Q2 GDP revised downward to 1.0%

posted at 8:50 am on August 26, 2011 by Ed Morrissey

People may have been disappointed with the initial Q2 GDP estimate of 1.3% from the Commerce Department announced last month, but that turned out to be the high point for American economic measures this year.  Commerce revised the estimate sharply downward today to 1.0%, as numbers from the quarter begin to firm up:

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 1.0 percent in the second quarter of 2011, (that is, from the first quarter to the second quarter), according to the “second” estimate released by the Bureau of Economic Analysis.  In the first quarter, real GDP increased 0.4 percent.

The GDP estimates released today are based on more complete source data than were available for the “advance” estimate issued last month.  In the advance estimate, the increase in real GDP was 1.3 percent (see “Revisions” on page 3).

The increase in real GDP in the second quarter primarily reflected positive contributions from nonresidential fixed investment, exports, personal consumption expenditures (PCE), and federal government spending that were partly offset by negative contributions from state and local government spending and private inventory investment.  Imports, which are a subtraction in the calculation of GDP, increased.

According to Reuters, economists expected a revision down to 1.1%, and says the US is now on “recession watch”:

Economists had expected output growth to be revised down to 1.1 percent. In the first quarter, the economy advanced just 0.4 percent. The government’s second GDP estimate for the quarter confirmed growth almost stalled in the first six months of this year.

The United States is on a recession watch after a massive sell-off in the stock market knocked down consumer and business sentiment. The plunge in share prices followed Standard & Poor’s decision to strip the nation of its top notch AAA credit rating and a spreading sovereign debt crisis in Europe.

While sentiment has deteriorated, data such as industrial production, retail sales and employment suggest the economy could avoid an outright contraction.

The change mainly came from inventories, which the previous estimate overshot.  Real final sales of domestic goods — GDP less inventory adjustments — remained at 1.2%, making it a rare quarter in the last two years where this measure outstripped the topline GDP growth rate.  Most of the GDP reports have been amped up by inventory expansions.  Another bright spot is a revision in consumer spending, which increased 0.4% rather than the initial 0.1% estimate.  However, exports got downgraded to a 3.1% increase from an initial estimate of 6.0%.

There was one warning note: the core personal consumption expenditure index rose at 2.2%, faster than anything since 2009Q4, according to Reuters.  That may be enough to keep the Fed on the sidelines, which we will know later today when Ben Bernanke gives a speech today on the economy and the Fed’s direction.  If they see a risk of inflation arising, the Fed will not likely engage in another round of quantitative easing.

Politically, of course, this is a rolling disaster for the Obama administration.  The downward revision comes while Obama is on Martha’s Vineyard, enjoying a high-profile “vacation” and promising to get around to a jobs plan … soon.  Commerce will give one more revision to Q2′s estimate in late September, which will put the poor economic performance under his stewardship on display yet again — and then Obama will have to deal with a Q3 result that so far doesn’t look any better than Q2.  If Hurricane Irene doesn’t bring the vacation to an early end, this number really should have the White House political team calling to have Air Force One warming up the engines.

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Count it!

gwelf on August 26, 2011 at 8:52 AM

Count it!!!!!

txhsmom on August 26, 2011 at 8:52 AM

Dang you beat me.

txhsmom on August 26, 2011 at 8:52 AM

Thank you President Obama!!!

txhsmom on August 26, 2011 at 8:53 AM

SCOAMF

gwelf on August 26, 2011 at 8:54 AM

GDP revised downward? How unexpected.

rbj on August 26, 2011 at 8:54 AM

Bang up job, Barry, really carrying the nation forward aren’t you?

Bishop on August 26, 2011 at 8:56 AM

Quick, let’s focus on the gop candidates religious views and climate change & evolution theories

-lsm/dear leader

cmsinaz on August 26, 2011 at 8:56 AM

This was as predictable as blacks and union members attacking white people across the country.

