As everyone expected (except for a select crowd that's always hoping for bad news), real GDP growth for second quarter was 3.4% and trending upward. Good riddance to the first quarter slowdown.
Here are the monthly charts:
Not yet sure if these new growth rates, combined with the shrinking deficit, will cause the debt clock to start ticking backwards, but that should happen sometime in the next few months if not this time; I'll recalibrate it as soon as the end of July debt tally is available.
Steve,
What do you make of the revisions? Sounds like some slight bad news.
"The percent change from the preceding year in real GDP was revised down for all 3 years: From
3.9 percent to 3.6 percent for 2004, from 3.2 percent to 3.1 percent for 2005, and from 3.3 percent to 2.9
percent for 2006."
I was also a bit surprised at the average error in these estimates:
"For the 13 quarters from the first quarter of 2004 to the first quarter of 2007, the
average revision (without regard to sign) was 0.5 percentage point."
Posted by: Stephen Reed | 27 July 2007 at 13:51
Business splurging fueled by cheap credit likely won't be repeated for many quarters. PCE is already down and MEW affects may not be in the numbers yet. Government spending is up. Ugh.
That leaves net exports as the sole bright spot, but that's what you get with a weak dollar.
Hmph, what's to be cheerful about.
Posted by: woodchuck64 | 27 July 2007 at 15:43
Positive numbers are always, well, positive. Realistically though 1.98%
real growth is not something I get all lathered up about.
My concern. We still have very reasonable interest rates and low tax rates. If ~2% growth is the best we can do now what will it take to get in the 3-4% range?
Posted by: Bob | 28 July 2007 at 09:16
A 4.5% FF Target, and $1.50/gal unleaded.
Posted by: rufus | 28 July 2007 at 14:29
"My concern. We still have very reasonable interest rates and low tax rates. If ~2% growth is the best we can do now what will it take to get in the 3-4% range?"
Well housing is whats dragging the economy down... without housing GDP growth over the last year would have been...
Q306: 3.2%(2%)
Q406: 3.5%(2.5%)
Q107: 1.7%(0.7%)
Q207: 3.9%(3.4%)
Not bad at all... and that is assuming housing has not affected anything else(even though it obviously has).
It seems that all the bears have been pretty much dead on when it comes to housing... it stinks and may not get better for a while. Optimists however, have been right on housing's impact on the overall economy, its holding up pretty well. Lets hope it stays that way. Still, we need to look at the big picture and not the short term.
Posted by: Syphax | 28 July 2007 at 15:09
Re: Housing
Seems to me the ten year is going to have to get back around 4% for cheaper mortgages that will fuel housing. Could happen, I don't see it.
If higher growth was driven by housing and housing was driven by
very low interest rates, something else is going to have to pick up the slack.
Posted by: Bob | 29 July 2007 at 09:31
Well, population growth continues (what, about 3,000,000 per year, counting illegals?) and they have to live somewhere. Housing can't stay down forever. This is a correction and the only question is how long before it turns up. We won't know the answer to that until after it's happened.
Housing is in trouble in some parts, not all parts of the country. Remodeling continues to do fairly well. Not everyone did something stupid with their mortgage you know.
Maybe it's just that I lived through all the gloom-and-doomers in the late 1970s and early 1980s telling us how the party was over and all the Boomers would never have it as good as their parents and we'd just have to get used to living in Jimmy Carter's malaise America. Ha! I hope they invested according to that belief and got rewarded accordingly.
Personally, everyone in my immediate family (two brothers and one sister and we started in the upper end of poverty) are doing comfortably better than our parents, who in their time worked their way up into middle class status. Somehow, hard work, perseverance, reasonable caution and optimistic investment still seem to lead to some modest success in the US.
I am currently helping my son look for a house to buy (as I did my daughter 4 years ago). He will (as did she) get a realistic mortgage that can be handled with some ease while building the reserve fund and equity. Now is a great time to be buying a house. It's not magic or luck, it's common sense.
Posted by: JorgXMcKie | 29 July 2007 at 15:17
Well, population growth continues (what, about 3,000,000 per year, counting illegals?) and they have to live somewhere. Housing can't stay down forever. This is a correction and the only question is how long before it turns up. We won't know the answer to that until after it's happened.
Housing is in trouble in some parts, not all parts of the country. Remodeling continues to do fairly well. Not everyone did something stupid with their mortgage you know.
Maybe it's just that I lived through all the gloom-and-doomers in the late 1970s and early 1980s telling us how the party was over and all the Boomers would never have it as good as their parents and we'd just have to get used to living in Jimmy Carter's malaise America. Ha! I hope they invested according to that belief and got rewarded accordingly.
Personally, everyone in my immediate family (two brothers and one sister and we started in the upper end of poverty) are doing comfortably better than our parents, who in their time worked their way up into middle class status. Somehow, hard work, perseverance, reasonable caution and optimistic investment still seem to lead to some modest success in the US.
I am currently helping my son look for a house to buy (as I did my daughter 4 years ago). He will (as did she) get a realistic mortgage that can be handled with some ease while building the reserve fund and equity. Now is a great time to be buying a house. It's not magic or luck, it's common sense.
Posted by: JorgXMcKie | 29 July 2007 at 15:18
Well, population growth continues (what, about 3,000,000 per year, counting illegals?) and they have to live somewhere. Housing can't stay down forever. This is a correction and the only question is how long before it turns up. We won't know the answer to that until after it's happened.
Housing is in trouble in some parts, not all parts of the country. Remodeling continues to do fairly well. Not everyone did something stupid with their mortgage you know.
Maybe it's just that I lived through all the gloom-and-doomers in the late 1970s and early 1980s telling us how the party was over and all the Boomers would never have it as good as their parents and we'd just have to get used to living in Jimmy Carter's malaise America. Ha! I hope they invested according to that belief and got rewarded accordingly.
Personally, everyone in my immediate family (two brothers and one sister and we started in the upper end of poverty) are doing comfortably better than our parents, who in their time worked their way up into middle class status. Somehow, hard work, perseverance, reasonable caution and optimistic investment still seem to lead to some modest success in the US.
I am currently helping my son look for a house to buy (as I did my daughter 4 years ago). He will (as did she) get a realistic mortgage that can be handled with some ease while building the reserve fund and equity. Now is a great time to be buying a house. It's not magic or luck, it's common sense.
Posted by: JorgXMcKie | 29 July 2007 at 15:18
Jorg is right in that housing goes through cycles just like other parts of the economy.
My point, and a recurring theme of this blog, is that higher real GDP growth is necessary to counter the the liabilities the government faces going forward. Either that or face some nasty tax increases.
So, with the days of incredibly cheap money behind us (but still very affordable money around today) we must look for segments of the economy other than housing to contribute to a sustainable growth rate of ~4%.
Posted by: Bob | 30 July 2007 at 08:58
"My point, and a recurring theme of this blog, is that higher real GDP growth is necessary to counter the the liabilities the government faces going forward. Either that or face some nasty tax increases."
Or reneging on some of those liabilities.
PS
Posted by: Pete Storm | 30 July 2007 at 10:32