Economic News Getting Downright Ugly
On Wednesday, July 25, we growled about the current economic recovery being the worst since 1945 while on July 17, we growled about the economic news Federal Reserve Chairman Ben Bernanke provided to the U.S. Senate Banking Committee.
Now comes news that economic growth slowed to 1.5% for the second quarter of 2012, according to the United Kingdom's Financial Times earlier today. They lead by saying:
"The world’s largest economy has suffered a worrying loss of momentum with US growth slowing to an annualised rate of 1.5 per cent in the second quarter of 2012.
"The pace of growth is now too slow to bring down unemployment, threatening both the global economic recovery and the re-election prospects of President Barack Obama.
"The figure, which was broadly in line with market expectations, will add to the Federal Reserve’s fears about progress towards higher employment but may not be alarming enough to force immediate action at an interest rate meeting next week.
“The latest GDP data show a more shallow growth recovery and a near term pattern of weakness that supports a case for more accommodation from the Fed,” said Eric Green, chief economist at TD Securities in New York."
They did note one "bright spot," which was that "housing investment" grew at a rate of 9.7% annually. In addition, an Associated Press report in the San Jose Mercury News said "the economy grew a little better than previously thought in the January-March quarter. It raised its estimate to a 2 percent rate, up from 1.9 percent," which the AP explained this way:
"Growth at or below 2 percent isn't enough to lower the unemployment rate, which was 8.2 percent last month. And most economists don't expect growth to pick up much in the second half of the year. Europe's financial crisis and a looming budget crisis in the U.S. are expected to slow business investment further."The main take away from today's report, the specifics aside, is that the U.S. economy is barely growing," said Dan Greenhaus, chief economic strategist at BTIG LLC. "Along with a reduction in the actual amount of money companies were able to make, it's no wonder the unemployment rate cannot move lower."
However, Bloomberg reported: "The first year of the recovery from the worst U.S. recession in the post-World War II era was even weaker than previously estimated, evidence of the extent of the damage wreaked by the economic slump, revised figures show."
Also today, ABC News reported the "Obama budget office lowers economic growth forecast for 2012," saying specifically:
"President Barack Obama's budget office on Friday revised downward its previous forecasts for economic growth in 2012 and 2013 and projected a $1.211 trillion deficit through the end of the year, slightly down from earlier predictions.
"The economy is not growing fast enough and there are still too many people out of work. Most troubling, the pace of improvement in the labor market slowed in the second quarter of this year," according to the Mid-Session Review (MSR) from the Office of Management and Budget (OMB).
"Obama's hopes for re-election hang on voters' perceptions of how he has handled the economy, which is still sputtering three and a half years after he took office. Polls show Republican challenger Mitt Romney is seen as a better candidate for creating jobs, though the president outscores him on which candidate would be a better champion for the middle class."
Finally, the lede in a Wall Street Journal editorial set to run in their weekend edition says:
"President Obama didn't comment on Friday's report of declining growth in the second quarter, and that's no surprise. The economic story of his Presidency is by now familiar: a plodding recovery that has taken its third dip in three years and is barely raising incomes for most Americans."
A part of the Wall Street Journal editorial was the following chart: