US 2nd Quarter GDP
US 2nd quarter GDP figures - investment remains the keyissue for US recovery
By John Ross, 31 July 2010The publication
of the US 2nd quarter GDP figures highlighted several striking andinterlinked structural trends in the US economy. These go considerably beyond the wellpublicised slowing of the US economic recovery. They confirm that the trajectory of the USeconomy will be determined by what happens to US fixed investment
The data confirms the US recovery is weak
Unsurprisingly, because it was anticipated, and as has been widely reported, the dataconfirmed the slowdown in US economic recovery.
Taking the latest revised figures,annualised US GDP growth decelerated from 5.0% in the 4th quarter of 2009, to 3.7% in the1st quarter of 2010 to 2.4% in the 2nd quarter.
US GDP remains 1.1% below its peak level in the 4th quarter of 2007. At the 2nd quarter’s
rate of growth previous peak US GDP will not be regained until the 4th quarter of 2010.Such figures have essentially decided the debate between those who argued that becausethe US downturn was very severe its economy would spring back strongly from recession,and those, such as the present author, who pointed to the underlying structural situation ofthe US economy and therefore argued recovery would be weak compared to previous USpost-war business cycles.