U.S. GDP Grew at a Disappointing 1.2% in 2nd Quarter

[mahatmakanejeeves]

Last edited Fri Feb 3, 2017, 03:00 PM - Edit history (5)

Source: The Wall Street Journal.

U.S. GDP Grew at a Disappointing 1.2% in 2nd Quarter

Gross domestic product fell well below expectations; cautious business investment offset robust consumer spending

By Eric Morath and Jeffrey Sparshott

[e-mail]
[link:https://twitter.com/EricMorath@EricMorath]

[e-mail]
[link:https://twitter.com/jeffsparshott@jeffsparshott]

Updated July 29, 2016 8:50 a.m. ET

WASHINGTONThe U.S. economic growth sputtered this spring with cautious businesses largely offsetting more robust consumer spending.

Gross domestic product, the broadest measure of goods and services produced across the U.S., grew at a seasonally adjusted annual rate of 1.2% in the second quarter, the Commerce Department said Friday. The figure was well below the 2.6% growth economists surveyed by The Wall Street Journal had forecast.

The gain marks only a slight acceleration from the first quarter, when GDP advanced at a downwardly revised 0.8% pace. The first quarter was previously seen as increasing 1.1% from the prior period. ... The economy has grown at less than a 2% pace for three straight quarters. Since the recession ended seven years ago, the expansion has failed to achieve the breakout growth seen in past recoveries. The average annual growth rate during the current business cycle remains the weakest of any expansion since at least 1949.

Lackluster growth could be a concern to Federal Reserve officials considering whether the economy is strong enough to absorb higher interest rates later this year. It could also influence voters weighing the economic track record during Barack Obamas administration before electing a new president in November.

Read more: http://www.wsj.com/articles/u-s-economy-grew-at-a-disappointing-1-2-in-2nd-quarter-1469795649

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[div class"excerpt"][link:http://blogs.wsj.com/briefly/2016/07/28/5-things-to-watch-in-the-first-quarter-gdp-report-3/5 Things to Watch in the Second-Quarter GDP Report]

U.S. economic growth appears to have accelerated in the second quarter after a weak start this year. Gross domestic product, a broad measure of economic output, is projected to have advanced at a 2.6% annualized pace this spring, according to economists surveyed by The Wall Street Journal. [link:http://www.wsj.com/articles/u-s-gdp-growth-in-first-quarter-revised-up-to-1-1-rate-1467117151The economy grew at 1.1% in the first three months of the year]. Heres what to watch in Fridays GDP report from the Commerce Department.

28 Jul 2016 7:00am

By Eric Morath

[e-mail]
@EricMorath
I'm going to toss another jerry can of unleaded on the fire and link to this thread started yesterday by purveyor:

[link:http://www.democraticunderground.com/10141534571Ford's Darkest Day In 5 Years]

It ain't all unicorns out there.

ETA, Tuesday, August 2:

[link:http://www.bea.gov/newsreleases/national/gdp/2016/gdp2q16_adv.htmGross Domestic Product, 2nd quarter 2016 (advance estimate) {7/29/16}]

[Calista241]

1. If we bury our head in the sand, and pretend this isn't a problem

We're in for a rude awakening in November.

[George II]

2. No doubt we won't see a single optimistic economic article from the WSJ until after the election....

...it's in WSJ's interest to be negative at this time.

[mahatmakanejeeves]

3. 9:49. That didn't take long. NT (Private joke)

[progree]

5. I won't see a single article from WSJ before or after the election, optimistic or pessimistic

given that it has a paywall.

Here's a USA Today article that didn't demand money:

http://www.usatoday.com/story/money/2016/07/29/economy-grows-weakly-third-straight-quarter/87684508/

[mahatmakanejeeves]

8. That paywall of theirs is an on-again, off-again kind of thing.

Sometimes I can go through Google and see the whole article; sometimes not.

I can trying linking to Department of Commerce, but their website is a mess. BLS is a snap to navigate.

