of the recession after severe cuts, which helped drive GDP growth to begin the year. The economy grew at a 3.7% pace in the first quarter and a 5% rate in the fourth quarter of last year. But those inventory rebuilding efforts slowed in the second quarter, and even more than expected between the advance report in the second quarter and the latest assessment. Change in inventories, which originally contributed 1.05 percentage points to GDP in the Commerce Department's first read, was revised lower to reflect a gain of 0.63 percentage points in the report Friday.

But the government also highlighted some positive news. As the country's consumers felt the sting of job losses and dwindling incomes, consumer spending appeared to take a hit in the first read on GDP, rising by a lighter-than-expected 1.6% during the April-to-June period. But that tally was revised higher in Friday's revised assessment, instead showing 2% growth during the second quarter. That sum modestly topped the 1.9% reported for the first quarter.

Fixed nonresidential investment on equipment and software -- one of a few measures looking at business spending -- was also revised up to show a 24.9% surge, rather than the 21.9% jump reported in the first read. Business investment, overall, grew at a 17.6% growth pace in the quarter.

A third estimate on second-quarter growth is schedule for release at the end of September.

With a better-than-expected GDP print on the books (or, maybe, just a less bad figure), stocks began Friday's session on a mild upswing. Just after the opening bell, the Dow Jones Industrial Average was gaining 68 points, or 0.7%, to 10,054, the S&P 500 was improving by 6 points, or 0.6%, at 1053, and the Nasdaq was climbing up 17 points, or 0.8%, to 2136.

--Written by Sung Moss in New York.

>To contact the writer of this article, click here: Sung Moss.

>To submit a news tip, send an email to:

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs