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Shocker: 2nd Growth Revised Up To 3.3%

From the cultists of recession at Reuters:

The U.S. economy expanded at a stronger-than-first-reported 3.3 percent annual rate in the second quarter, as consumer spending and net exports were more robust than initially estimated and inventories fell less sharply, a government report showed on Thursday.

Second quarter growth revised upward to 3.3 percent

By Mark Felsenthal Thu Aug 28

WASHINGTON (Reuters) – The U.S. economy grew at a solid 3.3 percent annual rate in the second quarter, much stronger than first thought, but many economists expect growth to flag as the year progresses.

The U.S. Commerce Department on Thursday said consumer spending and net exports were more robust that initially estimated and that inventories fell less sharply. A month ago, it had said U.S. Gross Domestic Product had expanded at a 1.9 percent rate in the quarter.

Analysts polled by Reuters were expecting the annual rate to be revised to 2.7 percent.

U.S. equity index futures rose and the dollar pared losses, while Treasury debt prices fell on the report. Federal funds futures showed increased prospects for interest rate hikes

However, many analysts worry that exports and consumer spending, which have buoyed the economy, are likely to taper off in the second half of the year as spending from government stimulus checks dries up and weakening global growth and a stronger U.S. dollar crimp demand from abroad.

Consumer spending, which fuels two-thirds of the U.S. economy, grew at an upwardly revised 1.7 percent rate in the second quarter rather than the 1.5 percent pace first reported.

Meanwhile, exports grew at a 13.2 percent annual rate instead of the 9.2 percent pace initially estimated

Meanwhile, inventories dipped at an annualized $49.4 billion in the quarter, rather than the $62.2 billion drop first reported, a possible sign that businesses are less pessimistic than believed.

Separately, the number of U.S. workers filing new claims for jobless benefits fell by 10,000 last week, government data on Thursday showed, but remained at elevated levels indicating a weak labor market.

As always things have turned out far better than what the media’s economic experts foretold. But their predictions always get put on the front page, while the actual facts gets buried somewhere next to the classified ads.

By the way, note the graphic Reuters supplied with the story.

Once again Reuters (like the rest of the media) are still trying to pretend that the US has had periods of negative growth. That simply is not true. But when has that ever stopped them?

And even when they grudgingly report the truth, they have to explain how the facts are actually lying.

For instance, here is an all too typical article from CNBC:

Economy May Be Strong, But It Feels Like Recession


CNBC staff and wire reports
28 Aug 2008

Despite the surprising growth in the US economy in the second quarter, many economists—and average Americans—aren’t convinced that the country has avoided a recession.

“The reason this feels like a recession is—from the standpoint of the consumer—it basically is,”  David Ressler, chief economist at Nomura Securities. “Consumer spending is very weak and isn’t going to get any stronger anytime soon, and that’s with the benefit of the economic stimulus.”

The Commerce Department attributed the unexpected 3.3% jump in the gross domestic product to stronger-than-expected consumer spending and exports, while inventories fell less sharply. GDP measures the value of all goods and services produced within the U.S. and is the best barometer of the country’s economic health.

Still, a growing number of analysts fear that the country will hit another economic pothole in the third and fourth quarters as the impact of the tax rebates disappears and exports tail off as other countries’ economies slow down.

“Export growth will NOT be repeated with global growth slowing,” said Robert Brusca, chief economist for Fact and Opinion Economics. “Domestic spending will LOSE its boost from tax rebate checks.”

Even Federal Reserve Chairman Ben Bernanke recently warned the economy will be weak through the rest of this year.

“We’re going to get negative growth in consumer spending for the first time since late 1991 in the third quarter.” said Ressler. “Consumers at least are certainly in a very weakened state and that’s going to be evident in the data going forward. We’re not going to get as much help from exports down the road either.” …

—Reuters and AP contributed to this report.

(Thanks to NotSoYoungJim for the heads up.)

This article was posted by Steve on Thursday, August 28th, 2008. Comments are currently closed.

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