Well…It Could be Worse
Updates to the Gross Domestic Product numbers for quarter two aren't good, but they could have been worse. Still, the risk of recession is considerable.
The BEA has revised downwards its estimate of second quarter GDP. The good news is that the economy grew in the second quarter even with more complete data on which to make the various calculations. On the other hand growth is very anemic now at 1% (seasonally adjusted and annualized). And keep in mind that there is one more revision to go so it could be revised even lower. For example the first quarter GDP increased, in real dollars, only 0.4%. In looking at growth in real dollars for the past year or more we see that growth recently peaked in 2010 (quarter 1) at 3.9% and the growth rate has been steadily declining. And in real terms personal consumption expenditures have been decreasing for April – June, if that trend continues then things are going to be looking rather bad for the anemic expansion. The PCE data for July will be available on Monday, lets hope it is good news.