Final Q2 GDP: 1.7%

posted at 9:30 am on September 30, 2010 by Ed Morrissey

Commerce released its final revision of the annualized rate of growth from the second quarter.  Initially estimated at 2.4% in July, the number got sharply revised to 1.6% in August.  Now, with the final numbers in place, economic growth still looks moribund:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.7 percent in the second quarter of 2010, (that is, from the first quarter to the second quarter), according to the “third” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 3.7 percent. …

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures, nonresidential fixed investment, exports, private inventory investment, federal government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the second quarter primarily reflected a sharp acceleration in imports and a sharp deceleration in private inventory investment that were partly offset by an upturn in residential fixed investment, accelerations in nonresidential fixed investment and in federal government spending, and an upturn in state and local government spending.

The third quarter numbers for “Recovery Summer” will be out at the end of next month.  That won’t look much better, thanks to a summer of almost across-the-board declines and a crash in home sales and construction.  We will be lucky to get to 1.7%, unless September delivers some eye-popping upticks in sales and lowering of inventories, which have grown all summer long thanks to low demand.

The initial jobless claims report doesn’t give any hint of rebound:

In the week ending Sept. 25, the advance figure for seasonally adjusted initial claims was 453,000, a decrease of 16,000 from the previous week’s revised figure of 469,000. The 4-week moving average was 458,000, a decrease of 6,250 from the previous week’s revised average of 464,250.

The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Sept. 18, a decrease of 0.1 percentage point from the prior week’s revised rate of 3.6 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Sept. 18 was 4,457,000, a decrease of 83,000 from the preceding week’s revised level of 4,540,000. The 4-week moving average was 4,526,750, a decrease of 5,500 from the preceding week’s revised average of 4,532,250.

That is right in the range of figures seen for all of 2010.  Job “churn” continues well into Q3, and while job creation is a lagging indicator, the consistent number of people filing for unemployment each week shows that we haven’t yet stopped the job destruction.

Tomorrow, the Department of Labor will announce September’s jobless rate in what will be the final statement of unemployment before the midterm elections.  From this data, it doesn’t appear that the news will be good for Democrats, or for anyone looking for a job.

Update: The AP was, er, expecting this (via DogSoldier):

The new reading is a notch higher than the 1.6 percent growth rate the government estimated a month ago. But it marks a sharp slowdown from a 3.7 percent growth rate logged in the first quarter. And, the new figure doesn’t change the big picture: The economy has been losing momentum since the end of last year.

Many think the economy grew at around the same anemic pace, or slightly worse, during the July-to-September quarter. Little improvement is expected in the final quarter of this year. That’s why unemployment — now at 9.6 percent — is expected to stay high or even rise in the coming months.

To be fair, it’s usually Reuters that uses “unexpected” in its reports.  Maybe they should read the AP more often.


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Rally!

Tres Angelas on September 30, 2010 at 9:33 AM

Look at the economy SOAR.

Eat it, wingnuts!

Good Lt on September 30, 2010 at 9:33 AM

Can you smell the Hopenchangium this morning???

I know…it does smell like dogsqueeze…

ted c on September 30, 2010 at 9:33 AM

Yawn.

B Man on September 30, 2010 at 9:33 AM

Great, our economic growth rate got beat by Vietnam, Chad, the Marshall Islands, and Andorra.

Give the demorats a few more years and we might get trounced by North Korea.

Bishop on September 30, 2010 at 9:34 AM

Recovery Fall, flail and fail.

Thank you Democrats.

NoDonkey on September 30, 2010 at 9:34 AM

The question in 2010 is over control of the House and Senate. When Democrats took control of those two institutions in January 2007, the S&P 500 was at 1300 on 3 years of positive growth; the annual deficit was 2% of GDP and had been decreasing for the previous 3 years, and unemployment was at 4.9%, and had not been above 6.5% since the last time Democrats controlled the House in 1994. Over the next 3 years of Democrat Congressional rule, the budget deficit soared to more than 10% of GDP, unemployment went straight up to 10.5% and has stayed above 9.5%, and the S&P500 is down to 1100.

