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Economy in Brief
U.S. Mortgage Applications Continue to Weaken
The MBA Loan Applications Index fell 1.2% (-54.5% y/y) in the week ended May 20...
German Climate Reading Continues to Skid Toward the Abyss
Germany's GfK consumer climate reading improved ever so slightly in June...
U.S. New Home Sales Plunge in April as Prices Jump
The new home sales market is unraveling...
U.S. Energy Prices Rise Further
Retail gasoline prices increased to $4.59 per gallon in the week ended May 23...
S&P Flash PMIs Are Mixed in May As Manufacturing Erodes Slowly
Among the early reporting countries in Europe and Japan, the S&P PMI readings for May tilt toward weakness...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
State Coincident Indexes in April 2022
State Labor Markets in April 2022
Profits & Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation and Fed Policy: A Relationship which Should Worry the Fed and Scare Investors
by Tom Moeller July 30, 2012
There's no doubt that GDP growth has been moderate. Data released last week indicated that year-to-year growth of 2.2% ending in Q2'12 was about the same as during all of 2011 (1.8%) and 2010 (2.4%). After past deep recessions, growth of 5-to-7% was usual. Expansions in each economic sector has been depressed versus the norm. Consumption growth of 1.9% during the last four quarters compares to 5-to-7% after earlier downturns, residential investment is showing some life (10.7%) but that's a fraction of the norm and even business investment growth of 10.2% is subpar.
Nowhere is the comparison to past economic cycles more depressing than in the government sector which is 19% of the real economy. Real spending fell 1.4% last quarter (-2.4% y/y) and it's been down since 2010. Defense spending fell 4.0% during the last four quarters while state & local spending fell 1.8%, for an unprecedented two year decline. The best that can be said is that these rates of decline are more moderate than those in 2011.
Excluding the government sector, GDP growth is still subpar. Growth in private sector spending of 2.2% in Q2'12 pulled the y/y comparison to 3.3%. Nonetheless, the private sector is holding onto a modest recovery. Recently, however, forecasts for economic growth have been lowered. Much of that is due to a still-struggling private sector spending and a moribund public sector.
The latest GDP figures can be found in Haver's USECON and USNA databases; USNA contains basically all of the Bureau of Economic Analysis' detail on the national accounts, including the new integrated economics accounts and the recently added GDP data for U.S. Territories. The Consensus estimates can be found in AS1REPNA.
Chained 2005 $, % AR | Q2'12 | Q1'12 | Q4'11 | Q2'12 Y/Y |
2011 | 2010 | 2009 |
---|---|---|---|---|---|---|---|
Gross Domestic Product | 1.5 | 2.0 | 4.1 | 2.2 | 1.8 | 2.4 | -3.1 |
Government Spending | -1.4 | -3.0 | -2.2 | -2.4 | -3.1 | 0.6 | 3.7 |
Private Sector GDP | 2.2 | 3.1 | 5.6 | 3.3 | 3.0 | 2.8 | -4.7 |