“Final” 2Q GDP -0.7%. Government Spending Carries Period & BLS Changes GDP Reporting Language.
Final 2Q2009 GDP came in today at -0.7%, and combined with final 1Q2009 GDP of -6.4%, we’re now concluding our fourth consecutive quarter of economic contraction, something that hasn’t happened in more than 60 years. Consumer spending typically accounts for two-thirds of GDP, but personal consumption expenditures actually dropped -0.9% in the period and government consumption expenditures and gross investment increased +11.4%. All figures are ‘real’ which means they’re adjusted for inflation.
As of December 23, 2008, -0.5% GDP was the largest quarterly decline since the tail end of the last recession in 2001. Six days after that release, the NBER declared a recession had been in effect since December 2007 and also countered the popular definition of recession as two consecutive quarters of negative GDP growth, saying that they evaluate many factors in addition to GDP. This falls well in line with the beginning of the credit crunch in August 2007 and the multi-layered factors that have led to the recession we’re still in. Below are the last seven quarters of final GDP (now called third reading) and here is the press release for today’s figures.
Today, the Bureau of Economic Analysis also revised the language they use to report GDP. In the past there were three official readings per quarter: Preliminary, Advance and Final. Then there would be final, final readings that followed as additional settlements were made on things like real estate transactions and other longer lead contributors to GDP. But markets tend to trade mostly on the first three readings because when subsequent readings come out, we’re already into the next quarter. This quarter, BEA changed the naming of the readings from Preliminary, Advance and Final to First, Second and Third.
4Q2007: -0.2% (final)
1Q2008: +0.9% (final)
2Q2008: +2.8% (final)
3Q2008: -0.5% (final)
4Q2008: -6.3 (final)
1Q2009: -6.4% (final)
2Q2009: -0.7% (3rd reading, formerly called ‘final’)