A booming economy?

"Incomprehensible" GDP growth numbers make "recession" a hard word to say. But we'll say it anyway.

Published August 28, 2008 4:58PM (EDT)

The Department of Commerce has revised its figures for second-quarter GDP growth rate to 3.3 percent, up from the previously reported 1.9 percent, and a significant rise from the first quarter's 0.9 percent growth rate. 3.3 percent GDP growth rates are not normally associated with recessions.

One early reaction:

"Ha ha ha. And if you believe that data, I also have a bridge for sale in Brooklyn." -- The Big Picture.

The Economist's Free Exchange sheds a little more light:

It's a big flashy number, but it probably doesn't mean all that much. The first second-quarter GDP revision is in, and the 1.9 percent growth rate has been pushed up to an incomprehensible 3.3 percent. Quarterly growth was due almost entirely to exports, without which the economy would have been roughly flat. Bad news, since the dollar is rising and the rest of the world is tightening the purse strings.

As noted here when the Commerce Department released its first guess at the quarterly GDP numbers, "Trade, in other words, is the current American lifeline."


The smallest trade deficit in eight years was the biggest contributor to growth last quarter. The trade gap narrowed to a $376.6 billion annual pace and added 3.1 percentage points to growth, the most since 1980.

But free-trade fans shouldn't expect the new numbers to change any hearts and minds in, say, Ohio. The total number of Americans receiving unemployment benefits reached a five-year high of 3.4 million. According to Calculated Risk, "By this measure, the economy is clearly in recession."

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization Great Recession How The World Works U.s. Economy