The increase in real GDP in the second quarter primarily reflected positive contributions from exports, personal consumption expenditures, nonresidential structures, federal government spending, and state and local government spending that were partly offset by negative contributions from private inventory investment, residential fixed investment, and equipment and software. Imports, which are a subtraction in the calculation of GDP, decreased.
Consumer spending was supported by the largest increase in disposable personal income in six years, thanks largely to about $80 billion in tax-rebate checks from Washington.
Real personal consumption expenditures increased 1.5 percent in the second quarter, compared with an increase of 0.9 percent in the first. Durable goods decreased 3.0 percent, compared with a decrease of 4.3 percent. Nondurable goods increased 4.0 percent, in contrast to a decrease of 0.4 percent. Services increased 1.1 percent, compared with an increase of 2.4 percent.
Annual revisions in the report also showed that the economy contracted in the fourth quarter of 2007, falling 0.2%. It was the the first drop in real gross domestic product since the recession of 2001. The economy grew at a revised 0.9% annual rate in the first quarter.
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