United States Economy Shrinks For First Time Since 2001

[interestrateripoff]

http://www.guardian.co.uk/business/2008/ju...rowth.recession

The US economy shrank at the end of 2007 for the first time in six years, according to official figures, leading analysts to speculate the world's largest economy may be in recession.

The commerce department revised its estimate for the fourth quarter to show gross domestic product contracted 0.2% - rather than growing 0.6% as it previously reported. It was the first three-month period in which GDP shrank since growth contracted by 1.4% in the third quarter of 2001 during the last official recession.

The department also reported that GDP grew at an annual rate of 1.9%, up from a revised-down 0.9% in the first quarter. This figure was lower than analysts' expectations of a 2.3% rise in second-quarter growth.

Paul Ashworth, senior US economist at Capital Economics, said: "At first glance, the 1.9% annualised gain in US GDP in Q2 would seem to make a mockery of claims that the economy is in recession. However, given that the Treasury pumped in $91bn (£45bn), or nearly 4% at an annualised pace, in the form of tax rebates during the quarter, the actual outturn is pretty disappointing. It was also below the consensus forecast of a 2.3% gain.

"Moreover, GDP growth in the preceding two quarters was revised down. In particular, the economy is now estimated to have contracted by 0.2% in Q4 of last year, raising the possibility that the National Bureau of Economic Research (NBER) will eventually conclude that the recession began some time during the final three months of 2007."

Recession is popularly defined as at least two quarters of negative economic growth but the US has its own method of assessment, with the NBER's business cycle-dating committee making a judgment.

Consumer spending, which accounts for two-thirds of the US economy, rose 1.5% in the second quarter of the year, up from 0.9% in the first quarter and 1% in the fourth quarter last year.

Pessimists are basing their gloom on old news - can Anatole Kaletsky spin this into a positive???

Do the bears have it?

[Van]

Recession has been underway since H2 2007. They always revise the figures afterwards - this is *exactly* what they after the 2000 recession.

[domo]

Hm 0.8% revision, not exactly very accurate are they. Thats even after optimistic massaging of the data that they do.

Edited July 31, 2008 by domo

[interestrateripoff]

BBC NEWS | Business | US economic growth stays positive

The US economy has been boosted by the government's $168bn (£84bn) stimulus package, according to the US Treasury Secretary Henry Paulson.

Official figures showed that gross domestic product (GDP) rose at an annual rate of 1.9% between April and June, up from 0.9%.

Mr Paulson predicted that the US economy would get stronger next year "and beyond".

However, the figure was worse than expected, sending shares falling.

Investors were also concerned that the government had downgraded its estimate of growth in the last three months of 2007 from the previous reading of 0.6% to show a negative growth figure of -0.2%.

The US dollar fell across the board, including against the euro and the yen, following the release of the data.

At the current growth rate of nearly 2%, the US economy is only growing at half the rate it was one year ago.

I wonder how these figures will get revised.

Edited July 31, 2008 by interestrateripoff

[Flatdog]

BBC NEWS | Business | US economic growth stays positive

I wonder how these figures will get revised.

A mere £84 billion stimulus package?… little league in comparison to the £50 billion doled out here.

Why list comparisons to US$ as only the Euro and Yen?

[Not Long Now]

Recession has been underway since H2 2007. They always revise the figures afterwards - this is *exactly* what they after the 2000 recession.

Too right. I don't believe any of the figures that are pumped out of the ONS or whoever these days. Just spivs for the policians to spin their crap.

Why aren't ALL statistics (upon which government policy is based) provided by an INDEPENDENT, transparent and accountable body.

Maybe then when we are told that unemployment has stayed the same (HOW?) and inflation is only 3.something% we might actually believe them.

[interestrateripoff]

http://business.timesonline.co.uk/tol/busi...icle4437116.ece

The Labour Department report showed that the number of US workers filing new claims for unemployment benefits jumped to a near five-year high last week, increasing by 185,000 to 3.28 million – the highest level since December 2003.

GDP growth was supported by America's smallest trade deficit in seven years, which shrunk to $395.2 billion. Without the benefit of a smaller deficit, GDP would have contracted by 0.5 per cent.

According to this it was all down to the trade deficit???

[Elizabeth]

I'm so glad this happened while Bush was still in power. This way the Republicans can't blame Obama for something that happened in the first month of his presidency and have proved themselves decisively impotent to do anything about it.

[Della]

All they'll do to fix this I predict is print more money.

A recession is defined as a shrinkage of economic activity in nominal dollar terms, therefore if there are more dollars about the economic activity number is higher because there are more dollars about, and then, technically the recession is cured. Huzzah!