GDP Growth Revised Up to 2.9% for the Second Quarter

by Patrick Lunsford, CollectionIndustry.com

The Commerce Department said Wednesday that the U.S. economy was in a little better shape in the second quarter than was previously believed.

Real gross domestic product growth for the second quarter was revised to an annual rate of 2.9% from the earlier estimate of 2.5% released last month. In comparison, the economy grew 5.6% in the first quarter.

Economists surveyed by various news outlets had been expecting the GDP growth rate to be revised to an even 3%.

The really good news in the restatement came with commentary on wage growth and inflation. The Labor Department said income from employee compensation was revised up by an annual rate of $106 billion in the first half of 2006. Wages and salaries increased 4.5% in the first quarter and 1.5% in the second, revised up from estimated growth of 1.7% in the first quarter and 1% in the second.

On the inflationary front, core inflation — a measure closely watched by the Federal Reserve — rose 2.8% in the second quarter, down from the 2.9% reported earlier. The year-over-year change was unrevised at 2.3% — above the Fed’s target of 1% to 2%. It’s the largest increase in core prices in 11 years.