Q2 GDP and Bank Profits Revised Down

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.3 percent in the second quarter of 2012, down sharply from the 1.7 percent growth rate reported one month ago, the ""Bureau of Economic Analysis"":http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm reported Thursday. In the first quarter, real GDP increased 2.0 percent.

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The BEA release also included a revised report on second quarter corporate profits showing they were slightly higher than originally reported, though profits for financial corporations were slightly lower than the earlier report.

The GDP report was below market expectations of no change in the growth rate and emphasized a moribund economy. The economy had expanded at a 3.0 percent pace in the fourth quarter of 2011.

In economic measurement terms, these data are ancient economic history since the third quarter ends Sunday. The advance third quarter GDP report will be released on October 26. The data released so far for July, August and early September suggest no significant change for third quarter 2012 economic activity though residential fixed investment is likely to show a strong positive contribution.

Personal Consumption spending accounted for $35.7 billion or 85% of the growth in real GDP according to the final estimate compared with 69% in thr revised estimate issued one month earlier. Indeed, according to the final estimate, total consumer spending â€" about 70% of total GDP â€" was down about $4.4 billion from the earlier report.

Residential fixed investment, at $7.2 billion, was down from the originally reported $7.5 billion and down from the $16.1 billion spent in the first quarter.

Government spending was reported at $2.48 trillion, unchanged from the earlier report but down $4.3 billion from the first quarter. The drop in government spending subtracted about 0.1 percentage points from GDP, according to BEA.

Overall the downward revision to GDP reflected a downward revision to inventories â€" mainly farm inventories resulting from the summer drought.