2Q2010 GDP: Final Estimate Gets a Small Boost

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The Bureau of Economic Analysis on September 30 “bumped up” its third estimate of the 2Q2010 growth rate in real gross domestic product (GDP) to 1.7 percent after having slashed the estimate by one-third (from 2.4 to 1.6 percent) at the end of August.

 

"We have a slow-growing economy," said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. "What we're getting will do nothing to bring down the unemployment rate. The improvement in the labor market is very slow."

 

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The deceleration of real gross domestic product between the 1Q and 2Q2010 was due to a "sharp acceleration" in imports and a "sharp deceleration" in private inventory investment. Consumer spending and nonresidential fixed investment made major positive contributions to growth in the second quarter. The small upward revision to the final growth estimate resulted from higher inventory investment and consumer spending that were almost completely offset by higher imports.

 

If the period between December 2007 and June 2009 constitutes the “Great Recession,” the period since then can be labeled the “Great Disappointment,” said star economist David Rosenberg.

In a recent report obtained by Business Insider, Rosenberg, chief economist at Gluskin Sheff, rattled off several statistics to highlight the recovery’s weakness.

• While GDP has recouped 69 percent of its loss since hitting a low in June 2009, employment has recouped only 9 percent of its losses since hitting a low in December 2009.
• Household net worth has recovered only 28 percent since its low in the first quarter of 2009.
• Wages and salaries have rebounded only 36 percent from their March 2009 lows.
• Housing starts have recouped only 7 percent of their losses since their April 2009 low.
• Home prices have recovered only 13 percent from their low in April 2009.
• Consumer sentiment has regained only 27 percent of its losses since hitting a low in November 2008.

“New and existing home sales are at all-time lows,” added Rosenberg. “They have never recovered.” All that adds up to the “Great Disappointment.”