Economy: Good News is Bad News... for real

[Kurt_and_Hunter]

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

[Greyhound]

1. Technicalities and massaging the numbers are still SOP.

It remain so until people generally start to wake up to the daily lies.
:kick: & R

[Warpy]

2. That's very optimistic of him

because unless they start paying attention to demand side economics, the supply side is going to continue to shrink. Throwing money at the supply side got the pipeline stuffed full of goods and services. Starving the demand side has resulted in having no one willing and/or able to buy those goods and services now that easy credit has dried up.

The only thing that continues to astonish me is that so few of our wonderful leaders manage to see it.

[sendero]

5. I agree..

... all of the "tax cuts for small business" and "eased credit" aren't going to do a thing as long as there is no consumer.

[JCMach1]

3. Where is this 'growth' whereof you speak...?

Haven't seen any of it on my trip home...

[spanone]

4. makes me think this will be revised up too

[Kurt_and_Hunter]

8. It is possible but there is no compelling reason to expect it.

[JuniperLea]

6. They have to move the goalpost all the time...

Tiresome. Up is still up.

Wasn't there supposed to be a report released yesterday showing what might have been had there been no TARP or any other stimulus? I heard a little blurb about it, then... *crickets*

[raouldukelives]

7. A double dip?

When did the first dip end? It's felt like one long elevator ride down in my neck of the woods.