Keemo on August 26, 2011 at 8:58 AM

Have they revised Q1 into negative territory yet?

forest on August 26, 2011 at 9:00 AM

I think he’s doing a fine job.
 
crr6 on August 10, 2011 at 6:15 PM.

rogerb on August 26, 2011 at 9:00 AM

You would think they would be saying, “Thank you!” That’s what you’d think!
—Barack Obama

flyfisher on August 26, 2011 at 9:00 AM

It’s because of Hurricane Irene.

JimK on August 26, 2011 at 9:01 AM

For the last 2 years or so, financial statistics have been notoriously racist. That’s the problem.

RBMN on August 26, 2011 at 9:04 AM

More bad luck…

PatriotRider on August 26, 2011 at 9:04 AM

Off to the links…

PatriotRider on August 26, 2011 at 9:04 AM

Q2 GDP revised downward to 1.0%

You bone it you own it, President Downgrade!

Chip on August 26, 2011 at 9:04 AM

I wonder if this hurricane will affect Moochie’s lobster supply?

PatriotRider on August 26, 2011 at 9:05 AM

The barest pulse of positive growth. I guess now a double dip is now totally out of the question, right Obama economic team?

Who is even on the Obama economic team anymore?

Missy on August 26, 2011 at 9:05 AM

“I know people are frustrated with the economy, but recovery is a long process. And we cannot always foresee or predict such things as Hurricane Irene that causes a downward revision of second quarter growth.” – Barack Hussein Obama

NotCoach on August 26, 2011 at 9:05 AM

It’s because of Hurricane Irene.

JimK on August 26, 2011 at 9:01 AM

Damn it, I was too slow.

NotCoach on August 26, 2011 at 9:06 AM

Blame the gop congress to begin shortly

cmsinaz on August 26, 2011 at 9:06 AM

JimK on August 26, 2011 at 9:01 AM

The Obama administration, a really lousy remake of ‘Me, Myself & Irene’

Chip on August 26, 2011 at 9:06 AM

BS:
How much of this “growth” is paper money shifting from one group to another, courtesy of the Government.

rob verdi on August 26, 2011 at 9:07 AM

Seems to be an trend – initially inflate data to the positive, then revise when nobody is looking or cares (Unemployment, GDP, etc..). Duck, bob and weave…

molding_perception on August 26, 2011 at 9:08 AM

I wonder if this hurricane will affect Moochie’s lobster supply?
PatriotRider on August 26, 2011 at 9:05 AM

Mooch will have her staff out on the flooded streets of D.C., sharp sticks in hand, searching for lobsters that were washed in by the hurricane.

No one gets back in the house unless they produce two lobsters.

Bishop on August 26, 2011 at 9:08 AM

2008: The One
2011: The One-point-O

Bruce MacMahon on August 26, 2011 at 9:10 AM

LEAN FORWARD!

txag92 on August 26, 2011 at 9:12 AM

I’ve noticed that the creases in his pants aren’t even as impressive these days.

Sugar Land on August 26, 2011 at 9:13 AM

And yet, 51% of Americans think that the poor economy is the fault of President Bush!

Since the democrats are running against big business and the wealthy, the GOP should start explaining that the real fat cats are govt. employees, their unions and bureaucrats in the Departments of This and That and The Other Thing. That’s the real reason they want taxes increased, to keep their plush jobs.

Vince on August 26, 2011 at 9:15 AM

B+

Capitalist Infidel on August 26, 2011 at 9:15 AM

If Hurricane Irene doesn’t bring the vacation to an early end…

I keep hearing a version of Come On Eileen Irene in my head.

Fallon on August 26, 2011 at 9:15 AM

I don’t even believe 1.0

we are surrounded by prestidigitators!

golfmann on August 26, 2011 at 9:16 AM

No one gets back in the house unless they produce two lobsters.

