And now, for the next installment in our series of disappointing status reports on the American economy, GDP grew by only 1.3% in the second quarter. If there’s good news here, it’s that with new, revised data out this AM, that 1.3% is a gain on last quarter’s 0.4% (take out the inventory build-up from last quarter, which gives you a cleaner look a “final demand,” and we posted a zero!).
No wonder the job market is stalled. We’re living on fumes out there in terms of demand. Consumer spending, closely tied to the job market, was flat in Q2, and in a 70% consumption economy, that says it all. Also, state and local governments continue to contract, taking 0.4 percentage points off growth in both of the last two quarters.
More to come, including a look at some pretty big negative revisions. According to these data the Great Recession was even worse than we thought. EG, I thought the nadir in 2008q4 was a cliff-diving -6.8%. According to today’s revision, we were contracting at an annual rate of 8.9% in that quarter.
I’ve got no idea what it would take to get Congress to stop threatening to make this bad economy worse. But this is not an economy to fool around with.