Second Quarter GDP Growth Revised Up Sharply to 3.3 Percent

The economy performed very admirably in the second quarter of 2008, growing at an annual rate of 3.3 percent, according to revisions released Thursday by the U.S. Department of Commerce, which had previously estimated growth in the quarter of 1.9 percent.

The sharp revision caught even the most optimistic economists off-guard. In polls conducted by MarketWatch and Bloomberg, economists had been expecting the revision to show growth of about 2.7 percent in the quarter.

But economists were quick to point out that the second quarter growth rate for GDP might be the high-water mark for a while. In the latest edition of the economic publication Blue Chip Economic Indicators, a survey of 50 economists revealed that experts think third quarter growth will slip to 1.2 percent followed by growth of 0.3 percent in the fourth quarter.

Adding to the forward-looking gloom is the fact that economic stimulus checks were largely credited for the sharp upward revision to the second quarter’s numbers. Those checks are now long gone.

According to the Commerce Department, exports were a main driver of second quarter economic growth. With a weak dollar, exports increased 13.2 in the quarter, adding 3.1 percent to GDP growth. Consumer spending, bolstered by stimulus checks, increased 1.7 percent in the quarter, adding 1.2 percent to growth.

Investments in housing, business investments, and a drop in inventories were the main drags on the economy, subtracting 0.6 percent, 0.4 percent and 1.4 percent from the GDP growth rate in the quarter.

Corporate profits were also down 2.4 percent in the second quarter, the fourth straight quarter for declines.

Commerce did not revise GDP growth for the first quarter of 2008 (0.9 percent) and the fourth quarter of 2007 (negative 0.2 percent).