GDP Q2 – Final show GDP contracted by 0.7%, expected to decline further to a 1.1% contraction from the 1% decline data from the August Q2 preliminary estimate, following a 1% estimated contraction in the advance Q2 estimate (today’s preliminary release is based on a more complete set of data), after contracting by 6.4% in the first quarter of 2009, and by 6.3% in the 4th quarter of 2008.  Today’s release demonstrates the rate of contraction of GDP has slowed down considerably in the recent quarter, indicating a bottoming out of the recession.  The decrease in real GDP in the second quarter primarily reflected negative contributions from private inventory investment, nonresidential fixed investment, residential fixed investment, personal consumption expenditures (PCE), and exports, which were partly offset by positive contributions from federal government spending and state and local government spending, although smaller decreases in these categories allowed for the reduced rate of decline in GDP since the first quarter. Imports, which are a subtraction in the calculation of GDP, decreased.

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