Grim Economic News: Second Quarter Growth Downgraded to 1.6%
August 27, 2010
(ChattahBox)—Well, it’s Friday and that means more gloomy economic news. A government report downgraded the already slow pace of economic growth from last month’s 2.4 percent to just a snail’s pace of 1.6 percent. The good news is that the Gross Domestic Product is growing at all, but the bad news is that it’s sputtering along on a near-empty tank of gas.
According to The New York Time’s report, the latest bad economic news comes in the wake of a grim home sales report.
“The news came at the end of a week that showed the economic retrenchment that began in the second quarter has spilled over into the summer. Existing home sales in July were down to their lowest level in a decade, and sales of new homes that month were at their lowest level since the government began tracking such data in 1963. Orders for large factory goods, excluding the volatile transportation sector, dropped in July, indicating that recovery in the manufacturing sector is also stalling.”
What prompted the revision? Lower inventories than expected, coupled with an increase in imports.
“The bulk of the downgrade in the second-quarter G.D.P. resulted from the fact that government analysts had assumed that American companies added more inventories to their warehouse shelves than they actually did. The adjustment also took into account a sharp rise in imports, leading to a wider-than-estimated trade deficit.”
One bit of good news: Consumer spending was revised upwards from last month’s figures, from 1.6 percent to 2 percent for the second quarter.
So, Americans can take that bit of good news to the shopping malls his weekend, and spend what little disposable income they have on back-to-school supplies, before they hit the soup kitchen.