This is abysmal, especially when it's taken in context with the reality that the ongoing (and growing) conventional wisdom and forecast consensus in U.S. economic circles for the second-half of this year is (and has been for awhile) for these numbers to worsen. In other words, the chances of either a double-dip recession and/or an economic relapse into negative GDP territory--signifying a rather massive, formal extension of the existing recession with increasing unemployment as we head into the last 80 days of the mid-term election season--have increased substantially in recent weeks.
2nd Quarter G.D.P. May Be Revised Even Lower
By CATHERINE RAMPELL
"Economix" Blog, NY Times
August 11, 2010, 11:11 am
CHART: Gross Domestic Product Growth, Annualized Rates NY Times 8/11/10
The government's preliminary estimate for economic growth in the second quarter is likely to be revised substantially lower...
...today, the Commerce Department reported that the trade deficit in June was wider than expected. Trade is also incorporated into the calculation of G.D.P., and a wider trade deficit means an even smaller gain gross domestic product.
Right now it's looking like second quarter G.D.P. growth was only half as big as initially estimated.
"Combining the bigger-than-expected trade deficit with other weak data suggests that Q2 growth was only 1.2 percent rather than the 2.4 percent originally estimated, placing the economy on even shakier ground than it seemed," wrote Nigel Gault, chief United States economist at IHS Global Insight, "and underlining why the Fed has shifted towards an easing bias."
I covered the growing likelihood of a significant downward revision in U.S. GDP for the 2nd Quarter in a diary last week.
Some are saying it's not even that "good"...
Trade Deficit Surges To Highest Since October 2008, Trounces Expectations; Q2 GDP To Be Revised To Sub-1%
Submitted by Tyler Durden on 08/11/2010 08:08 -0500
...The June balance of trade plunged to ($49.9) billion, on expectations of ($42.1) billion - a surge of $8 billion compared to May's ($42) billion. This number was the highest since October 2008, and just $28 billion away from the all time record...
And courtesy of the Current Account equation, what this surge in deficits means is that Q1 GDP will now likely be revised to well under 1.0%! As JPM reported earlier, revision in BEA assumptions on wholesale and non-durable inventory alone will push Q1 GDP from the official 2.4% to 1.3%. Today's data is the last nail in the Q2 GDP number, and according to analysts will take out another 0.4% from the GDP, meaning that when all is said and done, Q2 GDP will come out to sub-1%. And this was in a quarter when the stimulus was still expected to be boosting GDP. We now fully expect that the final reports of Q3 and Q4 GDP, some time in 2011, to be solidly negative, as the economy is now officially contracting once again. In other words, the Double Dip-ression is (even more) official.
On Tuesday, Bob Herbert pointed out in his NY Times op-ed column (which received only minor notice in this community) that the grossly-distorted economic spin delivered up by our government, via the MSM, encompasses many key metrics other than just first-read GDP results, in "The Horror Show."
The Horror Show
By BOB HERBERT
New York Times
August 10, 2010
The employment situation in the United States is much worse than even the dismal numbers from last week's jobless report would indicate. The nation is facing a full-blown employment crisis and policy makers are not responding with anything like the sense of urgency that is needed.
The employment data for July, released by the government on Friday, showed that private employers added just 71,000 jobs during the month and that the unemployment rate remained flat at 9.5 percent. But as bad as those numbers were, if you look beyond them you'll see a horror show...
Herbert tells us that, in addition to the143,000 temporary census workers who were let go in July, 48,000 "budget-strapped" state and local government employees lost their jobs last month, while 181,000 workers left the labor force.
...given the Alice-in-Wonderland way in which we compile our official jobless statistics, they are no longer counted as unemployed.
Herbert continued on to quote others who inform us that...
--over the past three months "...1,155,000 unemployed people dropped out of the active labor force and were not counted as unemployed"
--even if we ignored population growth, "...if these unemployed had not dropped out of the labor force, simple arithmetic shows that the official unemployment rate would have risen from 9.9 percent in April to 10.2 percent in July, rather than -- as it has -- fallen to 9.5 percent."
--14.6 million Americans are officially jobless, 5.9 million additional folks have simply stopped looking for work but still want a job, and another 8.5 million of us are working part-time but want full-time employment.
--there are 3.4 million fewer private sector jobs than there were a decade ago.
...In the last 10 years, we've seen the worst job creation record since 1928 to 1938.
We're not heading toward the danger zone. We're there. The U.S. will not remain a stable society if this great employment crisis is not addressed head-on -- and soon. You cannot allow joblessness on this scale to fester. It's wrong, and the blowback will be as destructive and intolerable as it is inevitable.
Michael Hirsh, in this week's Newsweek edition, elaborated on this reality as it relates to the view (and, the spin) from the White House: "Has Obama Run Out of Economic Options?"
Has Obama Run Out of Economic Options?
August 9th, 2010
...That was the unspoken subtext Friday as President Obama put the best possible face on a grim jobs report for July and an ever-darkening economic outlook--not just for the rest of 2010, but for 2011 as well. He talked up the "183,000 jobs" added by the manufacturing sector this year--and alluded hopefully to a USA Today story that suggested some plants are returning to the U.S. "for the first time"--as well as new legislation that will aid the states. What was left unsaid was that Obama may have already politically maneuvered himself out of the only major remedy that could bring unemployment down and growth up enough to assure his reelection: another giant fiscal stimulus. After engendering Tea Party and centrist-Democratic resistance to more government spending by pushing his health-care plan--and losing altitude rapidly in the polls--Obama no longer seems to have the political capital he may well need, in the end, to save his presidency...
