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GDP 1.3%, 1st Quarter Revised Down To .4%

From a seemingly surprised Reuters:

Economic growth tepid as spending flat

By Lucia Mutikani
Fri Jul 29, 2011

WASHINGTON (Reuters) – The economy grew less than expected in the second quarter as consumer spending barely rose amid higher gasoline prices, and growth braked sharply in the prior quarter, a government report showed on Friday.

Growth in gross domestic product — a measure of all goods and services produced within U.S. borders – rose at a 1.3 percent annual rate, the Commerce Department said. First-quarter output was sharply revised down to a 0.4 percent pace from 1.9 percent.

Lest we forget, the New York Times and others in the media said a GDP of 3.3% was proof the country was in a recession when George Bush was President. And yet here we are, smack dab in the middle of our second ‘recovery summer.’

Economists had expected the economy to expand at a 1.8 percent rate in the second quarter.

And they only lowered their rosy predictions to 1.8% in the past few days. Previously they had been predicting much higher growth.

In addition, fourth-quarter growth was revised down to a 2.3 percent pace from 3.1 percent, indicating that the economy had already started slowing before the high gasoline prices and supply chain disruptions from Japan hit.

So maybe the problem is more than high gas prices and the Japanese earthquake. By the way, we thought higher energy prices were supposed to be good for the economy.

Economists had expected the economy would show signs of perking up by now with Japan supply constraints easing and gasoline prices off their high, but data has disappointed. This and the sharp downward revisions to the prior quarters suggest a more troubling and fundamental slowdown might be underway.

The data is clearly racist.

There is also heightened uncertainty over the outlook because of the impasse in talks to raise the nation’s borrowing limit and avoid a damaging government debt default. The Treasury says the government will soon run out of money to pay all its bills.

Economists have warned that a debt default could push the fragile economy over the edge.

"The implications of more rancorous foot dragging would be bad for an economy already in a precarious state," said Julia Coronado, chief North America economist at BNP Paribas in New York. "Uncertainty continues to tax an already fragile recovery."

Whereas the government sucking another $2.4 trillion dollars out of the financial markets and saddling us with more debt will be a shot in the arm for everybody.

Data released on Friday showed the 2007-2009 recession was much more severe than prior measures had found, with economic output declining a cumulative of 5.1 percent instead of 4.1 percent.

The annual revisions of U.S. GDP data from the Commerce Department showed the economy contracted at an annual average rate of 0.3 percent between 2007 and 2010. Output over that stretch had previously been estimated to have been flat

Each and every day the art of blaming Bush is taken to new heights.

Still, doesn’t this mean that ‘the economists’ have been incredibly wrong for four years in a row now? Maybe we need some new economists. Ones who don’t moonlight as administration propagandists.

This article was posted by Steve on Friday, July 29th, 2011. Comments are currently closed.

6 Responses to “GDP 1.3%, 1st Quarter Revised Down To .4%”

  1. Petronius says:

    July economic report :

    • As a result of these GDP numbers, stocks are falling sharply at today’s opening. Insiders have stepped up selling of their shares. http://www.marketwatch.com/story/gdp-grows-slender-13-in-second-quarter-2011-07-29

    • US and European economies have clearly slowed and it is unclear whether they will improve in the second half or slide into a double-dip recession. The two biggest economies in the Western world are locked into socialist spending programs and unable to get their fiscal houses in order.

    • “Wars in old times were made to get slaves. The modern implement of imposing slavery is debt.” Ezra Pound (1943).

    • The fundamental restructuring of the American government, economy, and society that began with the Pelosi Congress of 2006 and that accelerated full-throttle with the election of Nerobama in 2008 was answered by a powerful reversal in the historic Congressional and State elections of 2010, the most dramatic change in eighty years. The markets responded favorably in the fall of 2010, in the expectation that further Federal encroachment would at least be stymied, but also that the Bush tax cuts would be extended and that new taxes would not be imposed. The Tea Party Republicans clearly understand the historic threat posed by the trillions of dollars of deficit spending and new public debt added by the Democrats in recent years. Nerobama and the Congressional Democrats have begun to pay lip service to the need to rein in government spending, but in practice show themselves unwilling to do so. Instead of real cuts, they offer “smoke and mirrors,” while they continue to call for “a balanced approach,” by which they mean the imposition of additional taxes upon the so-called rich, and the protection of their domestic spending and wealth redistribution programs.

