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So here we are, coming to the end of another month with limited economic growth. Friday (August 26), the Commerce Department downgraded the second quarter US Gross Domestic Product (GDP) from 1.3% as initially reported to 1%. Via Reuters:
The rate of growth between April and June was cut from the government’s first reading of 1.3 percent and followed a lethargic 0.4 percent pace in the first three months of 2011.
This means the economy grew only 0.7 percent in the first half of the year. Nonetheless, and despite a sharp fall in consumer confidence this month, economists do not believe the economy will fall back into recession.
Note for those with short memories – the first quarter GDP was initially reported at 1.8%, upped to 1.9% with some fanfare before being downgraded to .4%. That seems to be a bit of a trend these past few weeks and months where the various economic indicators get revised in a negative direction (negative that is in relation to what would be good news). For example, when the Initial Unemployment Claims for last week came out on Thursday, the previous week’s claims were revised upwards (via CNN):
The number of first-time filers for unemployment benefits rose to 417,000 in the week ending Aug. 20, the Labor Department said Thursday. That’s up 5,000 from a revised 412,000 the prior week.
The original report for the previous week was at 408K so the upwards revision was 4K. Since the business reporters like to latch onto a factoid or two to try to explain things, they’ve all seemingly latched onto the point that some striking Verizon workers had filed claims. But the number provided was 8.5K which means even without the Verizon worker claims (which will most likely be denied as strikers are rarely allowed to collect unemployment), it would still have the initial claims at 408.5K. From the previously linked CNN article:
In most states, workers on strike are not eligible for unemployment benefits. And the weekly initial claims number merely reflects applications for the benefits — not all of which will be approved and paid out.
Today (Sunday, August 28), Bloomberg has an article on their survey of economists for the August jobs and economic numbers. Read the rest of this entry →