Bishop on August 26, 2011 at 9:08 AM

Aaaah…life on the new plantation…

PatriotRider on August 26, 2011 at 9:18 AM

Wait, all you doomsyers…naysayers…
A 1.3% to a 1% is a 33% improvement, yes, in one month the Government has shown a 33% improvement, even in the best of times that is a substantial improvement…anyway that is how the dems figure it…and along with the GDP, we are on the road to recovery, after the horrible burden the Republicans place on us years and years ago…so the dems will state…praise be to Obama, he can do no wrong…33% improvement, the malaise is over…

right2bright on August 26, 2011 at 9:18 AM

The downward revision comes while Obama is on Martha’s Vineyard, enjoying a high-profile “vacation” and promising to get around to a jobs plan … soon.

It’s not easy writing an outline when you’ve only been focused on it (like a laserbeam) for a couple of years.

Actually, I wonder if that’s why his transcripts are hidden behind lock and key…Maybe his grades aren’t bad, per se; they’re just all incompletes.

BlueCollarAstronaut on August 26, 2011 at 9:19 AM

Somehow I distrust even those numbers as being artificially too high.

Trust the government? No wise man would let Judas hold his wallet for the same reason.

Don L on August 26, 2011 at 9:21 AM

I keep hearing a version of Come On Eileen Irene in my head.

Fallon on August 26, 2011 at 9:15 AM

Thanks. My productivity just went out the window. ;)

tomg51 on August 26, 2011 at 9:22 AM

right2bright on August 26, 2011 at 9:18 AM

I know you’re being sarcastic but I don’t get the sarcasm.

Vince on August 26, 2011 at 9:23 AM

And yet, 51% of Americans think that the poor economy is the fault of President Bush!

Vince on August 26, 2011 at 9:15 AM

thanks to dear leader and the lsm…

infuriating that they could be this clueless…

cmsinaz on August 26, 2011 at 9:24 AM

Damn you, George Bush!

John Deaux on August 26, 2011 at 9:25 AM

Isn’t 1.0% “growth” the equivalent of finding some change in the cushions of your sofa, or finding a few extra bucks in a pair of jeans you haven’t worn in a while?

Neo-con Artist on August 26, 2011 at 9:25 AM

quantitative easing = “legal” counterfeiting

Cindy Munford on August 26, 2011 at 9:28 AM

Aaaah…life on the new plantation…
PatriotRider on August 26, 2011 at 9:18 AM

Homophobe.

Bishop on August 26, 2011 at 9:29 AM

Dear leader’s outline will be pure awesomeness come sept…
/

cmsinaz on August 26, 2011 at 9:31 AM

So if we go into a recession, will negative numbers be magically revised upward?

SlaveDog on August 26, 2011 at 9:35 AM

Those darn pesky headwinds. Let’s ban earthquakes, tornados, hurricanes, insurrections in North Africa, Bush policies, greedy jet owners, expensive yachts, private health insurance, teenagers without jobs, empty unowned houses, the darn tea partiers that have invaded the congress for the last 6 months, gold, silver, corn, Greece, Spain, Italy, Ireland. Things would be so much more pleasant.

Fuquay Steve on August 26, 2011 at 9:41 AM

Neo-con Artist on August 26, 2011 at 9:25 AM

Maybe like finding a dollar in an old coat. The thing is, this 1.0 number is not accurrate either. It’s likely to be closer to zero when they revise it and who knows how accurrate even that will be.

We are in a depression and have been all along. A few have been fooled by fake politically generated numbers into thinking there was some little recovery. That was a foul lie because it masked the serious problems that will remain until the current idiots in charge are gone and we can replace them with a sane government.

dogsoldier on August 26, 2011 at 9:41 AM

Just pathetic…..

jeglinas on August 26, 2011 at 9:43 AM

Welcome to the microrecession!

ironman on August 26, 2011 at 9:45 AM

I wonder if this hurricane will affect Moochie’s lobster supply?

