GDP: U.S. Economy Grows Only 1 Percent In Spring, Increasing Recession Fears

WASHINGTON (Associated Press)-- The U.S. economy grew at a meager 1 percent annual pace this spring, slower than previously estimated. The downward revision will likely increase fears that the economy is at risk of another recession.

Fewer exports and weaker growth in business stockpiles led the Commerce Department to lower its estimate for the April-June quarter from its previous rate of 1.3 percent growth. That means the economy expanded only 0.7 percent in the first six months of the year.

Nine of the past 11 recessions since World War II have been preceded by a period of growth of 1 percent or less, economists note. Still, many said the revision hasn't changed their outlook for the rest of this year.

The weaker growth could rattle an already edgy stock market, which has lost 12 percent of its value since July 21.

Stock futures fell after the report was released.

Economists worry this summer's sell-off on Wall Street could hurt growth in the second half of the year, if consumers and businesses pull back on spending and investment.

High gas and food prices have already eroded consumers' buying power. Spending increased only 0.4 percent in the April-June period, the weakest growth since the final three months of 2009.

The revision showed spending was a bit higher than the government's first estimate of 0.1 percent growth. But the increase mostly reflected greater spending on health care, insurance and financial services, the government said.

People bought fewer long-lasting manufactured goods, such as autos and appliances. Those purchases fell 5.1 percent this spring, the biggest drop since the final three months of 2008. That partly reflects a shortage of autos on many dealer lots after the March 11 earthquake in Japan. Consumers spending accounts for 70 percent of growth.

"Consumption still barely had a pulse," said Tom Porcelli, chief U.S. economist at RBC Capital Markets.

Government spending contracted for the third straight quarter. And spending by state and local governments declined for the seventh time in eight quarters.

Federal Reserve Chairman Ben Bernanke will deliver a highly-anticipated speech later Friday in Jackson Hole, Wyo. Investors hope he will signal that the Fed will launch a new effort to boost the economy, but analysts don't expect anything ambitious.

The central bank has already cut the benchmark short-term interest rate it controls to nearly zero, and last week pledged to keep it there until mid-2013. But so far lower interest rates haven't helped: mortgage rates, for example, are already at record lows, and home sales are still falling.

Several dismal economic reports have suggested the economy worsened in the July-September quarter, sending the stock market lower. Manufacturing in the mid-Atlantic region contracted in August by the most in more than two years, a survey by the Federal Reserve Bank of Philadelphia found. A Richmond Fed survey released Tuesday and a New York Fed survey last week also pointed to slowdowns in those areas, although not as severe.

There have been some positive signs. The economy added 117,000 net jobs in July, twice the number added in each of the previous two months. Consumers spent more on retail goods last month than in any month since March. U.S. automakers rebounded last month to boost factory production by the most since the Japan crisis.

Most economists aren't forecasting a recession. JPMorgan Chase projects the U.S. economy will grow only 0.9 percent this year and 1.7 percent in 2012, much lower than the bank's estimates just a few weeks ago. Other economists have made similar downgrades.

Thursday's report is the second of three estimates the government issues for each quarter's economic growth. The estimates are updated with more recent data that wasn't available for the first take.

Comments

[smusmu]

03:00 PM on 09/01/2011

We've go to blame some of the big banks, see here http://www.greenuptrends.blogspot.com as well as the American companies taking job over seas to China and the likes whenmericans at home can use those jobs.
Obama as president needs to fix this problem soth jobs can stayat home whereit'sneeded most!.

