7/27/12 10:27 PM – US 2Q Economic Growth

The growth in the US 2nd quarter economy was released today and was better than many expected, though in-line with consensus. I would guessed a lower number. In addition, 1Q growth was revised upward to 2.0% from 1.9%. The 4Q GDP was revised up a lot, from 3.0% to 4.1%.

There were some bright spots in this rather low growth number. First, business spending on plant and equipment was up 7.2%, housing was up 9.7% and the inflaton measure was low at 0.7%. Exports were up.

The only downside I saw was that consume spending rose at a lower rate than the previous quarer, 1.5% compared to 2.4%. Government spending, both state and federal continued downward and was a drag on economic growth as measured by GDP.

Overall, a better report than I expected but 1.5% growth is not what we need. 3% – 5% would be much better at this point in the recovery. Still, the US is growing. A number of European countries would love to report 1.5% growth.