Economy Has Hit Stall Speed – 1.3% and falling
There is no way to spin the GDP report that came out this morning as anything but very bad. It was just last May that the consensus was that second-quarter GDP would be 3.3%. That had been revised down to 2.7%, but the number came in at 1.3%.
John Mauldin at Business Insider
EXCERPTS:
Normally, at this time in a recovery we are growing at close to 3 times that number, or 3.6%. (You can read the press release and see the data I write about at http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm.)
Even worse, the first-quarter number was revised down from 1.9% to an anemic 0.36%. For new readers, note that the first estimate of a quarter’s growth is just that, an estimate. There are three monthly revisions that follow, and after a few years it is revised yet again with the aid of hindsight. And the 4th quarter of 2010 was taken down from 3.1% to 2.35%!
Joan McCullough notes:
“Working from Q309, forward, read GDP as follows:
“1.7, 3.8, 3.9, 3.8, 2.5, 2.3 … now here it comes: 0.4 … and then today’s 1.3%.
“I won’t keep you in suspense any more. Here’s my take: MOMENTUM IS BROKEN. A big, ol’ monkey wrench, courtesy of input arising from the change in inventory and Imports. And once momentum stumbles, then H2 growth becomes a wild card, right?”
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