The Commerce Department released the final revision to its estimate of second-quarter growth this morning, and the GDP figure returned to the first estimate from July. The revision back to 1.3% certainly looks better than the second pass’ 1.0%, but it’s not going to convince anyone that the economy has caught fire:
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 1.3 percent in the second quarter of 2011, (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 0.4 percent.
The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 1.0 percent (see “Revisions” on page 3).
The increase in real GDP in the second quarter primarily reflected positive contributions from nonresidential fixed investment, personal consumption expenditures (PCE), exports, 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.
The acceleration in real GDP in the second quarter primarily reflected a deceleration in imports, an upturn in federal government spending, and an acceleration in nonresidential fixed investment that were partly offset by a deceleration in PCE, a downturn in private inventory investment, and a deceleration in exports.
Final sales of computers added 0.07 percentage point to the second-quarter change in real GDP after adding 0.08 percentage point to the first-quarter change. Motor vehicle output subtracted 0.10 percentage point from the second-quarter change in real GDP after adding 1.08 percentage points to the first-quarter change.
The report contains slightly better news on real final sales of domestic product, which eliminates inventory adjustments and focuses on actual sales. That figure rose 1.6% over Q1, which had only increased 0.1% over 2010Q4. That indicates more actual growth, although 1.6% is still an anemic growth figure.
Reuters gives a glass-half-full report on the new numbers:
There is cautious optimism the economy will skirt another downturn as factory output continues to expand, although at a slower pace than earlier in the recovery, and businesses maintain their appetite for spending on capital goods.
Details of the GDP revisions also were consistent with an economy that is on a slow growth track rather than sliding back into recession.
Consumer spending growth was revised up to a 0.7 percent rate from 0.4 percent. The increase in spending, which accounts for more than two-thirds of U.S. economic activity, was still the smallest since the fourth quarter of 2009.
Export growth was stronger than previously estimated, rising at a 3.6 percent rate instead of 3.1 percent. Imports increased at a 1.4 percent rate rather than 1.9 percent.
That left a smaller trade deficit, and trade contributed 0.24 percentage point to GDP growth.
Well, it’s an improvement over Q1 to be sure, but it’s hardly going to build confidence in the economy, either. If factory output stays at a “slower pace than earlier in the recovery,” that’s a recipe for stagnation, not a burst of economic growth. It makes this the New Normal, along with 9% unemployment and a staggering housing market.
Another economic indicator indicated better news — so much so that it looks curiously like an outlier:
In the week ending September 24, the advance figure for seasonally adjusted initial claims was 391,000, a decrease of 37,000 from the previous week’s revised figure of 428,000. The 4-week moving average was 417,000, a decrease of 5,250 from the previous week’s revised average of 422,250.
The advance seasonally adjusted insured unemployment rate was 3.0 percent for the week ending September 17, unchanged from the prior week’s unrevised rate.
The advance number for seasonally adjusted insured unemployment during the week ending September 17 was 3,729,000, a decrease of 20,000 from the preceding week’s revised level of 3,749,000. The 4-week moving average was 3,743,000, a decrease of 4,500 from the preceding week’s revised average of 3,747,500.
That would be great news, except that there is no real correlation between this and any sudden burst of economic activity. Reuters notes that the Department of Labor isn’t exactly confident in its report, emphasis mine:
New claims for jobless benefits fell sharply last week to their lowest level since April although a Labor Department official said government statisticians had problems seasonally adjusting the data.
Expect this number to get revised upward next week. Sharply.