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Economy Title: Economy in U.S. Grew a Revised 1.6% in Second Quarter Aug. 27 (Bloomberg) -- The U.S. economy grew at a 1.6 percent annual rate in the second quarter, less than previously calculated as companies reined in inventories and the trade deficit widened. The revised increase in gross domestic product was bigger than the median forecast of economists surveyed by Bloomberg News and compares with a 2.4 percent estimate issued last month, figures from the Commerce Department showed today in Washington. Corporate profits climbed. Federal Reserve Chairman Ben S. Bernanke, who addresses central bankers from around the world today in Jackson Hole, Wyoming, may shed more light on policy makers’ outlook in the wake of reports that signaled a growing risk of a renewed U.S economic slump. Slowdowns in housing, business investment and consumer spending are prompting economists to cut second-half growth forecasts. “We’ve got a recovery that is stalling but we’re not expecting a double dip,” Paul Ballew, chief economist at Nationwide Mutual Insurance Co. in Columbus, Ohio, said before the report. “A very slow, hesitant recovery is playing out.” Stock-index futures rose and Treasury securities fell after the report. Futures on the Standard & Poor’s 500 Index gained 0.7 percent to 1,052 at 8:35 a.m. in New York. The yield on the 10- year Treasury note rose to 2.54 percent from 2.48 percent late yesterday. Economists projected a 1.4 percent rate of growth in the second quarter, according to the median estimate in the Bloomberg survey in which estimates ranged from 0.5 percent to 2.2 percent. The economy grew at a 3.7 percent pace in the first quarter. Today’s GDP estimate is the second for the quarter, with the final figures set for release on Sept. 30. Consumer Spending Today’s report showed consumer spending, which accounts for about 70 percent of the economy, rose at a 2 percent annual rate in the second quarter compared with a previously reported 1.6 percent pace. The revision reflected revised electricity and natural gas usage data, the Commerce Department said. Purchases increased at a 1.9 percent rate from January through March. A lack of job growth, declines in household wealth following slumps in stocks and housing, and the drive to reduce debt and boost savings are reasons consumer spending may struggle to strengthen. Figures this week showing a further slide in home sales and a drop in business spending on equipment prompted economists such as Joseph LaVorgna of Deutsche Bank Securities Inc. to reduce third-quarter growth estimates. Recession Odds Mark Zandi, chief economist at Moody’s Analytics Inc. this week said the likelihood of the economy slipping back into a recession is now 33 percent, up from a 20 percent chance 12 weeks ago. New York University economist and forecaster Nouriel Roubini, who predicted the financial crisis, said the odds of a return to recession at 40 percent. The economy is a top issue for voters in the November congressional elections and polls show the public is increasingly skeptical of President Barack Obama’s performance. Public approval for the president’s handling of the economy was at 41 percent in an Aug. 11-16 Associated Press-GfK survey, an all-time low and down from 50 percent last July. The trade gap in the second quarter widened to $445 billion, compared with an initial estimate of $425.9 billion, subtracting 3.37 percentage points from growth, the biggest reduction since record-keeping began in 1947, today’s report showed. Imports grew at a 32.4 percent pace, the most since 1984. Fewer Inventories Slower inventory accumulation contributed 0.63 percentage points to second-quarter growth. The Commerce Department said in its initial report that stockpiles added 1.05 percentage points to growth after adding 2.64 percentage points in the first three months. Today’s report also showed gross domestic income, or the money earned by the people, businesses and government agencies whose purchases go into calculating growth, rose at a 2.3 percent annual rate from April through June. By comparison, GDP expanded 3.6 percent from April through June before adjusting for inflation. According to Fed research, GDI is a better gauge of the economy. Revisions to first-quarter income showed a gain of 4.1 percent, compared with a 5.6 percent pace initially reported. GDP before adjusting for changes in prices rose at a 4.8 percent pace from January through March. While the income and GDP should theoretically match, the different methods used in calculating the numbers cause them to sometimes diverge.
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#2. To: war (#0)
The Kenyan Depression
We've been in the same recession since 2007 when you spanking to your hero every AM.
Yep. From my perspective, the economy tanked in Oct 2007 and steadily got worse until April 2010. We had a little pickup in business in April through June and then it went south again in July. That pickup was largely due to people moving economic activity from 2011 to this year to avoid higher taxes. It WILL get much worse next year.
How so?
Taxes are going up for sure both on earned income, capital gains, and dividends. Healthcare insurance premiums are going up because of Obamacare. If the GOP doesn't gain control of Congress we'll also get Cap and Trade, resulting in substantially higher energy costs and perhaps Card Check. I think we'll see a handful of countries default on at least part of their debt. Also, monetization of the growing U.S. debt could start a big round of inflation. We could be right back to the stagflation of the 1970s.
Inflation isn't anywhere. Nowhere. Ain't going to happen.
#28. To: war (#27)
8D
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