First Quarter GDP Revised Down Again

Washington, DC, June 25, 2010--The Commerce Department revised down for the second time its estimate of economic growth in the first three months of 2010, now seeing 2.7% annualized growth.

The department had initially said the economy grew 3.2% from January to March, then said it had grown 3%.

The revisions to this final reading on first-quarter GDP only highlighted the unbalanced nature of growth as consumer spending was revised lower.

Final sales, which exclude inventories, increased at a 0.8% annual pace, revised down from 1.4%.

The downward revision was a surprise. Economists had been expecting no revision in the third estimate.

Growth in the first three months of the year decelerated from the 5.6% expansion in the fourth quarter of 2009.

Economists are forecasting stronger growth -- about 3.8% on an annualized basis -- in the second quarter ending June 30. But big questions remain about prospects for economic growth during the second half of the year.

The revisions to first-quarter GDP were in two major areas: consumer spending and trade.

Investments in housing shrank at a 10.3% annual rate. Residential investments subtracted 0.2 of a percentage point from GDP growth.

Exports rose 11.3%. Imports increased 14.8%. Net exports reduced growth by 0.8 of a percentage point.