Am I a total ass for thinking of this in purely political terms?
The economy sank at a pace of just 1 percent in the second quarter of the year, a new government report shows. It was a better-than-expected showing that provided the strongest signal yet that the longest recession since World War II is finally winding down.
The dip in gross domestic product for the April-to-June period, reported by the Commerce Department on Friday, comes after the economy was in a free fall, tumbling at an annual rate of 6.4 percent in the first three months of this year. That was the sharpest downhill slide in nearly three decades.
The economy has now contracted for a record four straight quarters for the first time on records dating to 1947. That underscores the grim toll of the recession on consumers and companies.
Many economists were predicting a slightly bigger 1.5 percent annualized contraction in second-quarter GDP. It’s the total value of all goods and services — such as cars and clothes and makeup and machinery — produced within the United States and is the best barometer of the country’s economic health.
“The recession looks to have largely bottomed in the spring,” said Joel Naroff, president of Naroff Economic Advisors. “Businesses have made most of the adjustments they needed to make, and that will set up the economy to resume growing in the summer,” he predicted.
Less drastic spending cuts by businesses, a resumption of spending by federal and local governments and an improved trade picture were key forces behind the better performance. Consumers, though, pulled back. Rising unemployment, shrunken nest eggs and lower home values have weighed down their spending.
Okay, so it wasn’t good. But it could have been a lot worse.
But even if things do start getting better sooner than we anticipate, the public is slow to catch onto things, so it’s not like Obama or his beloved stimulus package are going to be seen as economy-savers in November 2010. Please remember that Bill Clinton won in 1992 on the back of the “poor economy,” which had been out of a recession for an entire year by the time the election rolled around.
Obviously, though, either way, it’s more important for people to start finding work again than for Obama’s poll numbers to drop.
July 31st, 2009 at 11:15 pm
As it has been pointed out even if the economy starts growing this year unemployment is going to lag behind thus creating a problem for Obama and the Dems.Chances are they’ll be going into election day 2010 with a neg negative on the jobs front.
August 1st, 2009 at 12:02 am
Is it possible that some jobs lost will never come back because of the companies retooling and finding that those who were laid off were never needed or learned to get along with fewer employees even with a pick up in business begins.
During the worst years of the Depression unemployment was never lower than 17% even with the New Deal spending in full force. It wasn’t until WW11 that the Great Depression ended.
There are a lot of parallels to the Depression, FDR, and the New Deal. I say watch out for run a way inflation, just as the U.S. had in the 1950′s.
August 1st, 2009 at 12:12 am
#2
Meant to say at the worst of the Depression unemployment was at 25% and never went lower than 17% even with the New Deal programs putting people to work.
August 1st, 2009 at 2:02 am
I was discussing this with a friend the other day, and he actually has a good deal of economic background. We agreed that its about now when we will probably see two quarters of growth, albeit very modest. But after that, I am afraid its going to make the recession we just finished look trivial. What my friend explained and I completely agree with him, is that the only reason we are seeing profits from a lot of major financials right now and other major companies has nothing to do with growth. This recovery is the product of liquidation; corporations are liquidating all excess assets and cutting payroll so dramatically just so they can straighten their balance sheets and claim solvency. I would wager a lot of them feel they only need to ride the storm out, and once the recession is over and consumers are doing their usual, then their business models will work again.
While its commendable that these companies have slashed their budgets to balance them, nothing has really changed, except that the unemployment rate is much higher and a lot of wealth simply disappeared. Inflation is really going to do wonders for all of us. I think we are headed for the worst American crisis since the Civil War. At least we didn’t have hyper-inflation during the Great Depression.
August 1st, 2009 at 7:36 am
The analysis that this GDP was better than experts thought — from what I read — is incorrect. I’ve been a prosecutor for many years now, but I majored in economics as a college graduate that included a lot of statistic courses. From what I read, the reason that the GDP was -1 instead of bigger was because the GDP from the prior quarter was changed to an even lower number. The -1 decrease in GDP was the percentage increase from the prior quarter. Thus, if the prior quarter had not been changed, this GDP certainly would have met, if not beaten the estimate. I wouldn’t be surprised if the huge change in the prior quarter GDP was not done for political reasons. I put nothing past these guys and gals running the government now.
August 1st, 2009 at 9:42 am
It is fundamentally impossible for this economy to have truly improved. Unemployment must go up much further in order to clean out the malinvestment of the Greenspan boom. Things may get better before they get worse, but things will get much, much worse.
August 2nd, 2009 at 4:54 pm
#5… I dont know about all that. But I found this article interesting…http://www.ritholtz.com/blog/2009/07/falling-imports-versus-falling-exports/
http://curiouscapitalist.blogs.time.com/2009/07/31/gdp-nothing-to-write-home-about/
August 2nd, 2009 at 4:57 pm
#4… I pretty much agree with you. Think about it: many of the companies making profits are financial institutions that received bailout money from the govt. So, we’re paying for their profits. How long will that last??
August 14th, 2009 at 5:50 am
Valtrex interaction….
Valtrex. Valtrex side effects. Acyclovir versus valtrex. Buy valtrex online….