So where's the bad news in this GDP report. With the exception of a guess about a possible double dip recession everything is pretty positive but if you listen to the media you'd never know it.
Kat
news.moneycentral.msn.com
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WASHINGTON (Reuters) - The U.S. economy slowed sharply in the second quarter, according to revised government data on Thursday, but businesses showed signs of a renewed willingness to invest and improved bottom lines.
The Commerce Department said gross domestic product, the broadest measure of goods and services produced in the United States, advanced at a 1.1 percent annual rate, the same as in its initial estimate for the quarter made in July. The rate was a marked deceleration from the 5.0 percent annual pace seen in the first quarter of the year.
Within the report, however, there were signs that American businesses were managing to ride out the slowdown. After-tax corporate profits were up for a second consecutive quarter, rising 1.7 percent after a 2.0 percent gain in the first three months of the year. And while overall business investment was revised downward, falling at a 2.6 percent rate, spending on new equipment and software was revised upward to a 3.1 percent pace, the first gain since the third quarter of 2000.
The reading was close to Wall Street analysts' expectations. In a poll by Reuters, second-quarter GDP was expected to be revised up to a 1.2 percent rate.
The GDP report drew little market reaction.
``The second quarter slowed down a lot from (the first quarter) and that's a story we knew when the numbers were initially reported,'' said Stephen Stanley, senior market economist with Greenwich Capital Markets.
In a positive sign for the lackluster recovery from last year's recession, the report showed businesses built up inventories for the first time since the fourth quarter of 2000. Inventories grew at a $7.3 billion annual rate, revised upward from the previous estimate of a $1.0 billion pace and contributing strongly to the quarter's overall growth rate.
Inflation remained contained in the report, as well. The price index for consumer spending increased at a 2.5 percent rate, the same as in the initial estimate.
The economy fell into a recession in the first quarter of 2001, contracting slightly through the third quarter of the year. While it has been growing since the final quarter of 2001, its pace has been unsteady, leading to worries of a potential ``double dip'' recession after this summer's stock market woes. |
