Second Quarter GDP Revised Upward
The economy grew at a faster pace in the 2nd quarter according to the latest Commerce Department revision:
WASHINGTON — The U.S. economy accelerated more quickly than expected in the second quarter thanks to a surge in exports, bolstering the case for the Federal Reserve to wind down a major economic stimulus program.
Other economic data on Thursday showed the number of Americans filing new claims for jobless benefits fell last week, a potential sign of faster hiring in August.
U.S. gross domestic product grew at a 2.5 percent annual rate in the April-June period, according to revised estimates released by the Commerce Department. That was more than double the pace clocked in the prior three months.
The reports could boost confidence that the economy is turning a corner despite government austerity measures and a still-high jobless rate.
The government had initially estimated that GDP expanded at a 1.7 percent rate in the second quarter. But recent data on trade showed that exports climbed during the period at their fastest pace in over two years.
The government also said data from retailers showed that businesses had restocked their shelves at a faster pace in the April-June period than initially estimated.
Economists polled by Reuters had forecast the economy growing at a 2.2 percent pace.
Many economists expect the economy will accelerate further in the second half of the year as austerity measures begin to weigh less on national output.
That drag was evident in the second quarter, when spending contracted at all levels of government. Indeed, Thursday’s data showed the economic drag from spending cuts was greater in the second quarter than initially estimated.
Still, the data could make officials at the U.S. central bank more confident in their plan to begin reducing monthly bond purchases later this year.
“The market will take (the data as a sign that) tapering would be more likely next month,” said Scott Brown, an economist at Raymond James in St. Petersburg, Florida.
While 2.5% growth isn’t exactly barnstorming, and not nearly at the level we’d need to get an earlier fix to the jobs situation, it’s better than what we saw in the 1st quarter and the final quarter of 2012 so there’s something to be said about that. What we haven’t seen, so far at least, though, is any sign of real growth in the jobs market. The reports for June and July were at best fair, and it seems unlikely that the August report, which will be released a week from tomorrow, will be much better. Meanwhile, the irony of all of this is that improved economic statistics means that the Federal Reserve Board is likely to start pulling back from its latest round of Quantitative Easing, and that’s likely to mean that the stock market contracts, something that itself could cause the economy to cool.
Muddling through continues. It will for a while. The household debt overhang is still largely there and unless/until it’s a lot lower, consumer demand will be depressed. There are ways of trying to get there sooner, but they are all politically impossible. This is all pretty straightforward. It’s not some mystery.
I seem to recall (without actually checking, so my bad) that the low GDP figures earlier this year were remarked upon here as criticism of the administration. Good of you, sir, to post the corrected figures. And you are correct, of course, to mention the ‘jobless recovery’ aspects – that’s troubling. The alternative to the present course is the Ryan Budget. So given actual possible policy, what we’re doing seems like the best we’re likely to get.
Imagine if we weren’t shrinking the Public Sector and growth was instead at 3.5%…and UE was at 6% or lower. That would be something…something Republicans don’t want…judging purely by their actions..
Good. Republican economic sabotage isn’t working as well as they hoped.
@stonetools: Insane comment. When the growth looked low, it was the Republicans’ fault for their austerity. Now that the growth looks higher, it’s still the Republicans’ fault for their austerity, but they just weren’t as successful as you thought. The phrase “monothematic delusion” comes to mind.
@Pinky: Have you read Doug’s post?
What is going on is exactly what stonetools described: the insane, counter-productive cuts installed as a result of the 2011 debt ceiling shenanigans are slowing down the economy, luckily not enough to create a new recession. What you need to keep in mind that this is the first and only time in history when public expenditure and employment slowed down in a post-recession period, and this lays totally, completely and absolutely at the republicans’ feet.
Just for reference, here is a graph of public employment in the wake of the 1981 (Reagan!!), 1991, 200, and 2008 recessions. See if you can spot the one that stands out:
just for reference, here is a graph of public employment in the wake of the 1981 (st. Reagan!) , 1991, 2000, and 2008 recessions. See if you can spot the ones that stands out.
@humanoid.panda: I would like to see that for the 1970’s recession – really a bad time: high inflation, high unemployment, and high interest rates. The ’70’s were rough.
Another factor is that states and local governments have cut their workforces too. School systems have cut classroom positions. Look, these are people who teach and work directly with students. This is not a good situation. I do not remember a time when so many educators have lost jobs. Not good.
First off, the 1981 @Tyrell: According to this link totat government employment grew pretty sharply throughout the 1970s, contracted during the savage recession of 1981, and recovered very, very quickly starting in 1982.
Regarding teachers: one of the major benefits of the stimulus bill in 2009 was the money it transferred to state and local governments to mitigate teacher and other public worker layoffs. In 2011, Obama offered to extend this program; the bill was filibustered in the Senate and was never put on the floor in the House. In this atmosphere, both democratic and republican governors cut off public employment sharply. The big difference, of course, is that the republican governors also cut taxes at the same time, making the cuts even sharper than they would have been otherwise.
Great news indeed. However, I read that President Obama keeps wanting to throw feds and fed retirees under the bus by not giving any pay increases or revising how COLA is calculated…of course that is a cut. I do not understand why this President always takes sides of the rich and most well to do in our country when the folks who have supported him in both his elections have been the middle class and poor. As a supporter I am beginning to feel that either he is being given bad advice or he has forgotten his days as a community organizer where he would have seen first hand the plight of the poor and middle class. What a disappointment!