The Bureau of Economic Analysis released its advance estimate for the second quarter of 2006 reporting that real GDP grew by only 2.5% on an annualized basis. The slowdown in domestic demand growth was across all sectors with consumption rising by 2.5%, business investment rising by 2.7%, residential investment declining, and government purchases rising by less than 1%. And I’m listening to CNN, they are saying this is good news as it takes the pressure off the Federal Reserve to further raise interest rates. Let’s hope growth for the rest of the year is stronger.
Footnote: In a comment to this post, AB reader K Harris reminds us that Michael Darda had made a qualitative statement that investment demand growth would remain strong. She asks what was his Q2 forecast? Michael?
Update: Thomas Nugent really wanted to run a Laffer curve op-ed today chastising Democrats for ignoring “JFK economics”. Did he ignore today’s BEA news or just misread the report?
the economy hit a 4.6 percent annual growth rate in the second quarter of 2006
Could someone tell Mr. Nugent that nominal GDP growth is not the same as real GDP growth?!