    • In calling for taxes on “the rich,” the Marxists conveniently forgot that they recently imposed nearly 5% in additional income taxes on “the rich,” including the 0.9% Medicare tax and the 3.8% Obamacare tax. Both taxes take effect in 2013. These taxes are in addition to the wheelchair tax — taxes on medical devises, equipment, supplies, and pharmaceuticals.

    • The debt ceiling was passed by a Democrat Congress and signed into law by Nerobama. The debt ceiling has now been breached as the result of Democrat spending bills passed by a Democrat Congress and signed by Nerobama. The Senate Democrats and Nerobama have no answer to this problem that they themselves have created. The House Republicans passed the Ryan budget but it was blocked by the Democrats in the Senate, and Nerobama publicly insulted and ridiculed Congressman Ryan. House Republicans passed cut, cap, and balance. The Senate Democrats defeated (tabled) it without debate on a straight party-line (51-46) vote. The President has no plan. He has no budget. Instead, he retreated to secret negotiations with Congressional leaders behind-closed-doors in the White House. Negotiations over the American debt ceiling remain deadlocked, while the President publicly censures the Republicans for adhering to the principles that carried them to victory in 2010.

    • Moody’s warned that it was placing the US triple-A bond rating on review for possible downgrade. S&P warned a few days later, adding that the chance of downgrade was 50-50. On July 18th, Moody’s recommended that the Congress eliminate the statutory debt ceiling. S&P reissued its warning on 21 July, also noting that the consequences of a downgrade would have “a systemic and global macroeconomic disruption” similar to the crisis of 2008.

    • S&P also warned of a possible downgrade absent meaningful reductions in the public debt to show that the US is not “maxed out.” S&P wants to see a downward shift in the debt trajectory as a percentage of GDP. Having been criticized by Congress, the rating agencies don’t want to be caught short again, and have their finger on the trigger.

    • In an interview with the WSJ, investor Jim Rogers said, “The US has [already] lost its triple A status. Anybody who knows what’s going on knows that the US is now the largest debtor nation in the history of the world. It’s only Moody’s and S&P that hasn’t figured out what’s going on. The world –– the investment world –– the financial world –– knows that America is not triple A anymore. Who cares what Moody’s said? Moody’s has gotten everything wrong in the past ten years. Why do you pay attention to them?”

    • What would be the effects of a downgrade of US public debt? Economists are uncertain, but the following results are likely: Higher interest rates, which will increase the cost of borrowing, not only for the Federal government, but also for State and local governments, and for businesses, homebuyers, and consumers as well. A downgrade of US debt could also force downgrade of the debt of State and local governments, and of institutions that depend on government funding such as hospitals, schools, and certain utilities (muni bonds). Second, higher interest rates will punish the bond market, which will hurt bondholders, mainly creditors, retirement funds, and retirees. Third, a downgrade would put pressure on US government assets, such as US Treasuries. Where Treasuries have been used as collateral in transactions, this could trigger de-leveraging, as more collateral is required to meet requirements and to maintain positions. Many mutual funds, money market funds, banks, brokers, and insurance funds have exposure to Treasuries and to European sovereign debt as well. As de-leveraging occurs, it can spread globally, sucking the world economy into a vicious downward spiral. As markets sink, investors stand to lose value in their paper assets; stocks will fall along with bonds. The US dollar will also fall. Finally, all of these impacts may stifle economic activity and precipitate a recession. The only safe havens — if any — may be hard assets such as precious metals, and strong foreign currencies such as the Swiss franc.

    • On kicking the can down the road: El-Erian, CEO of PIMCO, said “A proper simile would be rolling a snowball down a hill, which grows ever larger.”

    • Wolfgang Munchau, Financial Times : “We’re not just kicking any old can down the road any more. This is a can of explosives.”

    • Usually the public debt will eventually be repaid. The debt can be repaid by more taxes or by economic growth accompanied by growth in tax revenues. Or by more money printing; inflation is a form of taxation. Or the debt may end in a revolution. Or in enslavement of the people, which is a form of repayment reminiscent of the debtors’ prisons.

    • The public debt issue will determine America’s economic future — whether America becomes a Big Government totalitarian state with a centrally planned economy. Or whether it reverts to a private sector market economy of capitalism, private property, and free enterprise. The 2012 election will determine whether Americans remain a free people or become serfs and slaves.

