Some odd things to note here:
GDP came in about as expected but is seen as bad news because last quarter's GDP was revised up a LOT. (From 2.7% to 3.7%)
That's good news, right? No, because it suggests a slowing. We are all about momentum right now... did all the deficit spending give us enough boost to start rolling on our own or will th economy just stop as we take our foot off the gas. It was expected that this quarter would be a continuation of last quarter. The news that perhaps this quarter was much worse than the previous raises double-dip recession fears.
And validly so. The good news that the previous quarter was stronger than we thought really is bad news as a trend indicator. Perverse, but here we are.
Also, we know employment is FUBAR. To realize that we recently had a 3.7% quarter without creating any jobs... well, it's daunting. It suggests that the future growth levels any sane person is predicting (way less than 3.7%) are just not going to help much with jobs.
One other note... a guy in this article says we won't have a double-dip recession and then predicts something that really is a double-dip recession except in the most literal sense. When you are predicting growth of 1.6% for six months
in the recovery phase of a recession that is not a recovery of anything. At 1.6% unemployment will go up. When unemployment is going up, that's a recession of some sort. 1.6% growth for the second half of 2010 is flirting with deflationary crisis.
The economy is supposed to grow at a minimum of 2% just to stay in the same place. 1.6% is losing ground. But, being a positive number, technically not a recession.
WASHINGTON (MarketWatch) -- The U.S. economy lost momentum in the second quarter, according to figures released Friday, which may raise concerns of an extended soft patch if not an outright contraction.
Real gross domestic product -- the inflation-adjusted, seasonally adjusted value of all goods and services produced in the U.S. -- rose at a 2.4% annualized rate in the second quarter, well below the average 4.4% increase over the past six months.
The 2.4% increase in GDP was close to the 2.5% expansion expected by economists surveyed by MarketWatch. However, the rate of expansion in the first quarter was revised up to a 3.7% rise compared with the prior estimate of a 2.7% increase. Read full government release.
Economists say the growth was fairly strong in April and May but hit a rough patch in June. So the economy is going into the second half with little momentum.
"The post-recession rebound is history," said Bart van Ark, chief economist at the Conference Board.
"We don't foresee a double dip," he continued, "but we do expect growth to slow even more markedly" -- to what he pegged as a 1.6% annualized rate for the second half of the year.
http://www.marketwatch.com/story/gdp-slows-in-second-quarter-to-24-rate-2010-07-30