PatriotRider on August 26, 2011 at 9:05 AM

No, we have a bumper crop of lobsters here in the Northeast this summer. Currently here in northern New England it’s going for around $5 a pound.

Del Dolemonte on August 26, 2011 at 9:48 AM

Fuquay Steve on August 26, 2011 at 9:41 AM

ATMs. You forgot ATMs.

ncc770 on August 26, 2011 at 9:49 AM

How does an “expert” economist make an error of 30%?

What would happen to an estimator in the private sector, if he made a mistake of that magnitude?

franksalterego on August 26, 2011 at 9:50 AM

And airport kiosks…

Dhuka on August 26, 2011 at 9:50 AM

Just got my first Obama re-election kick-off call. I told the caller, with the economy as it is, there is no way I would vote for Obama.

The caller said, “So, people are really hurtin’ out there, aren’t they?” No poop, Sherlock.

I’m still shaking my head on that one. Sheesh.

Fallon on August 26, 2011 at 9:54 AM

These are the very same “economists” in the Commerce Department who, for some unknown reason, can’t see a correlation between heavy-handed regulation and a stagnant economy.

franksalterego on August 26, 2011 at 9:57 AM

I keep hearing a version of Come On Eileen Irene in my head.

Fallon on August 26, 2011 at 9:15 AM

Thanks. My productivity just went out the window. ;)

tomg51 on August 26, 2011 at 9:22 AM

Let’s drop it even further-

Reel Big Fish – Another Day In Paradise

teke184 on August 26, 2011 at 9:59 AM

That may be enough to keep the Fed on the sidelines, which we will know later today when Ben Bernanke gives a speech today on the economy and the Fed’s direction.

Don’t even think about QE3, Benny Boy. Rick Perry’s watching you, or something.

steebo77 on August 26, 2011 at 10:00 AM

Seems to be an trend – initially inflate data to the positive, then revise when nobody is looking or cares (Unemployment, GDP, etc..). Duck, bob and weave…

molding_perception on August 26, 2011 at 9:08 AM

There is a clear element of corruption and fraud here on the part of these federal reporting agencies that I really, really hope the GOP presidential candidate throws some light on. It is time to start mocking these numbers when they come out so people will understand that they will be “revised” later on when no one is paying attention.

I would love to see a Perry or Romney say, over and over, “Hey, look. Unemployment has ticked down. Of course, next month we’ll find out it has actually gone up when the federal government ‘revises’ their figures. Remember, folks, every data point that comes out of the Obama federal government about the economy is a lie — every single one — and the truth gets told later on when no one is listening. He’s using every office of the federal government as a campaign propaganda outfit.”

This is crucial because as we get closer to November 2012, these agencies are going to be releasing some epically phony data to help Obama’s re-election efforts. They’ll have unemployment down to 5% by election day, only to “revise” it to 10% a day later.

Rational Thought on August 26, 2011 at 10:05 AM

I think he could turn all these “headwinds” to his advantage. Just do a 180, you dolt. Go the other way and then they become tailwinds. See, easy.

SKYFOX on August 26, 2011 at 10:06 AM

“It’s just a bump in the road”….

Baxter Greene on August 26, 2011 at 10:12 AM

Seems to be an trend – initially inflate data to the positive, then revise when nobody is looking or cares (Unemployment, GDP, etc..). Duck, bob and weave…

molding_perception on August 26, 2011 at 9:08 AM

Exactly. This happens over and over and over again. When was the last time one of these figures was revised upwards? I can’t remember it.

Theophile on August 26, 2011 at 10:19 AM

Only two more revisions to go … Never forget the revisions, but in the end, the last has to be the truth, else everything falls apart in the records.

The Soviets even went so far that they had the records match the Politburo wishes … sort of like what Hugo Chavez is doing with Venezuela today.

