Real gross domestic product (GDP) for the U.S. only grew at 1.3% in the second quarter of 2011. That’s according to the latest from the U.S. Commerce Department’s Bureau of Economic Analysis, which released the data in a report that read like a litany of bad economic news. Private sector analysts had expected a reading of 1.8%.
Perhaps even more devastating than the second quarter’s disappointing GDP numbers was the Commerce Department’s revision of the previous quarter’s growth rate; although it was previously pegged at 1.9%, Commerce revised first quarter 2011 growth down to 0.4%, a devastatingly slow pace that’s only a hair away from economic contraction.
Despite the anemic growth in the first half of 2011, Commerce noted that GDP has grown for eight consecutive quarters now. A possible explanation for the lagging recovery could be found in another one of Commerce’s negative revisions announced today, which showed that the percent change in real GDP for all of 2009 was actually 0.9% lower than originally reported. This means that the now-ended recession was even more severe than originally thought, and left the economy in a hole to crawl out of that was deeper than first believed.
Commerce Secretary Gary Locke used the numbers to ratchet up pressure on recalcitrant lawmakers unwilling to make a deal to raise the nation’s debt ceiling. If the ceiling is not raised by next Tuesday, the U.S. may default on its debt, which many believe would usher in another recession.
“Today’s first look at GDP in the second quarter confirms what we already knew: the economy isn’t growing as fast as it needs to. And every day that we fail to act to lift the debt ceiling and inch closer to default, we threaten our economic progress and job creation,” said Locke. “Experts have repeatedly warned that if this uncertainty continues, our economy will pay the price. We can’t afford to return to the same failed policies that brought us here. We must build on the progress we’ve made over the last two years and reach a balanced compromise that will reduce our debt and at the same time strengthen our job-creating ability and global competitiveness for the future.”
Negotiations on the debt ceiling continue. Last night, a vote on a short-term budget deal proposed by Speaker of the House John Boehner (R-OH) was delayed due to a lack of support. The proposal, which only raises the $14.3 trillion debt ceiling by $900 billion and would require another increase before the end of the year, may see another vote today.
Jacob Barron, NACM staff writer