U.S. GDP Grows Just 1.3% (Q1 revised down to just 0.4%)

[Pale Blue Dot]

Source: Wall Street Journal

The U.S. economy expanded at a slower pace than expected in the spring as consumers cut back on spending, while revisions showed the slowdown since the beginning of the year was much more drastic than previously thought.

The Commerce Department Friday said gross domestic product rose at an annualized seasonally adjusted rate of 1.3% in April through June, while first-quarter growth was revised down sharply to a 0.4% rate from the earlier estimate of a 1.9% gain. A big reason behind the downward revision in first-quarter growth was that the inventory buildup by companies was less than initially estimated, while outlays by the federal government and consumers were also revised down.

Economists surveyed by Dow Jones Newswires expected GDP to rise 1.8% in the second quarter.

The first estimate of the economy's benchmark indicator for the second quarter showed growth was supported largely by business investment and exports.



Read more: http://online.wsj.com/article/SB10001424053111904800304576475811201857064.html?mod=googlenews_wsj

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There's no way to spin this; this is horrible news.

[dgibby]

1. Just saw that on MSNBC's Morning Joe.

Thought the guy reporting on it was going to have a heart attack on air.

[xchrom]

2. Swell. Just swell. Was anybody 'surprised'? Nt

[Fuddnik]

3. I'm surprised!

Who could have ever seen it coming.

I'll really be surprised at the jobless numbers in about 90 days.

[Roy Rolling]

4. hmmm....

I predict the "experts" who got us into this mess will propose a solution: more tax cuts.

They will double down on a bad idea---it is the psychology of gambling that makes casinos rich and casino customers poor.

[Doctor_J]

14. DOUBLE down???

we're up to at least the 4th doubling down - we're broke

[OhioChick]

5. This is really bad n/t

[westerebus]

6. So much for all the debate on Austerity..

when you don't have a F'n economy!!!!!!!!

[karynnj]

7. Not surprising given what that the tea party controlled Republican party has created pessimism and

uncertainty. Not to mention, the states that the Republicans control have drastically cut employment - and it has NOT led to prosperity.

Because states can have very different economic factors, to really compare results, the best thing to do is to pair states that are very similar, but which have different leadership. This is actually not easy to do, but one comparison is pretty bad for the Republicans.

NJ is an affluent state with an abundance of jobs in R&D and in Finance. It is also a state where high school kids are among the top performing in the country. It also has a significant number of older urban centers that were once successful cities. Another state that could be described similarly is MA.

Since Governor Christie was elected in 2009, you can think of these two states as if they were testing the republican and the Democratic economic solutions. From two sources, here are the unemployment rates.


December 2009 (a month after Christie was elected - as a baseline): NJ - 10.0 MA - 9.3
December 2010 : NJ - 9.1 MA - 8.2 (Note, at least in NJ, the budget was passed in the fall of the previous year - so this year is not yet affected much by Governor Christie. MA and NJ are moving pretty much in sync - though MA is doing slightly better.)
May 2011: : NJ- 9.4 MA - 7.6 (This year it is a Christie budget and Christie is in charge - and while MA continues to improve, NJ gets somewhat worse.)

Deval Patrick was MA Governor for the entire time period.


If you look at NY, also run by a Democratic governor, the results look like MA's. What is clear is that the cuts that Christie forced through have hurt the state of NJ.

Here are the two links:

For the 2009 and 2010 data - http://www.foxnews.com/us/2011/01/25/unemployment-rates-state-glance
For the 2011 data: - http://www.ncsl.org/?tabid=13308

(Both are simply releases of the same government data.)

It would be nice if there were other pairs. It is hard to find them because like states usually have governors of the same party. I was trying to think of any Midwestern state to pair Illinois with, but I think none have anything like Chicago. (NYC was one reason why I paired NJ to MA rather than to NY. ) In addition, many of them did not get Republicans until last November - so their full effect could not be seen yet.

[Doctor_J]

8. As soon as the Repukes take control, things head South

Hopefully president "both parties are to blame" will bring this up next time a camera is running.

[mahatmakanejeeves]

9. From the source

Bureau of Economic Analysis News Releases

Gross Domestic Product, 2nd Quarter 2011 (advance estimate) (7/29/11)

National Income and Product Accounts
Gross Domestic Product: Second Quarter 2011 (Advance Estimate)
Revised Estimates: 2003 through First Quarter 2011

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.3 percent in the second quarter of 2011, (that is, from the first quarter to the second quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.4 percent.

The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3). The "second" estimate for the second quarter, based on more complete data, will be released on August 26, 2011.

and, from MarketWatch:

GDP grows slender 1.3% in second quarter



The DJIA blew out 150 points right from the get-go, but it's recovered some from that.

[dkf]

10. Ugly

[dkf]

11. Oops

[bhikkhu]

12. In the long-term, zero growth is an optimistic goal

...as at some point in our history we have to look at our utilization of resources, and say we can't expect to continually increase our consumption on a finite world. Already we are in the midst of our planet's sixth great extinction event, largely caused by the huge share of space and resources we demand just to maintain the status quo.

And if the disappearance of other life on the planet isn't sufficient to suggest a need to curtail our continual growth, then there is climate change. Economic activity is inherently linked to energy consumption, which in largely allowed by our use of fossil fuels. If you look at graphs tracking carbon emissions and economic activity, they correlate quite well - meaning that growth in the economy=growth in carbon emissions=our grandchildren's planet will be a very difficult place to live. "It's hard now" is an objection, but insisting on more growth now makes it exponentially worse down the road for nearly everyone else.

It would be nice if more people could see the connection.

[Igel]

16. Nopity nope.

I you look at US carbon emissions over the last 40 years, you'll see that they've increased but not nearly as fast as economic growth.

In fact, if you factor out the usual consequences of economic growth to find the hypothetical energy usage given 0 growth you'd find that US carbon emissions dropped consistently over that time. Not because of regulation but because higher value stuff was made and because of increased energy efficiency. It's a nice conceit to think that the increased efficiency was what was mandated by the government, and if you look at the appliances, codes, and products mandated to be more efficient you do see very nice increases in efficiency--but if you look at other products and equipment that weren't regulated you see pretty much the same increases in efficiency. I've seen it analyzed as a kind of knock-on effect--X is regulated and more efficient so that drives increased efficiency in Y. Except that the increase in efficiency, like a lot of other things that could only be the result of laws and regulation, actually started before regulation was in place and increased with breakthroughs in technology that led to increased mandated efficiencies. Cart, horse.

In other words, while economic activity is linked with energy consumption, it's not a constant proportion.

[bhikkhu]

17. This is one graph of US GDP vs Carbon emmissions:

There is also some decoupling of the two beginning before the 1960 start point of this data due, primarily, to gains in efficiency. But overall a strong and consistent correlation.

I wouldn't argue that there must be a correlation, or that it is constant, or that further gains in efficiency are impossible, but that all the underlying factors which lead to correlation are still there - particularly as regards growth.

[Doctor_J]

13. those extended tax cuts for billionaires keep on giving!!

will we ever fight back?

and can't you find a better source than wsj? I refuse to click on links to right-wing propaganda sites.

[newportdadde]

15. Can't wait to see what Q2 gets revised at. Will we go negative?