Q2 GDP (Final) Research Notes

by Jim Baird on September 30, 2010

As expected, the final estimate for second quarter GDP came in virtually unchanged, providing perhaps the final piece of evidence that the economy slowed considerably during the period.

Investor focus has already shifted to the third quarter, which is widely expected to show further weakness and will remain well below ideal growth.

The economy needs to grow at a pace above trend to meaningfully reduce the high jobless rate, but that degree of growth just doesn’t appear likely any time soon.

Although weekly jobless claims declined, they remain stuck in a range that is consistent with a lackluster jobs market.

Consumers are still the primary engine of growth, but low confidence levels and high unemployment are likely to continue to keep spending in check.

Overall, the current recovery cycle appears to have fallen short.  Even after four quarters of recovery, aggregate output is still clawing its way back to its pre-recessionary peak.

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