Recession Looms: GDP Revised Down to 1.3%, Durable Goods Collapse 13%
Because the media-narrative for the next 40 days must be: Obama can do nothing wrong and Romney can do nothing right, the corrupt media will surely focus on the fact that today's jobless claims were lower than expected at 359,000 (which you can only celebrate on a curve). But there's potentially catastrophic news in the economy today, with two leading indicators that point towards a coming recession.
Our 2nd quarter GDP has just been revised downward from an already anemic 1.7% to a shockingly weak 1.3%. Moreover, orders for durable goods went -- as Hot Air's Ed Morrissey points out -- "over a cliff," collapsing a full 13%. Morrissey also reports that this is the single largest decrease in over four years and that a subsequent increase in inventories this month means demand won't be improving any time soon.
UPDATE 1: The AP tells us things are bad and they're not going to get better:
The 1.3 percent growth in the spring followed a sluggish 2 percent growth rate in the first quarter, rates too slow to lower unemployment. The unemployment rate was 8.1 percent in August. Most expect it to stay around 8 percent for the rest of this year because they anticipate little pickup in growth.
Before Thursday's revision in the April-June figures, the consensus view was that the economy expanded in the July-September quarter at a lackluster pace of between 1.5 percent to 2 percent. They expected the final three months of the year will be about the same. For all of 2011, the economy grew 1.8 percent.
What the AP fails to highlight, though, is that our economy is slowing, from 2.0% in the first quarter of the year to 1.3% the second quarter.
Here's the GDP growth chart going back to the beginning of 2008. As you can see, in the last quarter of 2011, we hit a 3% growth rate. But ever since, the trend, like job creation, is down, down, down....
UPDATE 2: AEI's Jim Pethokoukis says we have entered into a "recession red zone."
Bottom line: Growth the past two quarters has averaged about 1.6%. Not only does this mean the economy is growing more slowly than last year’s 1.8%, it is also slow enough to signal about a 50% chance of a recession within a year. And the third quarter also looks weak.
The anemic, three-year-old U.S. recovery is already running out of steam. And if it does, it many be several more years before we see unemployment below 8%.
Yesterday, I saw a memorable bumper sticker that read: A Vote For Obama Is Like Backing Up the Titanic and Hitting the Iceberg Again.
Funny metaphor for what a vote for Obama really means: A lost decade for America.
Keep checking back. We will fill in this post as more news arrives….
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