The Conference Board Comment on Q2 GDP

Kathy Bostjancic, Director for Macroeconomic Analysis, The Conference Board

Q2 GDP: AGAIN, THAT DISAPPOINTING FEELING

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Jul 29, 2011, 09:11 ET

NEW YORK, July 29, 2011 /PRNewswire/ -- The U.S. Bureau of Economic Analysis today reported 1.3 percent growth in real gross domestic product for the second quarter of 2011.

This low growth number in the second quarter, following a large downwardly revised Q1 figure, comes at a bad time, when we are at the brink of political stalemate to avoid the debt default, which could spark a global financial crisis and send the U.S. economy back into recession. From the perspective of business cycle dynamics, however, the probability of recession remains low. Anemic consumption, still declining state and local government spending, tepid business investment, and soft housing activity all combined to offset some strength in exports. Concerns about the weak labor market and rising food and energy prices continue to weigh on consumer confidence. Business sentiment is not more optimistic than consumers, in general, and likely to result in no more than moderate expansion of business investment. The more bullish forecasters that believe we are only experiencing a cyclical soft patch are likely to be disappointed when growth struggles to get above 2 percent in the second half of the year.

SOURCE The Conference Board