21.4 million new jobs created during a Republican House 1994-2006;
Democrats have lost 6.8 Million jobs since taking power in Jan 2007.

Source

RushBaby on September 30, 2010 at 9:35 AM

We will be lucky to get to 1.7%, unless September delivers some eye-popping upticks in sales and lowering of inventories, which have grown all summer long thanks to low demand.

What? Are you kidding me? I expect the initial 3rd quarter GDP estimate to be about 4.2%, revised down to 1.3% the day after the November elections.

PackerBronco on September 30, 2010 at 9:37 AM

One great country + democrats = disaster

Mojave Mark on September 30, 2010 at 9:37 AM

Puce shoots!

ya2daup on September 30, 2010 at 9:38 AM

Dude, you don’t even want to know how bad Q4 is gonna be. We might even get QE round 2. Ditch the 401k’s folks- My new portfolio is gold, silver, lead ammo, and as much copper as I can carry off from some of these abandoned tracts.

abobo on September 30, 2010 at 9:39 AM

I thought Barry got the car out of the ditch?

Perhaps he’s driving a GM product . . .

NoDonkey on September 30, 2010 at 9:39 AM

And in other news, Rasmussen just moved Washington Senate race from Lean Democrat to Toss-Up.

This moves their Balance Of Power Rankings to 49 D, 46 R, 5 Toss-Up.

The Senate is definitely in play, folks.

Chris of Rights on September 30, 2010 at 9:42 AM

spin dear leader, spin!

the msm will be helping you out as well…no worries…

cmsinaz on September 30, 2010 at 9:43 AM

I just sent Ed another quote from Reuters stating that we actually have “modest strengthening” in employment.

What unmitigated gall!

Riddle me this: How many weeks have we had in a row where over 450,000 people filed for unemployment?

How long can it continue?

dogsoldier on September 30, 2010 at 9:43 AM

To be fair, it’s usually Reuters that uses “unexpected” in its reports. Maybe they should read the AP more often.

To Reuters’ U.S. bureau, all the results from the Obama economic reports are like the Spanish Inquisition…

jon1979 on September 30, 2010 at 9:44 AM

21.4 million new jobs created during a Republican House 1994-2006;
Democrats have lost 6.8 Million jobs since taking power in Jan 2007.

Source

RushBaby on September 30, 2010 at 9:35 AM

msm: *crickets chirping*

cmsinaz on September 30, 2010 at 9:44 AM

I don’t think the Sept jobless numbers come out until the 8th, Ed, not that they’re gonna look any better in a week anyway.

gsherin on September 30, 2010 at 9:45 AM

Was watching CNBC this morning and it looks like Joe from Squawk is wanting to go to Fox or something; talking about how Obama is blatantly fixing all the numbers and how bs it all is.

Very un-nbc like. 450k people are applying for unemployment benefits every single week. We are only hiring about 50-150 thousand people every month these days.

Barry is whining and lashing out way before I thought he’d start. I thought he’d wait until after the election.
What an idiot I am I guess, huh?

B Man on September 30, 2010 at 9:45 AM

I live in Wa St. If Patty Murray loses it will be unbelievable.
Right up there with Boxer losing.
Really want it to happen, can’t believe it will.

You know for the first time in a long time, my vote will actually matter in this state. What a year.

B Man on September 30, 2010 at 9:48 AM

They keep saying 1st quarter GDP was 3.7, it was not. It got revised twice, first down to 3.2, then down to 2.7.

Of course the report from the BEA says it was 3.7, which is total BS.

WoosterOh on September 30, 2010 at 9:49 AM

jon1979 on September 30, 2010 at 9:44 AM

No one expects the Spanish Inquisition. You might say it is “unexpected.”

rbj on September 30, 2010 at 9:49 AM

But “Cousin Eddie” Obama and Joe “Bite-Me” assured us there’s a pnoy somewhere under this pile of crap!

