GDP Back in Black

Some sort of rebound from the terrible first quarter numbers was inevitable, but the actual second-quarter GDP estimates were nothing less than outstanding, per this report from the New York Times‘ Dionne Searcey:

The United States economy rebounded in the spring after a dismal winter, the Commerce Department reported on Wednesday, growing at an annual rate of 4 percent for the three months from April through June.

In its initial estimate for the second quarter, the government cited gains in personal consumption spending, exports and private inventory investment as the main contributors to growth. The increase exceeded economists’ expectations and further cemented their views that the decrease in America’s overall output during the first quarter was most likely a fluke tied in large part to unusually stormy winter weather as well as other anomalies.

The first quarter numbers were also adjusted upward:

During the first quarter, output shrank by 2.1 percent, less than had been reported, according to the Commerce Department’s newly revised G.D.P. figures, also released on Wednesday. The department had previously said first-quarter output decreased 2.9 percent.

There are always, of course, shadows in the data:

While the economy seems generally to be bouncing back from the recession, overall growth remains lackluster. Wages have failed to rise significantly, an area of concern that Janet L. Yellen, chairwoman of the Federal Reserve, noted when she appeared before Congress this month.

Second-quarter earnings for many companies were mixed. Home prices are rising at the slowest pace in more than a year. Many economists say the mediocre housing market and underwhelming labor conditions are the driving forces behind the Fed’s plan to keep interest rates low well into next year.

We’ll see if the Fed reacts in any tangible way later today. And on Friday the July Jobs Report comes out. Fun week.

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Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.