Please enjoy the weekend.

[progree]

10. Here's the Dept of Commerce (BEA) report on it

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

Usually its a lot more readable, but this one is so buried in talk about the revisions, I couldn't find what I wanted -- the rate for the past 12 months.

[Calista241]

6. I suppose you could look at the Reuters, or a myriad of other sources

http://mobile.reuters.com/article/idUSKCN1081JM

1.2% is not the WSJ's number. And it is a godawful growth rate.

[George II]

7. Or we can look at the REAL historic GDP growth rates:

http://useconomy.about.com/od/GDP-by-Year/a/US-GDP-History.htm

The 1.2% is an annualized rate based on the 2nd quarter, NOT the entire year (yet). And it's not "godawful" nor is it, as the article implies, the weakest since 1949. Note the tricky wording, "the weakest of any expansion since at least 1949".

The last sentence gives us the true objective of this article, "It could also influence voters weighing the economic track record during Barack Obama’s administration before electing a new president in November."

Overall the "economic track record during Barack Obama's administration" has been spectacular.

Using the Dow as one gauge, it was between 7500 and 8000 in January 2009 when Obama took office. It's now in the vicinity of 18,000, more than double.

[progree]

9. Unfortunately, coincidentally, real GDP growth is up 1.2% for the past 12 months

http://www.businessinsider.com/us-gdp-advance-estimate-q2-2016-2016-7

The Commerce Department also published its annual revisions spanning Q1 2013 through Q1 2016. First-quarter GDP growth was revised even lower to 0.8% from 1.1%.

"Over the past 12 months, the economy has expanded by only 1.2%," said Paul Ashworth, chief US economist at Capital Economics, in a note.

And there's the additional problem that about 95% of the GDP gain goes to the top few %.

[ta2456]

4. Maybe this is normal

Maybe the problem is that this is normal under mature capitalism. Law of large numbers? GDP is an antiquated measure of economic health.

[progree]

11. Lots of pretty graphs from the White House blog (Council of Economic Advisers)

https://www.whitehouse.gov/blog/2016/07/29/advance-estimate-gross-domestic-product-second-quarter-2016

Consumer spending grew 4.2 percent, well above its pace over the prior four quarters, with pickups in growth in both durable and nondurable goods spending (see point 2 below). In addition, export growth was positive in the second quarter, and net exports contributed positively to GDP growth. However inventory investment—one of the most volatile of the major components of GDP (see point 3 below)—subtracted 1.2 percentage point from GDP growth. Fixed investment declined, weighed down by contractions in investment in both equipment and structures amid low oil prices as well as a notable decline in residential investment following eight straight quarters of increases

[mahatmakanejeeves]

12. Economists React to Second-Quarter Growth: ‘Very Weak’

Economists React to Second-Quarter Growth: ‘Very Weak’

Some analysts find reasons for optimism, while others forecast recession this year

By Anna Louie Sussman

Jul 29, 2016 9:42 am ET

Consumers did their part in the second quarter, but business investment fell, bringing overall quarterly growth to a weak 1.2%, well below the 2.6% figure forecast by economists. And the first quarter’s growth was revised downward, to a 0.8% pace. Here’s how economists and analysts reacted to Friday’s worse-than-expected GDP report from the Commerce Department.

“The good news is that consumption increased by a very strong 4.2% annualized in the second quarter and net exports added 0.2% points to GDP growth, as exports increased by 1.4%, while imports contracted by 0.4%. Otherwise, it was all bad news….There are some reasons for optimism in the second half of the year. The survey evidence has improved markedly in recent months. The drag from shrinking mining-related investment will fade, residential investment will recover and net exports should benefit from the fading of the 2014-15 dollar surge. Inventories have been a significant drag on GDP growth for five consecutive quarters now, which cannot continue indefinitely. But consumption growth is sure to slow too.” —Paul Ashworth, Capital Economics
{snip}