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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 →

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I’m not an economist so this is a fairly easy prediction for me to make. I’m basing this prediction on how the weekly Initial Unemployment Claims have gone up this month (see here, here, and here plus tomorrow’s post when I write it). Or at least, the numbers have not dropped as much as anticipated. Either way, things are not improving.

Amazingly enough (economists claim to be surprised all the time, I get to claim actual surprise when something surprising really happens), there have been a few news articles from different outlets, pointing out some unpleasant economic truths. First up is this article from Monday’s (June 27) USA Today:

Whether the economic recovery in the U.S. can continue could depend on a single factor: consumer confidence. Confidence is important because consumers who are upbeat about prospects tend to spend more, driving corporate profits and job growth. Companies hire more employees, boosting spending, growth and confidence.

…snip…

According to a monthly survey released last week by Consumer Reports, households that earn less than $50,000 have been extremely downbeat on the economy every month since the survey’s April 2008 launch. Such households make up half of the U.S. population. Meantime, affluent households — those that pull down $100,000 or more a year — have been feeling on average positive about the economy since February 2010.

The primary factor behind the disparity: jobs. Affluent households have seen little impact on job prospects overall. Meanwhile, low-income households have seen a net decline in jobs for 23 out of the past 24 months, according to the survey.

Please do click through and read the whole article as it offers a number of reasons besides those I’ve extracted to show how the affluent have benefited in this “recovery” while the rest of us have struggled.
Read the rest of this entry →