US Q2 GDP revised upwards to 1.3% from earlier 1% estimate

29 September 2011 14:29  [Source: ICIS news]

WASHINGTON (ICIS)--The US Department of Commerce on Thursday revised upward its estimate of the nation’s gross domestic product (GDP) growth in the second quarter, saying that the economy expanded at an annual rate of 1.3% rather than the more modest 1% pace reported in August.

In issuing its third and final estimate of US economic growth for the three-month period of April through June this year, the department said that the upward revision was attributed to more complete information on positive growth factors such as business equipment spending, commercial real estate investments, federal government outlays and reduced levels of imports.

However, the revised second quarter GDP growth pace of 1.3% matches the first estimate the department made in July and shows that the US economy was still operating at a very modest rate.

The US economy must grow at around 2.5% annually just to accommodate new workers entering the jobs market. A normal GDP growth rate for the US economy would be in the range of 3% to 3.5%.

To make any headway in reducing the persistently high 9.1% unemployment rate, the economy would have to expand at 3.5% at minimum and preferably higher. 

Some 14m Americans are unemployed, and another 10m who want jobs are said to be under-employed or have given up looking for work.

On a positive note, the revised second quarter GDP expansion pace of 1.3% looks much better than the barely breathing 0.4% growth that was the final estimate for the first quarter.

The revised second quarter estimate suggests that the US economy, while still weak, may be gaining enough momentum to avoid what many had feared could be another slide into recession beginning in the third quarter.

US policymakers and economists will be focused on the department’s first estimate of the nation’s third quarter GDP performance when that report is issued on 27 October.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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