The Burea of Economic Analysis (BEA) released their first estimate of second quarter real GDP growth and the economy showed a modest rebound from the low first quarter growth. Second quarter real GDP is estimated to have grown at a 2.3% annual rate. This is lower than the 2.5% consensus estimate from economists surveyed by Bloomberg. As a reminder, this is the first estimate with two revisions to occur over the next two months. The BEA also announced that they revised up first quarter GDP growth from (.2%) to .8%. The upward revision was due to upward revisions to nonresidential fixed investment (commercial construction), inventories and residential fixed investment (housing). Government spending and personal spending were both revised downward.

The BEA also announced revisions to annual GDP data back to 2011. What we have now learned is that the economy grew slower than what was originally reported.

• From 2011-2014, real GDP grew an an average annual rate of 2.0%. The previously published data had shown an average annual growth of 2.3%.
• From the fourth quarter of 2011 to the first quarter of 2015 the average annual growth rate of real GDP was revised down from 2.2% to 2.0%.
• Looking at the annual average growth rate since the expansion began (second quarter of 2009) through the first quarter of 2015, the BEA revised the growth rate from 2.2% to 2.1%.

Looking at the details behind the estimated growth rate in the second quarter of 2015 shows that personal spending accounted for virtually all of the 2.3% growth.

• Personal Consumption Expenditures (i.e. personal spending) contributed 1.99% of the 2.3% growth.
• Gross Private Domestic Investment (i.e. corporate spending) contributed .06%
• Net Exports (i.e. Exports minus Imports) contributed .13%
• Government Spending contributed .14%

The GDP news does not provide any significant additional information for the Federal Reserve as it comes to when they will raise interest rates. The news shows progress and improvement from the first quarter but the Federal Reserve will be more focused on what type of improvement is shown in the economic data for July and August.