Much Worse GDP Numbers than I Had Expected
8:30a BREAKING U.S. GDP up 1.3% in second quarter from weak Q1
8:30a Q1 GDP revised much weaker than previous estimate
8:30a U.S. Q2 GDP up 1.3% annualized vs. 1.6% expected
8:30a Q1 GDP up revised 0.4% vs. prev. est.1.9%
In the first six months of 2011 real GDP grew at an annual rate of only 0.8% per year. At that growth rate, unemployment will rise at about 1 percentage point per year.
I need to see the guts of the numbers, but unless there is something very odd in them, the chance that the unemployment rate will be above 9% in November 2012 just crossed 50% heading upward.
A rational Federal Reserve would:
- Begin QE III today.
A rational administration would:
- Announce a technical fix to the debt ceiling today: the economy does not need the risk.
- Abandon all long-term budget negotiations with anybody who requires cuts to the deficit over the next eighteen months to come to the table: the economy needs stimulus, not contraption.
- Take every single uncommitted TARP and TALF and whatever dollar, leverage it up, and throw it at the economy to boost aggregate demand.
Back in 1932 Herbert Hoover was very strong on how the economy needed the federal government to develop a plan for balancing his budget. Herbert Hoover was also very strong on how the housing sector needed federal government intervention and guarantees--the Homeowners Loan Corporation and similar things--and how business needed support to reduce risks--the Resolution Trust Corporation. I have been listening and I don't hear any of those last two from Obama.
