WASHINGTON ( TheStreet) -- The economy continued reflecting expansion in the second quarter, but the pace of growth slowed as imports surged, consumer spending ebbed and inventory rebuilding efforts slowed. The nation's growth domestic product grew at a seasonally adjusted annual pace of 2.4%, according to an advance estimate provided by the Commerce Department Friday morning. The final landed near consensus projections calling for GDP growth to fall to 2.5%, according to Briefing.com. More surprisingly, economic growth was stronger than first realized to begin 2010, making the second-quarter slowdown that much more pronounced. First-quarter GDP was revised sharply higher to reflect growth at a 3.7% annual rate, up from the 2.7% rate originally posted. On the other hand, the government cut historical figures further down, highlighting an even more profound recession. The 2009 contraction, which originally stood at 2.4%, was revised deeper to a 2.6% fall, while the modest 0.4% growth reported for 2008 was cut to even. "We can say the recession was a little bit deeper than we thought it was, and though we snapped back in the fourth quarter of last year, it was not quite as much as we thought," said Robert Dye, senior economist at PNC Financial. In the second quarter, the trade deficit widened and imports surged nearly 29%, which dragged on GDP. As the country's consumers felt the weight of job losses and dwindling incomes, consumer spending weighed on the economic mosaic, rising by a lighter-than-expected 1.6% in the April-to-June period vs. 1.9% in the first quarter. "What we can say about this recovery is that the consumer is not, in any way, leading the charge," Dye said. "The most we can say is that the consumer is keeping pace with the half-speed recovery, but remains justifiably cautious." And though firms restocked their shelves coming out of the recession after severe cuts, which helped drive GDP growth to begin the year, the inventory rebuilding effort slowed in the second quarter. Change in private inventories added 1.05 percentage points to GDP after adding 2.64 points in the first quarter and 2.83 points in the final quarter of 2009.
But the report also contained a few bright spots. Fixed investment made gains during the second quarter, the Commerce Department said, as equipment and software soared 21.9%. Federal spending also rose 9.2%, as a reinvigorated war effort in Afghanistan may have lent a hand to national defense spending, which rose 7.4%. More surprisingly, state and local expenditures also rose 1.3% after posting three straight quarters of declines, despite headlines focused on struggling state budgets around the country.
Stocks began the Friday session trading lower after the report's release. Most recently, the Dow Jones Industrial Average, S&P 500 and Nasdaq were down 0.6%, 0.8% and 1.1%, respectively. --Written by Sung Moss in New York