The United States economy continued to slowdown throughout the second quarter of 2010, where the U.S. Commerce Department announced today that the U.S. economy expanded by 2.4% only, as economic conditions weakened in the second quarter.

The Gross Domestic Product Advanced estimate showed that the U.S. economy expanded by 2.4%, compared with the prior expansion of 3.7% reported in the first quarter of 2010, and below median estimates of 2.6%, as personal consumption increased by 1.6% only in the second quarter, compared with a revised 1.9% in the first quarter of 2010 and also below median estimates of 2.4%.

The GDP price index inclined by 1.8%, compared with the expected rise of 1.1% and the prior revised rise of 1.0%, while core PCE increased by 1.1% in the second quarter, compared with the expected and prior revised estimates of 1.0% and 1.2% respectively.

The GDP report showed that gross private investments increased by 28.8%, while exports increased by 10.3%, while imports increased by 28.8%, also governmental consumption increased by 4.4%.

The GDP report also showed that personal consumption contributed to growth by 1.15%, while gross private domestic investments added 3.14% to growth, where residential investments added 0.59%, though we expect this number to be revised lower in the upcoming revisions, also, inventories added 1.05% to GDP, while governmental consumption added 0.88%, however, net exports shed 2.78% from growth.

Although spending levels continued to improve during the second quarter, yet the slowdown witnessed in spending levels apparently weighed down on growth levels, since spending accounts for nearly two thirds of U.S. GDP, where tough economic conditions including elevated unemployment and tightened credit conditions seem to have continued to suppress overall economic activities.

Spending was still improving according to the Federal Reserve Bank, though the Fed admitted that spending levels are still growing over a moderate pace, which signals that the entire recovery process will be also moderate, and accordingly, we shouldn’t really expect the economy to be able to meet its long term growth potentials any time this year, especially amid expectations that unemployment will continue to hover above 9 percent throughout this year.

The GDP report also included downward revisions to growth in the third and fourth quarters of 2009, where the economy expanded by 1.6% and 5.0% respectively, however, growth did slowdown indeed throughout this year, where expectations signal that 2010 will mark a recovery year for the U.S. economy, and we expect the recovery process to continue well into the first half of 2011 as well.

We should expect the recent weakness in economic activities to be reflected through lower spending and investments, and accordingly slower growth, while elevated unemployment will continue to weigh down on overall activities, especially amid expectations that long term unemployment will be higher than average amid the worst financial crisis since the Great Depression, which so far cost more than 8 million jobs and it will sure take a long time to recover such a huge loss in jobs.

Nevertheless, the U.S. economy is still expanding and that is a good sign, as we now know that the recovery process will take more time than previously thought, however, the important thing is that the recovery doesn’t come to a halt, since that would lead the economy back into recession, though this possibility is unlikely, but we can’t really rule anything out at this moment.