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Q2 GDP 1.9%; Q4 GDP = -0.2%; New Jobless Claim +448k

Thursday, July 31, 2008 | 09:02 AM

in Data Analysis | Economy | Employment

Across the board, this was simply a horrible, recession set of data:

Initial Jobless Claims: 448k. That's the worst level since April 2003.

Q2 GDP: 1.9%, well below consensus of 2.3%.

Q4 GDP Revisions: Revised from +0.6 down to -0.2%; The first negative quarter (Don't say we didn't warn you) since Q3 2001.

Q1 GDP Revisions: Revised down to 0.9% from 1.0%

Note -- I expect these revisions will get revised even lower in the future.

Durable Goods:

Consumer Spending: Despite $100 billion in rebate checks, consumer spending was up only .56% -- the bulk of which was (undercounted) food and energy inflation. Nominal spending for the quarter was 3%.

Inflation: The personal consumption expenditure price index rose at a 4.2% annual rate.

Revisions: A major set of revisions, and nearly all were negative. The economy contracted in the last three months of 2007, providing the first negative quarterly GDP data. Q4 GDP 2007 was revised to a negative number from +0.6% to -0.2%. And, this is very likely to be revised even lower in the future.

Just nasty numbers across the board.

One last "surprise" -- Bill King observes that the GDP Price Index inexplicably tanked to 1.1% in Q2; 2.4% was expected. Nominal GDP declined to 3% from Q1's 3.5%. Thus, the Q2 GDP benefited by 1.5% points, thanks to the mysteriously collapsing GDP Price Index, down to 1.1% from Q1's 2.6%.

Hence, I expect Q2 2008 GDP to eventually get revised downwards to 0.4% -- or worse.

Here are the charts:

>
Real GDP Growth

Chart courtesy of Barron's Econoday

>
New Jobless Claims

Chart courtesy of Barron's Econoday

Larry, you have some 'splainin to do!

James, are you really going to make me wait for that Bladerunner DVD?

Previously:
Recessions Often Begin With Positive GDP Data (May 2008)
http://bigpicture.typepad.com/comments/2008/05/positive-gdp-re.html

Sources:
GROSS DOMESTIC PRODUCT: Second Quarter 2008 (Advance)
BEA, JULY 31, 2008
http://www.bea.gov/newsreleases/national/gdp/2008/gdp208a.htm

Summary of GDP Revisions
http://bigpicture.typepad.com/comments/files/summary_of_gdp_revisions.pdf

Related:
U.S. economy suffers fourth-quarter contraction
Revisions show spending slower, profits higher than previously thought
Rex Nutting
MarketWatch, 9:01 a.m. EDT July 31, 2008
http://www.marketwatch.com/news/story/commerce-dept-concedes-us-economy/story.aspx?guid=%7BB40570D2%2D40FB%2D45BD%2D8920%2DFEC19E1A1F26%7D