Second quarter annuity sales in the U.S. have hit record highs, according to a report issued earlier this week by the Insured Retirement Institute, the annuity industry’s main trade group.

The report, which blends data from both Morningstar and Beacon Research, notes that 2Q 2010 annuity sales increased 13.5% from last quarter, from $47.4 billion to $53.8 billion. The gains were even greater for fixed annuities, which rose in 2Q 17.7%, from $16.5 billion to $19.4 billion.

According to Beacon Research, the fixed annuities numbers were strong because of widening spreads between Treasury and corporate bond yields, which let fixed annuities offer competitive credit rates. For buyers frustrated at stagnant rates, this was a compelling reason to invest in fixed annuities.

Variable annuities fared less well, but still posted an increase of some 9%, from $31.6 billion in Q1 to $34.4 billion in Q2. Mirningstar suggests that the floor against losses is doing much to drive these numbers, while advisors continue to see variable annuities as being both profitable for their own businesses as well as providing their clients with substantial opportunity for growth. Thanks to factors like these,  quarterly variable annuity sales are up year-to-year by 8.2%, from $31.8 billion in Q2 2009. But that might be where the good news ends.

For fixed annuities, the year-to-year numbers are actually down a whopping 30.2%, from $27.8 billion in 2Q 2009. This is not so surprising, really, given the larger risk profile fixed annuities impose on insurers, and given larger trends among insurers to scale back on their FA business in favor of more variable annuities. The overall annuity picture is not quite as bad, but still discouraging, down 9.8% from 2Q 2009′s level of %59.6 billion.

If variable annuities are the product of the future, then their lackluster performance as of late shows that this is still a hard environment to make a sale in. Looking back to Q1, National Underwriter reported that variable annuity sales were already down slightly from 4Q 2009, and up just a little compared to Q1 2009. In that article, written by Morningstar director of insurance solutions Frank O’Connor, the reality for variable annuities is less than clear-cut. Why? Living benefits are more expensive and restricted, and the industry is likely to see only modest growth unless more advisors work harder to sell the product and, frankly, more buyers are made to understand what this product really has to offer.

In the meantime, mixed economic news continues to trickle forth in terms of joblessness and low GDP growth, both of which have pulling the larger financial markets in different directions. The economy is uncomfortably close to entering the second half of a double-dip recession. And while the acute market turbulence of 2008 and 2009 seems to have leveled off, ongoing economic woes will surely play a role not just in what kind of annuity product clients wish to buy, but whether they want to buy anything at all.