A key measure of U.S. economic output grew slower than previously thought in the first half of the year, according to government data released Thursday.
Inflation-adjusted Gross Domestic Income grew at an annualized rate of 0.8% in the first quarter of this year, and barely rose at just 0.1% in the second quarter. said on thursdayThis was significantly weaker than the 1.8% and 1.4% growth rates reported in previous estimates.
Gross domestic product, the better-known measure of inflation-adjusted output, contracted by 1.6% in the first quarter and 0.6% in the second quarter in both periods. These numbers are unchanged from previous estimates.
Taken together, these two indicators show that economic growth in the first half of this year has been anemic at best. At its worst, the economy has contracted for two straight quarters, which is the unofficial but common definition of a recession.
Theoretically, the two indicators should be identical, so the conflicting signals sent by the two production readings in the most recent quarter were something of an economic enigma. GDP measures the value of all goods and services produced and sold within a country. The little-known Gross Domestic Income measures all the money made by individuals, businesses and other organizations. One person’s spending is someone else’s income, so the sum of the two numbers should be the same.
In practice, the two measurements are rarely in perfect agreement. because they are derived from different data sources. Recently, however, they have been sharply different, with government statisticians finding it difficult to explain the massive shift in economic activity caused by the pandemic and the massive aid programs enacted to combat it. Before the latest revision, government data showed gross domestic income exceeded gross domestic product by $773 billion in the second quarter of this year, a gap of nearly 4%. was.
The latest data released on Thursday helped narrow the gap to 1.3%. Gross domestic product for 2021 has been revised upwards. This is mainly due to increased private consumption and increased exports, especially for services. Gross domestic income was revised down both last year and this year. This was due to weaker earnings for both individuals and businesses.
The revision is part of an annual process in which the government incorporates more complete data from the Internal Revenue Service, state unemployment insurance systems and other sources that do not meet the Commerce Department’s quarterly estimates. The update affects his five-year-old stats, but there were few changes to previous years.