[Nonamnesiac]

10:57 PM on 08/27/2011

There has yet to be an adult, fact-based discussion about modest defense and defense-re­lated budget cuts -- and that must occur for the economy to grow. A truly modest cut in defense and defense-re­lated spending includes a 50% reduction in such spending and an immediate, safe total end to the wars and US direct and indirect military assistance in the wars in which we are now engaged (Iraq, Libya, Afghanista­n and Pakistan). The reason a 50% cut in defense and defense-re­lated spending is factually a modest cut (as opposed to the miniscule cuts the Dems and Republican­s are suggesting­) is that a 50% cut still leaves us spending more than the next 5 most powerful countries in the world combined spend on their combined defenses. If the US made those cuts, we would cut $5.5 trillion in useless, wholly wasteful, deficit/de­bt-balloon­ing, depression­-deepening spending, meaning we could cut the deficit, invest in our crumbling infrastruc­ture, provide a first-clas­s, high quality health care system for all Americans and improve the current poverty-le­vel social security benefits. That is how ovebloated US defense and defense-re­lated expenditur­es are and how that spending weakens the United States. We would be much safer and more secure by halving defense and defense-re­lated spending and full ending the wars and military aid.

Also do what the original Bush tax cuts required -- snapback tax rates to Clinton levels adding $4 trillion in revenues.

No halving defense, no real growth.

[68Namvet]

11:06 AM on 08/29/2011

Been saying this for months:

First, end the wars in Iraq and Afghanistan. Immediately withdraw ALL troops from both countries. Maintain air and satellite surveillance and a small (no more than 5,000 member) special forces strike group for short duration operations to destroy any found Al Qaida training or operations bases.

Second - close 90% of the over 1000 military bases worldwide - and reduce the forces of the remaining bases by 90%. (Seriously - would we be any less likely to attack - say North Korea - if they attacked 4,000 troops as opposed to the 48,000 we have there now?)

Third, cut the defense budget by at least 50% (making us spend more than the other top five industrialized countries defense budgets combined instead of over 48% of all nations combined). This would return between $4.5 to 5 trillion to the U.S. treasury in the next decade.

Forth - invest $2 trillion in infrastructure building in this country, and use the remaining $2.5 to 3 trillion to pay down the debt.

Fifth - Audit the FED. Close the FED. Have the Treasury and Congress take over their Constitutional requirements to control the U.S. money supply.

[Nightangle]

02:33 PM on 08/27/2011

“OF COOKING THE BOOKS AND MANIPULATI­NG NUMBERS.

As of Aug 17th - The government "real" unemployme­nt rate is 19.6% - it ignores numbers it does not like - those who exhausted unemployme­nt benefits and removed from the UC roll, those for the last 3 years are now permanently­y unemployed who are discourage­d and no longer actively seeking employment­, those that are working part time, and those under employed.

If you include all these, Statistica­lly it's about about 29.7% JOBLESS RATE, and for actuarial risk analysis, it's going to rise further simply because Obama is anti-busin­ess, the US GDP is tantamount to nil growth, dollar devaluation­n, dizzying market volatility­, and public confidence down the gutter

Cold honest truth is we need tens of millions more, and I do not mean Shovel Ready Poop Part II - we need FULL TIME LIVEABLE TO HIGH PAYING JOBS.

There is hardly no rise in wages, and worst, inflation doesn't count food and energy prices.
Obama still think we have a AAA rating - misleading to say the least.

Not that we don't already know, Jeff Immelt, Obama's job czar, and GE's CEO shed about 34,000 more jobs to China, and his 2-3 BILLION Chongqing China Project that would effectivel­y transfer high tech jobs to China.

GE is not alone - what about BOEING CHINA. US anchor industries have all but settled in China.

Expect more Americans to go on welfare.

[mjdloc157]

10:39 AM on 08/27/2011

All this "jobs" ,"infrastructure" talk,from Obama but the truth never came out about the first "Stimulus,go to www.newsroomamerica.com/story64180, its one of many sorys how Obama awarded his "CORPERATE FRIENDS" .the first payment to his friend Jeff Emmelt of GE was 25 million and a advisorie job,but MSNBC and the press "MISSED" these stories I guess,25 million ,thats 25 miles of road construction to say the least. and thats just the tip of the iceburg ,that Obama and Biden did to award thier friends

[hk usp 45]

08:33 AM on 08/27/2011

It looks like ATM"s are a much bigger problem than we originally thought.