Socialism always fails, but it’s the reporting that goes on, to tell of the successes!!! 1984 wasn’t just a movie.

tarpon on August 26, 2011 at 10:22 AM

Friday am news dump as Irene is headed here

cmsinaz on August 26, 2011 at 10:22 AM

But the good news is that the CBO expects 2.8% for the rest of the year…………

Vashta.Nerada on August 26, 2011 at 10:25 AM

According to Reuters, economists expected a revision down to 1.1%, and says the US is now on “recession watch”:

I can see The Recession from my house.

ted c on August 26, 2011 at 10:26 AM

Nothing that a few rounds of golf won’t fix.

ted c on August 26, 2011 at 10:26 AM

Oh goody, dear leader will speak about the storm at his vacay home

cmsinaz on August 26, 2011 at 10:30 AM

Nothing that a few rounds of golf won’t fix.

ted c on August 26, 2011 at 10:26 AM

I’m starting to wonder if all that golf isn’t an attempted escape from reality that he might normally seek in booze or cocaine binges.

SKYFOX on August 26, 2011 at 10:33 AM

The Honorable John McCain said-”we have nothing to fear from an Obama presidency”.

mobydutch on August 26, 2011 at 10:33 AM

and uh, homeschoolers….

Fuquay Steve on August 26, 2011 at 10:35 AM

‘personal consumption expenditure index rose at 2.2%, faster than anything since 2009Q4′. This is due to the purchases of guns, ammo and stock piling of food.

Kissmygrits on August 26, 2011 at 10:38 AM

I’m starting to wonder if all that golf isn’t an attempted escape from reality that he might normally seek in booze or cocaine binges.

SKYFOX on August 26, 2011 at 10:33 AM

I’m reminded of a joke from The Simpsons…

“You know, the preferred way to cheat at golf is to LOWER your score.”

teke184 on August 26, 2011 at 10:39 AM

The Honorable John McCain said-”we have nothing to fear from an Obama presidency”. And, JEB BUSH seconds the motion.

mobydutch on August 26, 2011 at 10:40 AM

The United States is on a recession watch after a massive sell-off in the stock market knocked down consumer and business sentiment.

Oh wow! Ya think?

GarandFan on August 26, 2011 at 10:42 AM

Nothing that a few rounds of golf won’t fix.

ted c on August 26, 2011 at 10:26 AM

I’m starting to wonder if all that golf isn’t an attempted escape from reality that he might normally seek in booze or cocaine binges.

SKYFOX on August 26, 2011 at 10:33 AM

I am assuming that he is still on coke and wee-wee. Why would he stop?

There’s also a long list of unsavory characters in and out of the White House that could be acting as couriers.

slickwillie2001 on August 26, 2011 at 10:51 AM

Replace Obama and his band of merry Marxists, then unleash the powerful economic engine of this great capitalistic Republic and good times will return. It’s that simple.

rplat on August 26, 2011 at 10:57 AM

Captain Renault Award® of the Day

MassVictim on August 26, 2011 at 10:59 AM

I think he could turn all these “headwinds” to his advantage. Just do a 180, you dolt. Go the other way and then they become tailwinds. See, easy.

SKYFOX on August 26, 2011 at 10:06 AM

If he did a 180 on economic policy (tax cuts, spending cuts, repealing ObamaCare, eliminating excess regulations, getting rid of EPA rules on CO2, etc.),like Clinton in 1995-96, the economy WOULD recover and he would have tailwinds.

But Egobama is too convinced of his own brilliance to admit a mistake and turn away from the cliff. Over he goes, and the whole country with him.

Steve Z on August 26, 2011 at 10:59 AM

In other words, the per-capita GDP is FALLING.

And if you add in real inflation rate (you know, including completely unnecessary items like food and fuel), the American standard of living is dropping like a rock.

Thank you Barack Hussein Obama.

logis on August 26, 2011 at 11:00 AM

He’s still at Martha’s Vineyard? Exactly how long is this vacation?

