Looking at the 2nd Quarter GDP August 2, 2009Posted by geoff in News.
This may not have been obvious from last week’s report on the 2nd Quarter GDP: everybody focused on the 1% decline, which was smaller than expected. But when you look at the GDP, I like to look at the “Gross Private Domestic Investment” category, which is a measure of how much buying and making of stuff that businesses are doing. That gives you an indication of how much pep the economy is likely to have in coming months.
So how are the businesses doing? Here’s a comparison of the business and government contribution to the GDP:
That’s not so good. The government expenditures keep rising, even when the overall GDP is falling, and the business portion of the GDP continues to plummet.
So when Christina Romer says this:
“We did get some positive news this week,” Romer said of reports that the gross domestic product contracted just 1.0 percent in the second quarter of this year.
“The slowdown is certainly slowing down,” Romer said, comparing the second quarter GDP figure to the 6.4 percent GDP contraction in the first quarter. “But we still have a ways to go before we hit bottom and certainly it’s gonna be a long, hard slog getting out of this.”
I don’t think she knows how far away “bottom” really is.