[nadiz6]

08:26 AM on 08/27/2011

Obama is the second worse president after carter

[nadiz6]

08:22 AM on 08/27/2011

Obama will be the second worth president after Carter in US history. Obama is competing with Carter for the last place in destroying US economy with his excessive regulations,lack of jobs, excessive spending ,raising the deficit by 4 trillion in 2 years(record time),passing health care reform that failed to control its cost and expanded government control on it.

[68Namvet]

12:33 PM on 08/28/2011

One might wonder upon what you base your statement - for the facts suggest otherwise. Facts, unemployment was higher under Reagan than Obama and lower under Carter than bush (the lessor).

Unemployment:

Carter = high 7.8%, low 5.2% - term average 5.8%
Reagan = high 10.8%, low 5.7% - term average 8.1%
Bush (senior) = high 7.8%, low 5.0% - term average 6.8%
Clinton = high 7.0%, low 3.8% - term average 4.9%
bush (the lessor) = high 8.4%, low 4.4% - term average 6.1%
Obama = High 10.1%, low 8.6% - term average 9.5% (thus far - still in 1st term)

By debt: (by the way - debt is what we have - deficits are planned spending versus revenues - once spent, the monies borrowed become debt, not deficits)

National Debt increase by president in constant dollars.
Under Carter: 42%
Under Reagan: 189%
Bush Act 1: 55.6%
Clinton: 36%
Bush (the lessor): 89%
Obama 25% (thus far)

[nadiz6]

03:21 PM on 08/28/2011

Where you get this numbers for unemployment rate under Obama was (low 8.6%),we never reach below 9% under Obama (still with your number the worst) . unemployment rate when Reagan become president was 11% and he created 16 million jobs in 8 years reach it to 5.7%( in his first term unemployment was 7.5%), Carter was worse president because(high gas prices - cars stand in line, interest rate was 14%. inflation was high, unemployment rate reached 11% in his last year, American hostage in Iran , failure operation to rescue them that killed more people)

[68Namvet]

12:33 PM on 08/28/2011

The deficit for fiscal year 2009 — which began more than three months before President Obama’s inaugurati­on — was $1.4 trillion and, at 10 percent of Gross Domestic Product (GDP), the largest deficit relative to the economy since the end of World War II. At $1.3 trillion and nearly 9 percent of GDP, the deficit in 2010 was only slightly lower. If current policies remain in place, deficits will likely resemble those figures in 2011 and hover near $1 trillion a year for the next decade. But, the fact remains: the bush (the lessor) great recession, the bush (the lessor) tax cuts and the wars in Afghanista­n and Iraq explain virtually the entire deficit over the next ten years.

While I do not support and will not vote for Obama [having continued the bush (the lessor) unnecessary wars of choice] let us at least be factual. Neither he nor Carter are even close to as bad as bush (the lessor) or even Hoover.

[nadiz6]

03:33 PM on 08/28/2011

Carter is one of the worst president in US history and ranked last on most polls( unemployment rate in his last year reached 11%,interest rate was 14%, high inflation high taxes, high gas prices and cars stand in line in gas stations(gas shortage), American hostages in Iran ,failure rescue operation that cost lives and equipment) complete failure domestic and foreign policies. All historians and economists agree that his policies was the worst of all presidents. Obama have deficit in 2009 ,2010 ,2011 budgets each have average of about 1.3 trillion or more . In addition He spend 890 billion stimulus that did not create any jobs and tarp money 500 billion that bush did not spend (Obama when become president spend rest of tarp money)

[tbwest84]

06:53 AM on 08/27/2011

I think Obama must know it's over nothing else can explain his let them eat cake both Obama's
display. 15 months good riddance .

[smburwick]

06:51 AM on 08/27/2011

Moonbats are caught up in the game of the radicals to demean and destroy the repubicans and conservatives, who are the only ones not partying to the 10's and spending 10 million of our tax dollars on clothing, and lavish trips.

