Economix: Economic Growth Worse Than Thought

The good news six months ago was that the United States economy, as measured by gross domestic product, had completely recovered all the losses it suffered in the recession.

Never mind.

FLOYD NORRIS

Notions on high and low finance.

The revised G.D.P. numbers put out by the government today make the recent history, which we thought was pretty poor, even worse.

Even with a small gain in real G.D.P. in the second quarter, the total size of the economy, $13.27 trillion in 2005 dollars, is $55.9 billion, or 0.4 percent, smaller than the revised number for the fourth quarter of 2007. The revisions indicate the economy was larger before the downturn than we had thought and is smaller now.

We are now told that during the recession, the economy shrank by 5.1 percent. That is a full percentage point more than the 4.1 percent the old numbers showed. The recovery has also been slower.

The changes are pretty much across the board in the G.D.P. numbers. Personal consumption expenditures fell by a full percentage point more than previously thought. Gross private investment — on such things as buildings and planes and computers — declined by 34.2 percent during the recession, 2.6 percentage points more than previous estimates.

A note to those who are complaining the federal government is too big: we are now told that nonmilitary spending contributed less than thought to the G.D.P., both during the recession and the recovery. The same is true of state and local government spending.

There is one area where the changes make history look better — corporate profits. They were a little lower than we thought in 2008 and significantly higher in 2009 and 2010.

It is small comfort, but the United States still looks relatively good in G.D.P. recovery. Following is the change in real G.D.P. from the prerecession peak to the most recent numbers available. For the United States and Britain, that is the second quarter of this year. For the others it is the first quarter.

Switzerland, +1.2%

Germany, +0.1%

United States, -0.4%

France, -0.8%

Netherlands, -1.0%

Euro zone, -2.1%

Portugal, -2.7%

Britain, -3.9%

Spain, -4.0%

Italy, -5.1%

Japan, -5.6%

Greece, -9.9%

Ireland, -11.5%

Article source: http://feeds.nytimes.com/click.phdo?i=4d2a62a6c23d22e32083e3f9285cc62e