Anyway, leave him and Moochelle there where they can’t do much more damage!

Everyone of us who really cares needs to volunteer as a poll watcher. Obama won’t be reelected with these economic numbers and his uber liberal social agenda without massive vote fraud. Don’t be naive in thinking that when the Rats go down it won’t be swinging… be prepared.

CCRWM on August 26, 2011 at 11:04 AM

No, we have a bumper crop of lobsters here in the Northeast this summer. Currently here in northern New England it’s going for around $5 a pound.

Del Dolemonte on August 26, 2011 at 9:48 AM

Irene will probably wash lots of full lobster traps onto Martha’s Vineyard. Hopefully the lobsters can give Obozo a good pinch before he eats them.

Steve Z on August 26, 2011 at 11:04 AM

But the good news is that the CBO expects 2.8% for the rest of the year…………

Vashta.Nerada on August 26, 2011 at 10:25 AM

No, that was their prediction last week — revised slightly from the 3.2% predicted the week before.

And, unexpectedly, for the twelfth time in a row, they just re-revised it again. But don’t worry, the government is still guaranteeing a healthy 2.2% growth rate. (Until the next re-re-revision anyway.)

logis on August 26, 2011 at 11:07 AM

Unprecedented bad luck.

Koa on August 26, 2011 at 11:25 AM

I know this getting old but……

Unexpectedly!

Nah,….it’s still funny……

98ZJUSMC on August 26, 2011 at 11:30 AM

Rational Thought on August 26, 2011 at 10:05 AM

Don’t worry, the only people who believe the lying numbers are already in the tank for him. They would vote for him even if they were unemployed his entire administration.

These numbers won’t mean squat to the rest of the nation looking for work, watching loved ones try to find work, wishing their teenager could get work, driving past mostly empty strip malls, etc come election day.

I’d bet a third of likely voters couldn’t tell you what the unemployment rate is, what GDP is so far this year, etc. They will vote by the mood of the people around them and the economic condition of those closest to them. And that will be much worse next November.

PastorJon on August 26, 2011 at 11:31 AM

in barry’s world, its ok…70 million people are gettin checks every month…they should be thanking me. He told Jindal not to worry about the oil people being unemployed..they’ll be gettin checks.

fundamental. transformation.

r keller on August 26, 2011 at 11:42 AM

I know you’re being sarcastic but I don’t get the sarcasm.

Vince on August 26, 2011 at 9:23 AM

Because the libs can’t do math…they will think that a 1.3% projection, if it comes in at 1%, they will claim victory, that it is a 33% improvement.
Years ago, the proposal was to increase the fed budget on schools, Republicans cut the increase (still was a substantial increase) and all the MSM ran the story as the Republicans cut school spending…then they did that with a bunch of other programs when they found out people don’t understand the simplest of math.
It has now become the standard MSM/liberal line, propose something large, and if it is cut back it becomes a “reduction in services” or such.
You were confused because it didn’t make sense, well, because it doesn’t…but trust me, libs will see this as an improvement.

right2bright on August 26, 2011 at 11:52 AM

He told Jindal not to worry about the oil people being unemployed..
r keller on August 26, 2011 at 11:42 AM

Those oil workers were making too much money when they worked anyway, it wasnt fair. Its better to just tax the oil companies more then take that money and instead of pay salaries, just spread it around evenly.

Koa on August 26, 2011 at 11:54 AM

Silly Commerce Department. Have they been using the climate models to report on the economy?

Left Coast Right Mind on August 26, 2011 at 12:42 PM

Pivot! Pivot! Pivot!

a capella on August 26, 2011 at 1:06 PM

Leave the Vineyard early??!!?? No one’s leaving early, this is no longer a vacation…this is a QUEST!!!

Alden Pyle on August 26, 2011 at 2:07 PM

Oh, and i forgot those pesky right to work states.

Fuquay Steve on August 26, 2011 at 3:12 PM