    • “Freedom in a commons brings ruin to all.” Garrett Hardin, “The Tragedy of the Commons” (1968). To a large extent this debt crisis is a failure of civic virtue among Americans, who are increasingly inclined to vote themselves benefits from the public trough. About half the population are taxpayers who support the other half through government mandated transfer payments. According to the Heritage Foundation, over the next ten years Nerobama’s “investment” in welfare spending will equal $250,000 for each person currently living in poverty in the U.S., or $1 million for a family of four. Current welfare spending is double that which occurred under President Clinton, after adjusting for inflation. There are 45M people on food stamps, 70M to 80M receiving refundable child tax credits, 9.5M on unemployment insurance, etc. Those Americans on the receiving end may not be willing to give up their benefits until they are forced to do so by an economic catastrophe.

    • While the battle over the US debt ceiling dominated the economic headlines in July, there are other, serious economic concerns, including the global rise in commodity prices, especially oil, and the rising specter of global inflation, spurred by an unprecedented policy of spending by the former Democrat Congress and the policy of easy money pursued by the Fed over the past three years. Beyond these are the persistent US unemployment and housing depression, and the European sovereign debt worries.

    • The US unemployment rate climbed to 9.2% in June. Real unemployment is over 16%. Jobless claims rose again in July. The collapse in housing prices deepens. Existing home sales hit a seven month low. (That George W. Bush sure has some ‘splainin’ to do.)

    • The New York Fed’s July manufacturing report showed that manufacturing contracted again in July, following a steep decline in June, and that inflation rose at its highest pace in three years.

    • It is becoming increasingly difficult to ascribe the growing inflation solely to volatility of food and oil prices. Rather, we are beginning to see signs of serious, long-term inflation from monetary debasement, the result of almost three years of government monetary and fiscal policies.

    • Many companies have missed earnings estimates due to deterioration in the economy. Corporate earnings are being supported by foreign profits and by the conversion of foreign profits into cheaper US dollars. Corporate balance sheets are generally in excellent condition. US stocks are declining. Foreign stock markets are turning bearish.

    • According to John Wiliiams (Shadow Stats) real inflation is up 11%.

    • World food prices are up 36% so far this year. The kings’ club of Saudi Arabia, the United Arab Emirates, and Qatar have adopted food price controls in a move to stave off political unrest. These countries import nearly all of their food from European and American companies such as Unilever, Carrefour, and Kraft, which are expected to absorb the losses from the price controls. Perhaps we should consider placing price controls on imported petroleum products? Oil is, after all, one of the important cost drivers in food prices.

    • Consumer sentiment fell sharply in July to the lowest level since March 2009.

    • Pepsi announced that it is seeing a fall off in consumer spending from earlier in the year. Consumer spending accounts for about 70 percent of the US economy. Shares of consumer products companies are lower as these companies are squeezed between cautious consumers and rising commodity prices.

    • Whirlpool’s CEO said that the demand level for its appliances has fallen off to the 2009 recession lows.

    • Ingersoll Rand reported slack demand for home air conditioners despite the heat wave.

    • General Mills announced that it expects cost increases of 10 to 11 percent for commodity ingredients and fuel.

    • Producer prices were up a whopping 7% in the month (84% annualized). Import prices rose 12%.

    • Oil prices hovered just below $100/bbl during the month, despite the regime’s June release from the strategic oil reserves.

    • BP applied for its first Gulf drilling permit since the Macondo spill in 2010.

    • Copper hit a three month high. Theft of copper scrap has become a booming growth industry, including gutters from home roofs, street electric cables, cemetery statuary, and irrigation pipes and wiring.

    • Interest rates remain very low and are under downward pressure.

    • This month Nerobama demonized corporate jets (the US aviation industry) and jet owners, thereby adding another scalp to his belt.

    • Steve Wynn : “this administration is the greatest wet blanket to business and progress and job creation in my lifetime. … all of us in this marketplace that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right, a president that seems, you know — that keeps using this word ‘redistribution.’ Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry in the United States of America, they’re frightened of this administration and it makes you slow down and not invest your money. The guy keeps making speeches about redistribution and maybe we ought to do something to businesses that don’t invest, they’re holding too much money. You know, we haven’t heard that kind of talk except from pure socialists.”

    • Cisco announced it will lay off 6,500, about 9% of its full time employees.

    • Borders bookstores is going into liquidation; 10,700 employees will lose their jobs.

    • Eight banks failed the European stress test; sixteen others barely passed.

    • The US dollar has been taking a serious beating administered by gold and the strong foreign currencies.

