US real GDP (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 2.4% in the second quarter of 2010, (that is, from the first quarter to the second quarter), according to the "advance" estimate released by the Bureau of Economic Analysis.  In the first quarter, real GDP increased 3.7%.

The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The "second" estimate for the second quarter, based on more complete data, will be released on August 27, 2010.

The increase in real GDP in the second quarter primarily reflected positive contributions from nonresidential fixed investment, exports, personal consumption expenditures, private inventory investment, federal government spending, and residential fixed investment.  Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP in the second quarter primarily reflected an acceleration in imports and a deceleration in private inventory investment that were partly offset by an upturn in residential fixed investment, an acceleration in nonresidential fixed investment, an upturn in state and local government spending, and an acceleration in federal government spending.

The moderation in real GDP growth primarily reflected a larger net trade deficit compared with the previous quarter and a slowdown in inventory investment.

These contributions to the moderation in growth were partly offset by the following:

• An upturn in residential investment.

• A pick-up in business investment, mainly an upturn in structures. (Investment in nonresidential structures rose for the first time since the second quarter of 2008.)

• An upturn in state and local government spending.

• An acceleration in federal government spending

Prices:Prices of goods and services purchased by US residents increased 0.1% after increasing 2.1%. Food prices rose slightly, and energy prices fell sharply. Excluding food and energy, prices rose 0.9% after rising 1.6%.

Personal income: Real disposable personal income (DPI)—income adjusted for inflation and taxes—rose 4.4% in the second quarter after rising 1.7% in the first quarter. Personal saving as a% of real DPI rose to 6.2% from 5.5%.

Annual revision of the NIPAs:Today, BEA released revised estimates for the first quarter of 2007 through the first quarter of 2010. The general economic picture remains unchanged. For 2007 through 2009, average annual real GDP growth declined 0.2%; before the revision, average growth was 0.0%.

Insight on the latest GDP numbers, with Joel Prakken, Macroeconomic Advisers:

Peter Morici, a professor at the University of Maryland commented: "The White House is pumping sunshine--the economy is in tough shape

Second quarter GDP numbers show the economy is not growing fast enough to create jobs and bring down unemployment.

Of the 2.4% growth reported, 1.1% was an increase in inventories—essentially businesses rebuilding and adjusting inventories from recession lows and to accommodate more price-conscious consumers.

This indicates actual demand in the economy is growing a scant 1.3% a year. Businesses can accommodate up to 2%age points through higher productivity and without adding workers.

Unless spending picks up (and indicators are that is not happening), once businesses stop piling up unsold goods, layoffs will outnumber hires, unemployment will rise with a vengeance, and the economy will head into a second dip. That will not likely happen until after the election. It will show up in fourth quarter data.

Consumers and business have been spending but too much is going into imports—the trade deficit subtracted 2.8% from growth. Put another way, had exports and imports grown by the same amount, economic growth would have been in the range of 5.2%.

Almost the entire trade deficit is oil and China but the president is not doing enough about either.

We get out by dealing with China on the trade deficit—either it revalues the yuan or we revalue it by taxing or licensing dollar yuan conversions. Create a Savings and Loan Crisis era Resolution Trust.

Start building many more gasoline efficient vehicles—the emphasis on electrics is nice but their large impact is many years away

Develop more domestic oil and gas.

Even with those problems addressed, small and medium sized businesses are not doing well because they can’t get credit from regional banks. An audit of U.S. banks by the IMF says the four largest banks have adequate capital but the regional and small banks need another $19 billion—all those toxic assets that did not get cleaned up.

Do not expect to hear the President talking about this out on the hustings this weekend."