[gahme59]

01:10 AM on 08/27/2011

As Obama has said, we need hope and change. Well, come 2012, we will have a change and that should give us hope. We must get rid of this weak and ineffective president and all of his so called advisors that have just about ruined this country. We need a real change, one that we can believe in and it isn't the failed programs of the social reengineering democrats. take from the people who have worked so hard to provide a good living for their families and give to the do nothings of this world. Out with them all.

[mvolz55610]

06:28 AM on 08/27/2011

Also, we can/should Hope for Change in 2012. One of the many Changes we saw but is rarely discussed is that the US govt reported that there are now (as of this past month) 46 million people or more than 15% of our population receiving food stamps. Their figures also describe that the number increased every month for 30 straight months. Obama has been POTUS for the past 31months. Coincidence? I think not. Whose fault is this? Gee what is the most rational and logical answer?

[Cleansing]

12:46 AM on 08/27/2011

There is no Jobs you - SOB's - none now and for the numbers we have out side dumb service jobs -that is all American's have and the Theives you love: WALL STREET boys

The only thing America has left is finance, and now that is moving abroad. On February 22 CNNMoney.com reported that America's large financial institutions are moving "large portions of their investment banking operations abroad." No longer limited to back-office work, offshoring is now killing American jobs in research and analytic operations, foreign exchange trades and highly complicated credit derivatives contracts. Deal-making responsibility itself may eventually move abroad. Deloitte Touche says that the financial services industry will move 20 percent of its total costs base offshore by the end of 2010. As the costs are lower in India, that will represent more than 20 percent of the business. A job on Wall St is a declining option for bright young persons with high stress tolerance.
get boys this about more then Gerry B and your BS
America has begun a polarization into rich and poor. The resulting political instability and social strife will be terrible.

[Reno Fickler]

12:28 AM on 08/27/2011

What if we didn't have this index.....or that ratio of this to that.....or this poll....or that survey.....
if anything had a consistent, provable influence on the economy it would have been discovered.
Your 'analyst' is Ray Charles throwing darts.

[golfr415]

10:19 PM on 08/26/2011

The US economy, indeed the world economy, is in serious difficulty. The true source of the problems results from spending more money than there are available revenues, thus incurring unsustainable debt. The solution to resolving the problems is in theory simple - spend less money than one receives. That primarily means "spending less" as the current tax burden cannot be sustained. Even the European Union is beginning to understand this, they are beginning to require their member countries to have balanced budgets. When will we learn this? When will we see a balanced budget amendment?

[rafaelrobyns]

01:34 AM on 08/27/2011

You have no blooming idea what you are talking about. First, Debt-to-GDP puts us 37th in the world. Second, the federal income tax burden is at an historic low. The economy is stimulated by demand for goods and services, which comes when the middle class has money in its pockets. The balanced budget amendment is a political trick that, if enacted, would tie the government's hands to respond to anything, and most economists agree that a drop in spending would absolutely kill the recovery. When will ignorant people learn anything?

[Karma2U]

06:13 PM on 08/27/2011

Ignorant people refuse to learn they just join the tea party.

[tnjr]

09:29 PM on 08/26/2011

Bernanke said Fed can't do anything, time is needed for the recovery. This after saying rates will stay near zero until 2013. Translation, economy will not get better with Obama in the White House.

[daradams]

09:37 PM on 08/26/2011

tnjr - I believe you. F&F

[mjdloc157]

08:42 PM on 08/26/2011

WHAT! WHAT!,1 % ,I was told by Obama that this was "THE SUMMER OF RECOVERY" he spent a trillion, on his friends and they promised jobs, GE,well they did provide jobs IN CHINA,GM they said they'd be in full production of there clown cars,WIND, GREEN , JOBS" what happened,Joe bidens in china his wife went to Africa ,Obamas in Marthas Vinyayard, But he can't be injoying himself with all those 'Rich" folk, Could he?All this traveling,partying, at lest his aides are working overtime,How much did you see of that trillion????????

[daradams]

09:37 PM on 08/26/2011

mjd - F&F - Good post.