GDP Growth Estimate Lowered

The BEA just released its first revision to its estimate of GDP growth in the April-June period of 2004. The estimate of GDP growth has been revised down to 2.8% from an initial guess of 3.0%. This is unequivocally slow growth. To put this in historical context, during the last expansion (1994-1999) only 4 out of 24 quarters had such low economic growth.

One interesting thing that I didn’t notice in the advance estimates: corporate cash-flow fell in the second quarter compared to the first. Cash-flow is probably the biggest single source of funds for corporate investment spending, so this should be worrying to those who have been hoping that investment spending will pick up later this year.