Real gross domestic product (GDP) increased at an annual rate of 6.5% in the second quarter, according to the Bureau of Economic Analysis (BEA). In the first quarter, real GDP increased 6.3%. Imports, which are a subtraction in the calculation of GDP, increased in 2Q.
BEA said in Thursday’s press release that the increase in real GDP in the second quarter was due to increases in personal consumption expenditures (PCE), nonresidential fixed investment, exports, and state and local government spending that were partly offset by decreases in private inventory investment, residential fixed investment, and federal government spending.
The increase in PCE reflected increases in services, which was led by food services and accommodations, and goods led by “other” nondurable goods, notably pharmaceutical products.
The increase in nonresidential fixed investment reflected increases in equipment —led by transportation equipment— and intellectual property products, which was led by research and development.
The increase in exports reflected an increase in goods that were led by nonautomotive capital goods and services, which was led by travel. The decrease in private inventory investment was led by a decrease in retail trade inventories. The decrease in federal government spending primarily reflected a decrease in non-defense spending on intermediate goods and services.
In the second quarter, non-defense services decreased as the processing and administration of Paycheck Protection Program (PPP) loan applications by banks on behalf of the federal government declined.
Current‑dollar GDP increased 13% at an annual rate, or $684.4 billion, in the second quarter to a level of $22.72 trillion. In the first quarter, current-dollar GDP increased 10.9%, or $560.6 billion.
The price index for gross domestic purchases was up 5.7% in the second quarter, compared with an increase of 3.9% in the first quarter. The PCE price index increased 6.4%, compared with an increase of 3.8%. Excluding food and energy prices, the PCE price index increased 6.1%, compared with an increase of 2.7%.