Research Briefing

TODAY’S GDP REVISION MAKES CLEAR OBAMA’S “ECONOMY BARELY HAS A PULSE”

The Associated Press: “The Government Is About To Confirm What Many People Have Felt For Some Time: The Economy Barely Has A Pulse.” (Christopher S. Rugaber, “Snapshot Of Economy About To Get A Lot Bleaker,” The Associated Press, 8/27/10)

The Commerce Department Revised Second Quarter GDP Growth Down To An “Anemic” 1.6 Percent. “The Commerce Department on Friday downgraded the nation’s economic growth in the second quarter, providing the most important evidence yet that the recovery has stalled. The anemic growth rate of 1.6% was down from last month’s estimate of 2.4%. The report put an exclamation point on a week of bad economic news that has raised fears the nation could plunge into another recession.” (Jim Puzzanghera, “2nd-Quarter GDP Growth Revised Down To An Anemic 1.6%,” The Los Angeles Times, 8/27/10)

Growth In The Second Quarter Was “Sluggish” And “Corporate Profits Nearly Dried Up.” “The U.S. economy grew more sluggish than initially estimated in the second quarter, and corporate profits nearly dried up, further evidence that the recovery is losing steam. … Friday’s report also showed that companies barely managed to post profit gains, following several very profitable quarters. After-tax earnings edged up 0.1%, well off the previous quarter’s gain of 11.4%. First-quarter profits were revised down from the initial estimate of a 12.1% increase.” (Tom Barkley And Darrell, “GDP Growth Revised Downward,” The Wall Street Journal, 8/27/10)

The New York Times: “Economic Statistics Released Friday Offered The Clearest Sign Yet That The Recovery, Already Acknowledged To Be Sauntering, Had Slowed To A Crawl.” (Motoko Rich, “U.S. Economy Slowed to 1.6% Growth Pace in 2nd Quarter,” The New York Times, 8/27/10)

With “Such Grim Reports,” Analysts Expect Employers To Put A Hold On Hiring. “With such grim reports, economists are now concerned that the outlook for job creation, which has been spluttering all summer, could deteriorate further. Companies and consumers tend to be spooked by bad news, and market analysts and economists worry that faltering confidence could cause employers to hold back on hiring.”  (Motoko Rich, “U.S. Economy Slowed To 1.6% Growth Pace In 2^nd Quarter, “The New York Times, 8/27/10)

The Washington Post: “The 1.6 Percent Growth Rate In The April To June Quarter Compares With A Solid 3.7 Percent In First Quarter Of This Year And A Breakneck Rate Of 5.7 Percent In The Final Quarter Of 2009.” (Ariana Eunjung Cha, “GDP Growth Falls Sharply In 2Q,” The Washington Post, 8/27/10)

Under 2% Growth Won’t “Reverse Any Of The Drags On The Economy” And “Job Seekers Won’t Find Much Work.” “That is because sub-2% growth in real gross domestic product won’t reverse any of the drags on the economy–and it will threaten a main support to recent growth: capital spending.  In a 2% economy, job seekers won’t find much work, workers won’t get big pay raises. Financial markets will stay on pins and needles. Policymakers will remain stymied and politicians will rant.”  (Kathleen Madigan, “How An Even Slower Recovery Would Feel,” The Wall Street Journal’s “Real Time Economics” Blog, 8/25/10)

Optimistic Economists That Projected A Recovery In The Second Half Of 2010 Are Now Admitting They Are Revising Their Estimates Down. “Economists who projected the U.S. recovery would gain speed in the second half of the year are now scaling back those forecasts as the outlook for jobs and business investment dims.” (Timothy R. Homan and Shobhana Chandra, “Optimists Cut U.S. Forecasts As Jobs, Spending Outlook Dims,” Bloomberg, 8/26/10)

• “‘We Have To Be Realistic And Acknowledge That The Economic Data Have Been Weaker Than We Thought,’ Said Joseph Lavorgna, Chief U.S. Economist At Deutsche Bank Securities Inc. In New York.” (Timothy R. Homan and Shobhana Chandra, “Optimists Cut U.S. Forecasts As Jobs, Spending Outlook Dims,” Bloomberg, 8/26/10)

IHS Global Insight’s Chief Economist, Nigel Gault: “I Think People Will Decide These Numbers Will Confirm The Economy Is Slowing Sharply. You Combine These With Any Other Numbers We’ve Gotten From The Third Quarter And There’s Little Reason To Think The (Next) Quarter Is Going To Be Better.” (“Instant View: Q2 GDP Growth Revised Down To 1.6 Percent,” Reuters, 8/27/10)