Economy Watch: US GDP Grew Tepidly in 2Q
- Sep 28, 2012
The Bureau of Economic Analysis released its final estimate of U.S. GDP growth on Thursday, the one that will be cited forever more, and it wasn’t good tidings for the U.S. economy. Real gross domestic product—the output of goods and services produced by labor and property located in the United States—increased at an annualized rate of only 1.3 percent during the second quarter, shaving it down from the previous estimated increase of 1.7 percent. In the first quarter, real GDP increased at an annualized 2 percent, according to the BEA’s final estimate for the period.
Positive growth occurred during 2Q12 in personal consumption expenditures (people out shopping), exports, and both commercial and residential real estate.
These positives were partly offset by negative factors: private inventory investment was down, and so was state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The growth in real estate expenditures during the second quarter wasn’t bad, but it wasn’t as vigorous as during the first quarter. Spending on nonresidential RE increased 3.6 percent in 2Q12, compared with an increase of 7.5 percent in the first quarter. Residential spending increased 8.5 percent, compared with an increase of 20.5 percent during 1Q12.
Unemployment claims dip
The U.S. Department of Labor said on Thursday that for the week ending September 22, initial unemployment claims totaled 359,000, an unexpectedly large decrease of 26,000 from the previous week’s revised figure of 385,000. The less volatile four-week moving average was 374,000, a decrease of 4,500 from the previous week’s revised average of 378,500, also a fairly sizable decrease.
The Bureau of Labor Statistics also released its preliminary annual benchmark revision on Thursday, which it does every year to get a clearer picture of U.S. employment; a final revision to be published in Feb. 2013. The upshot of the preliminary revision is that the BLS now believes that the number of payroll jobs as of March 2012 was underestimated by 386,000.
That is, the BLS undercounted jobs by 386,000 as of March—453,000 more private-sector jobs, but 67,000 fewer public-sector ones. Next February, the BLS will issue its final benchmark revision, which historically has been fairly close to the preliminary revision, and then revise employment numbers upward to match the new data. An addition to the numbers at that point would mean the employment market isn’t quite as bad as believed.
Pending sales and durable goods orders both down
The National Association of Realtors said on Thursday that its pending home sales index, which is based on deals inked but not closed, dropped 2.6 percent in August. Compared with August 2011, however, the pending sales index is up 10.7 percent.
New orders for manufactured durable goods decreased $30.1 billion or 13.2 percent in August to $198.5 billion, the U.S. Census Bureau reported on Thursday. This decrease, which follows three consecutive monthly increases, was the largest decrease since January 2009—when pretty much everything was in free fall—and follows a 3.3 percent July increase.
Wall Street had an upward bounce on Thursday despite the generally sour news (except for the employment numbers), with the Dow Jones Industrial Average gaining 72.46 points, or 0.54 percent. The S&P 500 advanced 0.96 percent and the Nasdaq was up 1.39 percent.