I want to make a prediction about what Wall Street is going to do today. Watch closely and I bet you will see it decline at least a little, if not rather sharply. On what do I base this prediction? It is the economic news the government will be releasing today. From all indications, it isn’t going to be good news. In fact, it seems to be rather bad news and it adds even more uncertainty to the economic outlook in America. I know President Obama and Vice-President Biden have been trying to tell us how well the economy is doing, but that simply is not the truth. They have been basing their boasts on how much money the government is spending in it’s attempts to shore up the economy and now that the stimulus is running it’s course, the economy is even worse shape than it was before. As has already been discussed on this blog and others, the homebuyer’s tax credit has ran out and this caused the housing market to decline sharply in July. The government figures that we will see later today proves the relationship between the two.
Just how bad is it? Let’s look at some figures from the report, supplied by The Associated Press.
The government is about to confirm what many people have felt for some time: The economy barely has a pulse.
The Commerce Department on Friday will revise its estimate for economic growth in the April-to-June period and Wall Street economists forecast it will be cut almost in half, to a 1.4 percent annual rate from 2.4 percent.
That’s a sharp slowdown from the first quarter, when the economy grew at a 3.7 percent annual rate, and economists say it’s a taste of the weakness to come. The current quarter isn’t expected to be much better, with many economists forecasting growth of only 1.7 percent.
Such slow growth won’t feel much like an economic recovery and won’t lead to much hiring. The unemployment rate, now at 9.5 percent, could even rise by the end of the year.
UPDATE: Here is a link to the newest economic indicators just released by the government, as well as a quote from the report.
Real gross domestic product (GDP) grew at an annual rate of 1.6 percent in the second quarter of 2010, according to today’s second estimate. This follows a growth rate of 3.7 percent in the first quarter.
If this isn’t bad news, then I don’t want to hear the bad news when it comes along. This news is sure to make consumers edgy and uncertain about the economic future. This is turning out to be a very vicious cycle. Little to no economic growth means the economy is stagnant. In turn, that means
consumer purchases will be down and that leads to businesses selling fewer products. From there, we have the unemployment rate, which is already high, possibly going even higher. Last, but not necessarily least, businesses are looking forward to the end of the year and the possibility of their taxes going even higher. Have I mentioned the uncertainty this brings to the picture?
What does all of this mean for you and I, the American consumer? I think we had best be tightening our belts, even more so than we have already done. Until our government officials can see their way to changing the course they are on and the tactics they are using to try to keep our economy from going further into the tank. One thing for sure, what they are trying now is just not working. Is it time to try something else? Just a thought.
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