U.S. Economy Grew at Revised 0.2% in 2Q

The Commerce Department delivered another round of bad news in a report released on Wednesday, as it revised its gross domestic product figure for the second quarter down by a half-percent.

The report changed the GDP from a 0.7% rise to a 0.2% rise – its worst performance since a contraction of 0.1% in the first quarter of 1993, according to Bloomberg.

However, some economists saw a positive subtext in the gloomy figure as personal spending, state and local government spending and residential fixed investment kept GDP out of negative territory.

The gross domestic product is comprised of consumption, investment, net exports, government purchases and inventories figures. Consumption –- mostly consumer spending -- is by far the largest component, totaling roughly 60% of GDP.

Consumer spending creates demand for new factory goods and the trucking shipments that get them to stores.

Another silver lining in the report was that business inventories were 0.4% lower than the previous estimate, Bloomberg reported.

This decline is good news for trucking because high inventory discourages manufacturers from making new goods. When that happens, there are fewer deliveries for trucks to make.

Economist Paul Kasriel of Northern Trust Co. told Reuters that less inventory means that production must increase, and it will spark a recovery in the months ahead.

ompanies replenishing inventories, the arrival of tax refund checks and Federal Reserve interest rate cuts all may help boost demand for products and pick up the economy, Bloomberg said. Healthier consumer spending, coupled with depleted inventories could put a U.S. economic recovery over the top.

The previous figure of 0.7% was a contributing factor in the Federal Reserve’s decision to cut interest rates on Aug. 21. The seventh and latest cut brought rates down to 3.5% - the lowest rate since April 1994, Bloomberg reported.