Today’s Commerce Dept GDP report reveals the U.S. economy is stuck in the muck.
Economists held their breath awaiting the release of the Commerce Dept 2nd quarter GDP report. The grim news, 1.3% growth, reveals the U.S. economy is stuck in the muck.
The 1.3% second quarter growth is almost the weakest recovery pace since the big recession officially ended two summers ago. We’re also a year out from the release of the Obama/Biden duet Summer of Recovery.
Economy grinds to halt as consumers pull back
NEW YORK (CNNMoney) — Consumers all but shut their wallets in the second quarter, causing the U.S. economy to grow at a tepid pace.
To make matters worse, growth in the first quarter was much slower than initially thought, according to new government figures released Friday.
“It’s quite worrisome as the economy remains at stall speed in the second quarter,” said Sal Guatieri, senior economist with BMO Capital Markets. “If that continues, then it would raise the risks of a double dip.”
Gross domestic product, the broadest measure of the nation’s economic health, rose at an annual rate of 1.3% in the second quarter, the Commerce Department said.
While that’s an increase from the revised 0.4% growth rate in the first three months of the year, it is hardly good news. The government originally reported that the economy grew at a 1.9% annualized rate in the first quarter.
● Note the revised growth for the first quarter of 2011. Will the already cheerless second quarter numbers also be revised?
● Mitt Romney responds:
Today’s dismal GDP report once again shows @BarackObama is failing to lead on the economy mi.tt/pqn1Tw #ObamaIsntWorking
PRESIDENT OBAMA IS LEADING IN THE WRONG DIRECTION
In Recent Days, President Obama And His Team Have Insisted We Are Headed In The Right Direction On The Economy:
President Obama, On The Economy: “I Think The Trajectory Is A Good One.”
OBAMA: “What people want to know is that we’re moving in the right direction, even if they’re frustrated with how fast we’re moving, we need to speed it up, but I think the trajectory is a good one.”
Treasury Secretary Geithner: America Is “Undeniably” In A Stronger Economic Position Today Than “Three Or Four Months” Ago. FOX’s CHRIS WALLACE: “You think you’re in a stronger position on the economy today than you were…” GEITHNER: “Oh, undeniably.” WALLACE: “…three or four months ago when you were growing hundreds of thousands of jobs a month?” GEITHNER: “Absolutely … The economy is growing. American businesses are investing again. Exports are getting stronger. That is all going well.”
Today’s Dismal GDP Report Confirms That President Obama’s Policies Aren’t Working:
Growth Estimates For The Second Quarter Badly Underperformed Economists’ Projections. “The U.S. economy grew less than forecast in the second quarter, after almost coming to a halt at the start of the year, as consumers retrenched. Gross domestic product rose at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than previously estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase.”
• “Consumer Spending From April Through June Showed The Smallest Gain Since The Second Quarter Of 2009, When The Economy Was In Recession.”
The Government Also Issued Major Downward Growth Revisions For The Previous Two Quarters, Suggesting A “Troubling And Fundamental Slowdown Might Be Underway.” “The Commerce Department data on Friday also showed the current lull in the economy began earlier than had been thought, with the growth losing steam late last year. … First-quarter output was sharply revised down to a 0.4 percent pace from a 1.9 percent increase. … Fourth-quarter growth was revised to a 2.3 percent rate from 3.1 percent. … The sharp downward revisions to the prior quarters [suggests] a more troubling and fundamental slowdown might be underway.”
• “The U.S. Economy Came Perilously Close To Flat-Lining In The First Quarter…”
GDP Estimates Were Not This Morning’s Only Disappointing News:
Continue reading here.
● What economists are saying:
TIM GHRISKEY, CHIEF INVESTMENT OFFICER OF SOLARIS ASSET MANAGEMENT IN BEDFORD HILLS, NEW YORK:
Everybody expected GDP to be weak for the second quarter, estimates had steadily come down, but this is a pretty shockingly low number. The revision to the first quarter is even more shocking.”
“Clearly this is evidence of a mid-cycle slowdown. The only question now is do we see a pick up in the second half and so far the economic data to date doesn’t suggest that.”
SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES, ST. PETERSBURG, FL
“The face value is certainly not great. The second quarter disappointed, but the first-quarter downward revision is more disturbing. It advances the pangs of concern. The debt ceiling nonsense is not going to help us. We’re already in an economy that is subpar.”
STEVE BLITZ, DIRECTOR AND SENIOR ECONOMIST, ITG NEW YORK
“The economy is weak, and it’s going to stay weak, and it’s going to stay weak for a while because we are in the process of deleveraging and this is what deleveraging looks like. To get the economy moving forward the way it should requires a reform of the tax code that will lower rates and broaden the base and favor investment over consumption. Efforts to try and put Humpty Dumpty back together again to have the economy we had before is not going to work.
“I’m not going to say there can’t be any growth in the second half of the year. Remember the fiscal stimulus has petered out. You don’t have the Fed’s QE2 pushing liquidity into the system and you have slower growth globally. It’s hard to add these things up and say that the U.S. economy is going to accelerate in the second half of the year.”
OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON
“Very weak number in GDP. The headline was well below forecast and surprisingly we saw very large downward revision to Q1′s data. So it looks like a lot of this was driven by a sharp falloff in consumer spending in the second quarter, which only rose by 0.1 percent. Overall, a very weak number.
As we await the outcome of the debt ceiling debacle debate, the dreary GDP report increases the likelihood that America’s financial reputation will be downgraded. A weak economy means a greater deficit.
● We need Mitt Romney’s leadership in the White House. Read his Seven Rules for Successful Economies here.
► Jayde Wyatt