    • The price of gold rose over 15% in the first six months. Gold remains incredibly strong and is overdue for a correction. On 13 July gold set a new record high at $1588, spurred by Bernanke’s comments signaling further easing and by fears of European debt contagion. On the 14th, it set another record, climbing to $1594. On Monday July 18th gold advanced over $1605. On Monday July 25th it jumped over $1622, a new record high, as no settlement was reached on the US debt ceiling. By Wed 27 July gold was at $1628, setting another record high.

    • Following Bernanke’s comments, the US dollar tumbled and hit a new low against the Swiss franc. The Swiss franc has risen over 25% against the US dollar in the last 12 months.

    • The conservative Swiss People’s Party — the largest party in Switzerland — will propose creation of a gold franc. Switzerland decoupled the Swiss franc from gold in 2000, but the franc is still considered the world’s safest currency.

    • Ron Paul questioned Bernanke in hearings on 13 July in an interesting exchange about $5.3T in money creation. Bernanke denied that gold was money. http://blogs.forbes.com/afontevecchia/2011/07/13/bernanke-fights-ron-paul-in-congress-golds-not-money/2/

    • Former UK prime minister Gordon Brown wins the booby prize for telling porkies in the House of Commons. Brown falsely claimed that the tabloid, The Sun, had illegally obtained information about him and his family. The leftist Guardian had published the story earlier accusing The Sun, but later issued a one-paragraph apology on page 36. This was pay-back for Rupert Murdoch’s opposition to Labour in the last election. This was not Brown’s first booby prize; Brown was also the economics wiz who, as chancellor, ordered the Bank of England to sell the country’s gold reserves at the market bottom in 1999.

    • Buoyed by the hacking scandal at News of The World, Sen. Jay Rockefeller (Marxist, WV) called for an investigation of News Corp., parent company of Fox and the Wall Street Journal. Rockefeller is a longstanding advocate for silencing conservative media. His spouse, Sharon Percy Rockefeller, made big bucks as an executive at PBS.

    • Rumors surfaced that Treasury Secy Tim Geithner may be leaving the regime; he is the last economic adviser still standing. GE’s CEO, Smilin’ Jeff Immelt is warming up in the bullpen.

    • Over the last five years Texas has accounted for 80 percent of America’s new private sector jobs. Texas leads the country in export trade. It has done so by creating a pro-business environment.

    • Each Greek’s share of his country’s public debt is $42,888. By comparison, our Federal debt here in the USA comes to $46,620 per each American citizen.

    • The EU has paid over €110 billion to bailout Greece, and is preparing to pay over another €110 billion. The MBM says the Greek crisis will then be over. Don’t believe it. The Greeks don’t repay their debts. Not ever. The EU is pounding money down a rat hole.

    • On 12 July, Moody’s downgraded Ireland’s debt to junk status. On 25 July, Moody’s downgraded Greece’s credit rating three more steps, describing default as almost certain.

    • The problem of Italy dwarfs Greece and Ireland. Italy is too big to be bailed out. The Germans’ pockets are not deep enough.

    • Italy is the only major industrialized country that has smaller gold reserves than the USA.

    • Default by Italy would pull down all the European banks and break up the EU. It might also pull down the big US banks.

    • Shares of European banks declined across the board in July. The banks are creditors on Eurozone debt, and the stock of these banks are in danger of becoming toxic assets.

    • US and Asian markets also fell on Eurozone worries. American banks are invested in Eurozone sovereign debt. JP Morgan Chase, for example, holds $100 billion in PIIGS bonds.

    • The US banks also remain exposed to toxic mortgage debts and a dire US housing market. They also labor under boot-on-the-neck regulations imposed by vindictive Democrat politicians in the Dodd-Frank Act. John Paulson announced that his hedge fund has too much risk exposure, and so he is reducing investments in banks.

    • Unlike the US, Italy has at least launched an ambitious deficit reduction plan. But will it work?

    • Moody’s downgraded Portugal’s sovereign debt to junk status.

    • In the wake of Japan’s Fukushima disaster, a task force appointed by the US Nuclear Regulatory Commission has recommended more stringent regulation of the American electric power industry. The new regulations will involve substantial costs to utilities in order to plan for catastrophes far beyond what their nuclear plants were originally designed to withstand. Margaret Harding, an industry consultant, said, “Done poorly, they could significantly increase costs in the current operating fleet without improving safety one iota.” Christine Tezak, energy analyst at Robert W. Baird & Co., said, “It’s a laundry list. Whether this adds up to a cooling tower and puts you out of business, it’s too early to tell.” Congressman Edward Markey (Marxist, MA), ranking Democrat on the Energy and Power Subcommittee, called for immediate implementation of the proposed regulations without further ado. Greg Jaczko, chairman of the NRC, and a former Markey staffer, wants to push ahead with new regulations by cutting through the normal technical reviews and legal due process. In language that suggests a parody of Ayn Rand’s “Atlas Shrugged,” Jaczko said, “The Commission may need to do things differently than it normally does. That should not be unexpected since these are not normal times….” Jaczko threatened to hold up building applications by Southern Company and SCANA.

