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A closed factory sits in Waterbury, Connecticut. The government has revised up U.S. GDP growth numbers for the second quarter, but GDP continues to be weak.
Under the circumstances, we should take it. The Commerce Department just revised up second quarter U.S. GDP growth to 1.7 percent from 1.5 percent.
If you're keeping score at home, this means that in the second quarter of 2012, the U.S. economy grew at a rate that matches expansion in the whole of 2011 — a rate that was considered abysmal at the end of last year, in the context of a fourth quarter in 2011 that saw GDP growth of 4.1 percent.
I like to keep an eye on GDP as it relates to unemployment, which is currently at 8.3 nationally, higher in California and L.A. Growth at 1.7 percent — or anything under 2 percent, really — isn't enough to make much of a dent there. In order to get nearly 13 million unemployed Americans back to work, we need to add 350-400,000 new jobs each month. We're doing less than 100,000 these days, after starting the year at about 200,000-per-month pace.
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Secretary of the Treasury Timothy F. Geithner (L) and William C. Dudley (R), President and Chief Executive Officer of the Federal Reserve Bank of New York, listen to Federal Reserve Chairman Ben S. Bernanke (C) speak during a hearing of the House Financial Services Committee on Capitol Hill March 24, 2009 in Washington, D.C.
The fourth quarter of 2011 was much better for the U.S. economy than the year as a whole. But if you can believe it, it actually disappointed many economists. The economy grew at a rate of 2.8 percent, a vast improvement over the sub-2-percent growth that typified the year. But we were looking for 3 percent GDP growth.
I know, I know — 0.2 percent doesn't sound like such a big deal. Unless your yearly GDP is $14.5 trillion and you need to add something like 350,000-400,000 jobs each and every month to bring unemployment down to pre-crisis levels (nationally, it's at 8.5 percent now).
The Fed on Wednesday said it expected to keep interest rates at rock bottom levels at least through late 2014, and Chairman Ben Bernanke said the central bank was mulling further asset purchases to speed the recovery.
The central bank warned the economy still faced big risks, a suggestion the euro zone debt crisis could still hit hard.
"We're still repairing the damage done by the financial crisis. On top of that we face a more challenging world. We have a lot of challenges ahead in the United States," U.S. Treasury Secretary Timothy Geithner said at the World Economic Forum in Davos.
Prospects of sluggish growth could hurt President Barack Obama's chances of re-election in November.
The economy grew 1.7 percent in 2011 after expanding 3 percent the prior year, and the unemployment stood at a still-high 8.5 percent in December.
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A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC. New claims for US unemployment insurance dropped last week to a level last seen more than three years ago, government data showed December 15, 2011 in a sign of stabilization in the troubled jobs market.
There's been a big debate in economics over the past few months about whether the U.S. will fall into another recession. One side points to continued high unemployment and sluggish growth, as well as the perception that the economy is in the dumps (and in an economy, perception is very important to consumer behavior, which accounts for 70 percent of economic activity in the U.S.).
The other side says, basically, that we aren't seeing unemployment go up or GDP growth go down, and besides, most industries have declined so far that there's nowhere to go but up. Therefore, no double-dip recession.
The data favors the latter argument. This is from the LA Times:
Growth has picked up steam through the fall as dropping gas prices put more money in consumers' pockets and businesses rebuilt their inventories. Economists project the annualized growth rate from October through the end of the year could be as high as 4%.
Helping fuel that recovery is continued improvement in the job market.
New jobless claims declined again last week, falling to 364,000, the lowest level since April 2008, the Labor Department said Thursday. The four-week average of 380,250 is below the 400,000 figure that economists say is key to cutting into the unemployment rate.
It may have been the most crazy, crazy, crazy year in business and economics since...well, since the Financial Crisis in 2008. In fact, it may have topped that surreal episode. We began the year with some economists expecting better than 3 percent GDP growth in the U.S. and ended it with anti-Wall Street protests from coast to coast, the eurozone on the ropes, and unemployment still hovering above 8 percent.
Click through the slide show to get the blow-by-blow, from the Japanese earthquake and tsunami to the ongoing foreclosure crisis. May you live in interesting times? For everyone's sake, let's hope 2012 is rather less interesting.
Oh, wait...it's an election year!
Methinks we're going to need helmets in 2012.
Should have gotten to this yesterday, but better late than never. And just in time for Black Friday, the traditional kickoff for the holiday shopping season!
The Bureau of Economic Analysis revised down its data for U.S. GDP growth in the third quarter. What was 2.5 percent, which was pleasantly surprising when it was announced, became 2 percent. So the economy grew in the third quarter, just not as much as was originally thought.
This isn't really a good thing — that 2.5 percent figure caught observers off guard and gave economists firm reason to believe that the economy isn't going to fall into another recession. But under the circumstances, 2 percent isn't terrible. And losing half a percentage point of GDP doesn't mean that we have to gird ourselves for a double-dip. In fact, it means that the economy continues to grow, a sign that if nothing else, unemployment won't climb higher than 9 percent.