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9/27/2012 @ 10:55AM |30,631 views
More Proof The U.S. Economy Is Falling Apart: GDP Revision A Grim Surprise
Factory activity slowed far more than expected in August, new data shows. (Photo credit: Wikipedia)
A series of new economic figures this morning cast fresh gloom on the health of the U.S. economy.
The economy grew much less than expected in the second quarter, new Labor Department estimates show. Second quarter GDP was revised lower to 1.3% from an earlier 1.7%. (Economists believed that GDP would be revised lower to 1.6%.) Declining consumer spending and business investment combined to weigh mightily on economic activity.
More troubling still is what this suggests about the third quarter. Little has surfaced to point to a pick-up, meaning that it’s unlikely the economy will grow much more than before. In short, today’s data sends “a notable red flag for U.S. growth,” says Action Economics‘ Michael Englund.
U.S. economic growth turned even more anemic after the first quarter, when GDP grew by 2%. Manufacturing, a key driver of the economy earlier in the recession, has cooled, the result of an uncertain U.S. political outlook and slowed global demand.
Caterpillar, the world’s largest maker of mining and construction equipment, earlier this week said next year would likely be little better than 2012 and slashed profit forecasts for 2015. Another U.S. manufacturer, Cummins, lowered its sales outlook in July. “The global economy has slowed,” CEO Tom Linebarger said.
What’s more, durable goods orders, a measure of factory activity, plunged last month in the largest drop in more than three years, data released by the Commerce Department this morning shows. Orders fell 13.9%. The last time that factories slowed this much: January 2009, when the economy was in the depths of the recession.
This data point also stymied economists, who predicted that orders would fall only 5%.
Transportation equipment saw demand drop the most. Those orders declined 35%, after gaining 13% in July. Excluding transportation figures, which tend to be volatile, core orders declined 1.6%. Economists had predicted a 0.2% increase in core orders. It adds up to “suggest restrained investment spending beyond just a short lull,” says Citi’s Steven Wieting.
Boeing‘s troubles neatly underscore the current situation. Boeing, the largest U.S. aircraft maker, received only a single order in August, down from 260 a month earlier. ”The latest durable goods report was bloodied by aircraft orders. Putting aircraft aside, though, we see a clear downward trend continuing in business capital demand,” says IHS economist Jim Dorsey. “Businesses have become more pessimistic as we approach the fiscal cliff with no resolution in sight. But even if we avoid it, there is still China and Europe weighing on our export markets.”
Further signs of a global slowdown have come from comments made by transportation companies. Norfolk Southern last week said coal shipments would hurt its earnings in the third quarter. Earlier, FedEx also warned that its profits would be less than expected. The nature of the shipping business—thousands of miles of connections across continents—allow these corporate giants to assess the health of the world’s economy.
Comments
America must decline. We will be on the same downward trajectory with Obama, & a much more steeper trajectory with Romney. That is the truth that we must face. There is no way for America to recover. The American People look to their governments to help them, & we are so far gone that that is not an option anymore.
In allot of ways, it really doesn’t matter. Electing Obama just buys us a little more time. But the American People destroyed America by living as we do, oblivious to our taxpayer funded activities.
The is but one way to recovery.
Damn your lack of edit ability here. In the first paragraph I meant to say that today we have no capacity to recover, or even cease decline.
In the last sentence, I make the statement that there is in fact but one path to recovery. When the American People decide to walk it, remains a mystery.
Sorry, I had to clarify. It appears that I contradict myself.
We the People carry no burden of freedom on our backs, therefor, America has no freedom withing it’s borders. When we decide to pick it up, we shall see.
Reply to Libertyinfinite…….you are a typical idiot……learn to spell first……..allot??? and it should be its instead of it’s. ……….”people look to governments to help them”……. maybe you do (as , according to Romney, 47% do as well), but most of us must rely on ourselves to make it happen and get results.
Lets get it over then and elect Romney. Vote for Romney!
Scott, I meant that the American People are looking to Romney or Obama, instead of themselves. & I doubt very much that you are going to exact a real recovery for yourself. It would take all of us.
Hubba Bubba, you are exactly what I was talking about. You have this insane idea in your head (put there by right wing propaganda) that if you “elect Romney” all of your problems will go away.
No president can stop or even slow Americas’ decline. We the People live oblivious to where all of our money & power goes. That doesn’t work in real life.
ECRI has gotten a lot of grief over their 2012 recession call. But I think when all the employment and GDP data are revised next year, we will see the US economy entered a shallow recession (ala 1969-70 or 2001) sometime during the 2Q or 3Q of 2012.
Recessions usually arent called,sometimes until after they are over. Especially shallow ones. The 1990-91 recession began in July 1990. In the Spring of 1990, the economy was still creating nearly 300,000 jobs per month. GHW Bush increased taxes in Sep 1990, yet no one said he was making a mistake of raising taxes in the middle of a moderate recession (only breaking his pledge).
Change!
More proof Forbes is falling apart.
Mr. Forbes himself is having lunatic dreams about a 1970-style United States, which by the way, is history. Forbes “contributors” are ruining Forbes as a brand name every day by writing outrageous but clueless articles. What a shame.
So you prefer the rock solid truth as seen on huffpo, huh? As opposed to all of this shameless propaganda on forbes?
(Yeah, forbes is all a brain wash propaganda machine, that’s why no one respects them, & they can’t even sell their mags. [sarcasm, a humorous negative meant to ridicule something being stupid] Forbes is known the world around for it’s bad, uninspiring, unpalatable stories. )
& this has been a vibrant display of sarcasm, thank you very much.