...It now appears that the spurt of new jobs seen earlier in year--most notably, the 241,000 jobs created in April--was not the start of a new trend of higher growth but a misleading aberration. The loss of 131,000 jobs and the anemic addition of just 71,000 private sector jobs in July, both far worse than the forecasts, amounted to a devastating blow to recovery. Last week Goldman Sachs forecast less than 2 percent growth for 2011, and the unemployment rate seems stuck at 9.5 percent or higher, with the possibility that it could tip back over 10 percent. With interest rates still close to zero, monetary policy can do little more (though the Fed will debate new measures at its meeting Aug. 10, when it is expected to downgrade its economic outlook as well). And political discontent over government spending is such that a much larger fiscal stimulus--urged on Obama at the start of his presidency by such economists as Paul Krugman and Joseph Stiglitz--has now become out of the question. "This town has given up on that completely," says Heidi Shierholz of the left-leaning Economic Policy Institute...
But, our government's response continues to be anything but reassuring, as was made self-evident by the statement issued after Tuesday's Federal Reserve Open Markets Committee meeting: "Fed Move on Debt Signals Concern About Economy."
And, this brings us to today's (Thursday's) lead editorial in the NY Times: "When the Fed Speaks."
When the Fed Speaks
NY Times Editorial
August 12, 2010
It was a statement of the obvious heard around the world. The Federal Reserve policy committee said on Tuesday that the economy had slowed recently and was not expected to improve anytime soon...--SNIP--...At the same time, prominent private forecasts for growth in the second quarter were revised downward from a preliminary reading of 2.4 percent in the United States to less than 2 percent.
The market response sent an even louder message than the Fed statement -- that the economy needs more and better help than it is getting and more, unfortunately, than it is likely to get in the current soured political environment.
...None of those measures add up to much of a boost, if any, because the Fed is not providing new stimulus...
...Simply put, it is increasingly plain to see that the Fed has all but played its hand, and the economy is still in deep trouble. The economy's central problem is not lack of money to hire workers or make loans or rates that are too high. It is lack of hiring and lack of lending, despite cash cushions at many corporations and big banks and rates that are already very low...
...The Fed's statement on Tuesday avoided the words deflation and double dip recession. But the markets heard them, still, because the Fed's efforts alone are unlikely to steer the nation clear of those dangers.
And, on our last stop tonight, here's the top story on the front page of Thursday's NY Times: "Market Drop Worldwide Signals Fears on Recovery." (I'm sure we'll all be hearing plenty about these realities today, and going forward.)
Market Drop Worldwide Signals Fears on Recovery
By GRAHAM BOWLEY and CHRISTINE HAUSER
NY Times (Page A1)
August 12, 2010
As economic recovery wavers in the United States, evidence is mounting that growth abroad is also slowing and may be unable to sustain the fragile rebound here.
Finally, new trade figures from Washington showed that American exports were faltering, a sign that hard-pressed domestic manufacturers could not rely on overseas markets to ease their pain at home.
The optimism that had pervaded Wall Street only weeks ago has faded quickly. In its place is a growing realization of what many Americans have been feeling in their bones: this is not the economic recovery the nation had hoped for. While the economy is growing again, it is growing too slowly to create many jobs or to increase household incomes.
Given the uneven rebound in the United States, and now signs that the world's other economic engines are slowing, economists say Americans may confront high unemployment and lackluster growth for some time to come.
Today's NY Times lede also tells us: "The trade report from the Commerce Department (see story and links, further up), which showed exports fell in June, prompted economists to sharply reduce their estimates of how fast the economy had been growing this year."
...after downward revisions to other economic data like inventories and the export figures, even that 2.4 percent annual [GDP] rate is now looking too rosy -- and may even be as low as 1 percent, some economists say.
Normally, at this point, I'd probably say something to the effect of: "Don't just stand there! Do something! Write and call your congressmen and your senators," etc., etc.
But, not tonight.
Tonight, we simply bring this story full circle, back to our gridlocked legislators on Capitol Hill and 1600 Pennsylvania Avenue...and to economist Dean Baker's post over at Alternet.org: "Crazy Economists Are Still Defending The Wall Street Bailout As The Recession Gets Worse."
The conclusion of his post sums up my sentiments, tonight, and it's thus (Baker's discussing the recent, widely-publicized study by economists Blinder and Zandi, which told us how much good was accomplished due to the implementation of the TARP and stimulus programs):
Crazy Economists Are Still Defending The Wall Street Bailout As The Recession Gets Worse
August 6, 2010 | Dean Baker
Economists are still spinning fairy tales so they can celebrate bank bailouts. Too bad everybody's still broke and out of work.
[They] have constructed an absurdly unrealistic counterfactual and told us that the TARP was much better than this absurd scenario [i.e. doing nothing]. This is like saying that people who don't eat chicken will starve to death. Under the counterfactual that people who don't chicken don't eat anything else either, they certainly will starve to death.
But that is not a serious analysis of the benefits of eating chicken, and Blinder and Zandi have not given us a serious analysis of the benefits of the TARP. This "it could have been worse" line should be flushed down the toilet. The reality is that greed and incompetence created an entirely unnecessary disaster. Tens of millions of people are still suffering from its consequences. And the Wall Street boys and the economists who are responsible for the disaster are all doing just fine.
People should be really angry about this and a silly study that might be used to tell them otherwise should just make them angrier.
Baker's right. And, for many such as yours truly, we don't need a study to tick us off.
We simply look around at our friends and family. Home. Family. REALITY.
In my case, I see a 60-year-old brother laid-off from a full-time video production gig he held for almost thirty years, about to celebrate his first full year on unemployment. And, his 23-year-old son, their state university's top scholar-athlete--a brilliant mathematician and a national track star who just graduated with a Masters Degree in Education who's now struggling to find a high school teaching job.
They don't need a "silly study" to get pissed-off, either.
They just need a job.