Just keep searchin AP you’ll find it ….Or Not!

dhunter on September 30, 2010 at 9:50 AM

That’s why unemployment — now at 9.6 percent — is expected to stay high or even rise in the coming months.

It would skyrocket if the BLS quit pulling accounting tricks with the total population numbers.

Johnnyreb on September 30, 2010 at 9:53 AM

Well, we have gotten through the “Recovery Summer” with only, by their numbers, around 5 million more out of work….
What pray tell are the President and Sen biteme going to call this winter???

golfmann on September 30, 2010 at 9:55 AM

I miss getalife.

Del Dolemonte on September 30, 2010 at 9:57 AM

I believe with absolute certainty that the Obama Administration and his team of economic “experts” are winging it and have been since day one. They haven’t a clue as the real, non-theoretical world operates.

Every step they’ve made flies in the face of common sense.

An small uptick in GDP. Look at the underlying factors. Look at the previous quarters. Look at how much this modest, minute, small increase has actually cost us. All of us.

Remember when 5% unemployment was considered something to be concerned about? Remember when 3-4% unemployment was viewed as allowing fluidity in the labor pool, thus not a bad thing, really.

Nope…if the current situation (real unemployment hovering near 12-15% or higher) is the result Team Obama’s best efforts…all that high-priced college they got under their belt hasn’t done us any good at all.

And yes, look for some major revisions to the revisions after the elections in November as the “experts” go over their data one more time.

coldwarrior on September 30, 2010 at 9:58 AM

Tomorrow, the Department of Labor will announce September’s jobless rate in what will be the final statement of unemployment before the midterm elections.

…….

I think it’s next Friday.

artist on September 30, 2010 at 10:10 AM

Look these numbers are bad even though they are being manipulated.The media plays them up as good even when they are bad. Expect more “tweaked” numbers tomorrow.

sandee on September 30, 2010 at 10:11 AM

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.7 percent in the second quarter of 2010,


Unemployment close to 10% with real unemployment at around 18%…..


Wages at all time lows……

Private sector jobs at all time lows….

Record debt and deficits…….


Record spending….so far more spending than all the Presidents from Washington through Reagan combined.

Dollar tanking……

Stock Market is an up and down circus…..

US buying more debt than ever…..

President Obama:

‘We are headed in the right direction’ on economy

….Absolutely stuck on stupid.

“Yes We Can!!!!!”

Baxter Greene on September 30, 2010 at 10:11 AM

I do think it’s next Friday also. That being said the stock market is a real curiosity to me. How does it go up under these circumstances?

sandee on September 30, 2010 at 10:13 AM

Hey unemployed! That glowing box in your living room is sucking out both your brain and your wallet!

The media knows what they are doing. So long as they can:
Blame Bush — didja hear Stewart blame Bush for sebt?
Keep the population in love with our (gasp) black POTUS — none of the stupid, crooked stuff gets press.
Wound any new GOP star — I can’t even list this subject

Aside from failing to do their real task, they are actually subverting any influence to bring the economy back.

And the future generations will pay for what we are doing.

IlikedAUH2O on September 30, 2010 at 10:20 AM

I do think it’s next Friday also. That being said the stock market is a real curiosity to me. How does it go up under these circumstances?

sandee on September 30, 2010 at 10:13 AM

They may be betting on November 2nd.

WoosterOh on September 30, 2010 at 10:24 AM

it doesn’t appear that the news will be good for Democrats, or for anyone looking for a job.

Poor Nancy and Harry. They rigged their “Stimulus” so that the majority of the spending would occur just prior to the 2010 election cycle, hoping that an economic upturn would grease the way to continued power in Washington.

Karma baby, Karma.

