Q2 GDP Growth = 1.7%

The economy had some good news, and it’s slightly more evidence in favor of our the-economy-is-stronger-than-people-realize thesis. The government revised higher its estimate for second quarter GDP growth.

The initial estimate one month ago said the economy grew by 1.5% during the second quarter. Now they’re saying it was 1.7%. Sure, that’s not a major revision but at least it’s in the right direction.

A second straight quarter of slowing growth shows the world’s largest economy is having difficulty making headway as consumers stay frugal and looming tax changes prompt companies to limit investment and hiring. Chairman Ben S. Bernanke this week may reaffirm the view of many Federal Reserve policy makers that more stimulus will be needed unless the expansion shows signs of strengthening.

“We are very much struck in a slow-growth mode,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who correctly forecast the revision. “We still don’t see the economy breaking free of this 1.5 percent to 2 percent growth rate. A 1.7 percent pace is the personification of the Fed’s frustration.”

The economy grew by 2% in the first quarter. Before today’s data came out, we were able to say that economic growth was “decelerating,” meaning rate of growth was slowing. That’s still technically true, but it’s probably more accurate to say that growth has leveled off during the first half of this year.

Posted by on August 29th, 2012 at 11:15 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.