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"Weakest" Recovery In Over Half A Century Stumbles Forward

- September 29, 2016

Today, The Commerce Department Said That U.S. Gross Domestic Product (GDP) Only Grew 1.4 Percent In The Second Quarter. "Gross domestic product, a broad measure of goods and services produced across the economy, expanded at an inflation-adjusted 1.4% seasonally adjusted annual rate in the second quarter, the Commerce Department said Thursday." (Eric Morath and Ben Beubsdorf, "U.S. Second-Quarter GDP Revised Up To 1.4% Gain," The Wall Street Journal, 9/29/16)

  • The Second Quarter's GDP Growth Was "A Far Cry" From The 2.6 Percent Growth That Economists "Had Originally Forecast." "While the rate is better than the 0.8 per cent increase logged during the first quarter, it is still a far cry from the 2.6 per cent growth that Wall Street economists had originally forecast." (Pan Kwan Yuk, "US Q2 Growth Revised Up To 1.4%," Financial Times, 9/29/16)

The Second Quarter's Meager GDP Growth Reaffirms That "The Current Expansion's Pace Is The Weakest Of Any Since 1949." "Second-quarter growth accelerated from the first quarter's 0.8% pace, but was slower than the roughly 2% annual rate averaged since the recession ended in mid-2009. The current expansion's pace is the weakest of any since 1949." (Eric Morath and Ben Beubsdorf, "U.S. Second-Quarter GDP Revised Up To 1.4% Gain," The Wall Street Journal, 9/29/16)

"The Latest Data Confirms" That The Economy Has "Decelerated In The First Half Of The Year." "The U.S. economy grew at a modestly faster pace in the second quarter than previously estimated, but the latest data confirms the expansion decelerated in the first half of the year." (Eric Morath and Ben Beubsdorf, "U.S. Second-Quarter GDP Revised Up To 1.4% Gain," The Wall Street Journal, 9/29/16)

Recent Weak GDP Growth Is Causing Concern That The Economy Is "Stumbling Seven Years After The Recession" Officially Ended. "The marked slowdown during an already sluggish expansion raised concerns that the economy was stumbling seven years after the recession ended." (Eric Morath and Ben Beubsdorf, "U.S. Second-Quarter GDP Revised Up To 1.4% Gain," The Wall Street Journal, 9/29/16)

"Economic Growth Has Held Below A 1.5% Pace For Three Straight Quarters." (Eric Morath and Ben Beubsdorf, "U.S. Second-Quarter GDP Revised Up To 1.4% Gain,"The Wall Street Journal, 9/29/16)

  • GDP Only Grew 0.8 Percent In The First Quarter of 2016 And 0.9 Percent In The Fourth Quarter Of 2015. "The modest second quarter gain followed weaker readings of 0.8 percent GDP growth in the first quarter and 0.9 percent in the final three months of last year." ("U.S. Economy Grew At Weak 1.4 Percent Rate In Spring," CBS News, 9/29/16)

As A Result Of Weak Growth In The First Half Of The Year, The Third Quarter's Expectations Are Now Being Lowered

Because Of Weak Growth In The First Half Of This Year, Expectations For The Third Quarter's GDP Growth Are Already Being Lowered. "All eyes will now be focused on third quarter GDP. Hopes that growth in the second half of the year is going to show a big rebound from the first half have dimmed some what following a spat of lacklustre economic data - including weaker than expected retail sales and industrial production in August. Analysts have in recently weeks trimmed their third quarter growth estimates to around 2.8 per cent." (Pan Kwan Yuk, "US Q2 Growth Revised Up To 1.4%," Financial Times, 9/29/16)

The Federal Reserve Just Lowered Its GDP Growth Projections For The Third Quarter. "The Federal Reserve Bank of Atlanta, on Wednesday, forecast a 2.8% growth pace in the third quarter. The projection has been scaled back from well above 3% over the past month." (Eric Morath and Ben Beubsdorf, "U.S. Second-Quarter GDP Revised Up To 1.4% Gain," The Wall Street Journal, 9/29/16)

Other Indicators From The Commerce Department Show Declines In Gross Domestic Income, Home Building And Improvements, And U.S. Business Profits

Gross Domestic Income Was Revised To Show A "0.2 Percent Drop Rather Than A Gain." "Gross domestic income, which reflects all the money earned by consumers, businesses and government agencies, was revised to show a 0.2 percent drop rather than a gain." (Sho Chandra, "U.S. Economy Expanded At Revised 1.4% Rate In Second Quarter," Bloomberg, 9/29/16)

Business Profits Declined For The Fifth Consecutive Quarter, "The Worst Streak Since The End Of The Recession In Mid-2009." "Before-tax corporate profits fell 4.3 percent in the second quarter from the same time last year, compared with a 4.9 percent drop previously reported, according the the Commerce Department. It was the fifth consecutive decline and the worst streak since the end of the recession in mid-2009." (Sho Chandra, "U.S. Economy Expanded At Revised 1.4% Rate In Second Quarter," Bloomberg, 9/29/16)

Residential Fixed Investments, Which "Had Been A Driver Of Economic Growth Since 2014," Fell At A 7.7 Percent Pace In The Second Quarter. "Residential fixed investment, including home building and improvements, fell at an unrevised 7.7% pace in the second quarter. Before last quarter, residential investment had been a driver of economic growth since 2014." (Eric Morath and Ben Beubsdorf, "U.S. Second-Quarter GDP Revised Up To 1.4% Gain," The Wall Street Journal, 9/29/16)

"Business Investment Was Still Soft In The April-To-June Period." "Although business investment was still soft in the April-to-June period, the weakness was less pronounced, revised figures show." (Jeffry Bartash, "Second-Quarter GDP Raised From 1.4% From 1.1%," Marketwatch, 9/29/16)


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