GarandFan on September 30, 2010 at 10:29 AM

While backing the car out of the ditch, it just sort flipped over, hey don’t look at me.

tarpon on September 30, 2010 at 10:31 AM

“B Man on September 30, 2010 at 9:45 AM”

The only folks who don’t know that all the numbers coming from the government are fake are easily spotted. They are the ones with their fingers in their ears, eyes closed singing “LA LA LA LA LA LA LA LA LA LA! I CANT HEAR YOU LA LA LA LA.”

Does anyone believe the 1.7 figure? If business isn’t hiring, isn’t investing or starting new projects, (and we all know they are not) how is this number possible?

If the government tells you the sky is orange are you going to believe them or your lyin’ eyes?

dogsoldier on September 30, 2010 at 10:35 AM

They may be betting on November 2nd.

WoosterOh on September 30, 2010 at 10:24 AM

The stock market has been divorced from reality for years, maybe decades.

Thanks to “financial products” they have created for themselves, the paper-shufflers of Wall Street have made a fat little nest for the select unproductive few. We lose, they win. And even if we “win,” they still win.

If whores like Kudlow and Cramer ever told the truth, the market would be where it should be, which is down in the 6000 range.

MrScribbler on September 30, 2010 at 10:36 AM

I do think it’s next Friday also. That being said the stock market is a real curiosity to me. How does it go up under these circumstances?

sandee on September 30, 2010 at 10:13 AM

The Federal Reserve has been buying various assets with newly printed money to prop up the economy:

http://www.cumber.com/content/misc/fed.pdf

theCork on September 30, 2010 at 11:21 AM

Want a shot of adrenaline? Look at the “Fed and Treasury Total Money Supply” chart, part way down this page. I wonder how the printing presses kept up:

http://nowandfutures.com/key_stats.html

theCork on September 30, 2010 at 11:30 AM

I miss getalife.

Del Dolemonte on September 30, 2010 at 9:57 AM

Ed, we need more trolls to liven things up in advance of the election. I suggest an open enrollment period. Our trolls seem rather weak and tired lately.

theCork on September 30, 2010 at 11:35 AM

We’re Heading In The Right Direction!!!

-O’Bozo

VelvetElvis on September 30, 2010 at 11:36 AM

We will be lucky to get to 1.7%, unless September delivers some eye-popping upticks in sales and lowering of inventories, which have grown all summer long thanks to low demand.

Hey, they first reported Q2 as 2.4% so it’s no stretch to report Q3 as 1.7 or 1.8% to show “growth”. They can revise it downward to the real 1.3-1.4% in a month or so after they’ve gotten the major press releases on the economic improvement or whatever.

gekkobear on September 30, 2010 at 11:53 AM

Germany elected Merckel’s conservative reform coalition in 2005. Merkel has been compared by many to former British Prime Minister Margaret Thatcher. She has instituted reasonable austerity measures (akin to the Contract from America) to reign in out of control Euro-socialism.

Germany’s economy is now booming and their unemployment rate fell today to its lowest level since 1992– led by manufacturing exports.

Octoberfest food for thought in November.

Terp Mole on September 30, 2010 at 12:05 PM

RushBaby on September 30, 2010 at 9:35 AM

Just FYI, you’re linking to the comment section.

And the link provided at the post to the BLS.gov website doesn’t work for some reason.

Hmmmm.

Good Lt on September 30, 2010 at 12:59 PM

The Democratic party is a job-making apparatus, if politics is your dream career. Sell enough dupes on the idea that they need you, and they’ll never vote against their selfish interests. Roll in the gays, Mexis, blacks, Jews, et al, and you have yourself a permanent job burnishing them in one way or another. The Jews want to be sure the Christians are kept at bay, but don’t tell that to the Mexi Catholics.

I don’t think these constituents ever communicate, so they never get it as to how they really are quite opposed to each other. Listen in on a conversation and find out what they think of the other… it’s often pretty hateful.

leftnomore on October 1, 2010 at 4:31 AM