    • End of the Dream: With the final launch of the Shuttle, NASA‘s manned space program came to an end. The regime cancelled the follow-on Constellation program, which looked to the moon, Mars, and beyond. Over 25,000 real science jobs will be lost. Russia now rules outer space by default. America turns away from greatness. Add another scalp to Nerobama’s belt.

    • China : The Chinese economy grew in the second quarter by 9.5% year-to-year. Moody’s issued a warning on Chinese local government debt. Caterpillar noted softening in the China economy.

    • Venezuela : Last year Venezuela overtook Saudi Arabia as the country with the largest oil reserves. But oil output continues to slide. Hugo Chavez expropriated the assets of ExxonMobil and ConocoPhillips in 2007, and the properties of the oil service companies were nationalized in 2009. Since then thousands of skilled technical personnel have been replaced by party loyalists and political appointees, taxes have been piled upon taxes, and corruption and theft is rampant. An “emergency” has now been decreed and PDVSA, the state oil company, is attempting to re-attract foreign investment into joint ventures to build new infrastructure. Chavez has also ordered the building of more prisons.

    • South Africa : In a country racked by corruption, inflation, AIDS, crime, and anti-white racism, unions representing thousands of workers in the petroleum, chemical, gold mining, and pharmaceutical industries stopped working, demanding wage increases triple the inflation rate. Critical shipments of fuel and medical supplies have been disrupted.

    • Indonesia : Operations at Freeport McMoRan’s giant Grasberg mine were halted by a miners’ strike for higher pay. Grasberg holds the world’s largest gold reserves and is one of the world’s largest copper mines. A strike is also set for Codelco, the state mining company in Chile, and the world’s top copper producer. Supply disruptions may drive copper prices higher.

  2. River0 says:

    Times of crisis like this are the greatest opportunities we’ll ever have for spiritual advancement in our lifetimes. Take full advantage by searching your heart and finding God within it. Do not be afraid. “Ask and you will receive. Knock, and the door will be opened for you!”

  3. BigOil says:

    Congratulations are in order. Barry has successfully turned the US into a no growth, western European style socialist state in a mere 2.5 years. Question is…do we end the transformation there?

    • Rusty Shackleford says:

      “My friends, we live in the greatest nation in the history of the world; I hope you’ll join with me as we try to change it.” — Barack Obama

      Snopes says this was a “slip-up” that was intended to be funny. But as we have learned so very often, when Captain Skidmark speaks off teleprompter, he tells the truth.

  4. proreason says:

    Don’t forget that government spending is included in GDP. Without the skyrocketing government spending, GDP wouldn’t be up slightly, it would be down dramatically.

    And all of the government spending is on the come. In other words, you and your children will be paying for it, plus interest, for decades.

    We’re still in the Obamy Depression. It’s just the the government’s lies and accounting deceipt hides it.

    Detroit is the key to the puzzle. It’s so bad there that they can’t hide it.

  5. yadayada says:

    gee, last quarter was a blazing 1.9 % growth. until the truth (ooops, revision) came out and they told us it was really only 0.4. I wonder, what will they “revise” this quarter’s rosey 1.8% down to?

    “The annual revisions of U.S. GDP data from the Commerce Department showed the economy contracted at an annual average rate of 0.3 percent between 2007 and 2010.”

    unfortunately, the convoluted contortion craze to blame Bush will actually work in the propaganda ministry.

    if only there were a way the conservatives in congress could somehow manage to buy or find a camera somewhere to step in front of. they might be able to transmit (maybe on youtube or something) some sort of coded message to the taxpayers that Pelosi and Reid were in charge of the purse strings during that 2007-2010 stretch.

    I wont hold my breath…. with Boner and his ilk in the leadership, nothing will change until 2012. and I think it would send a a wonderful message if a few hard core conservatives ran against the likes of Boner and his ruling class cronies. if they are willing to threaten to gerrymander out TEA Party representatives, maybe someone could show them how fragile their own positions could be after this traitorous “debt ceiling” debacle.

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