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Economy Growing a Bit Swifter Than We Thought?

We're still a couple weeks away from the advance reading of the just-ended second quarter GDP growth rate (economists seem to expect it to remain roughly flat from the previous quarter's 1.0% growth), but a bit of economic data out today from the Census Bureau may sweeten that forecast a bit.

It's the monthly trade balance data for May and it shows net exports unexpectedly increasing.  The trade deficit still increased, compared to May 2007, but it fell 1.2% from April 2008 (versus expectations that it would increase by 2.8%).  The net effect is a monthly trade deficit that's 4% smaller than economists expected.

It's gummint data, so it's slow in coming and we don't have June yet, but assuming it failed to improve further and simply held steady, this unexpected outperformance would result in roughly a 0.2% increase in the quarterly GDP growth rate (assuming net exports represent about -5% of quarterly GDP).

If that bears out, it could mean second quarter economic growth accelerated (again), from 1.0% to 1.2%.  Still pokey, but positive and trending upward.

The sad part of all this is that accelerating economic expansion tends to cause recession fetishists great consternation.  Maybe they can shut their eyes tight and make a wish for a big financial crisis in the second half of the year, one sufficiently dire as to succeed at dragging the economy into recession, where credit, housing, and oil crises have thus far failed.

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Economy Growing a Bit Swifter Than We Thought?

We're still a couple weeks away from the advance reading of the just-ended second quarter GDP growth rate (economists seem to expect it to remain roughly flat from the previous quarter's 1.0% growth), but a bit of economic data out today from the Census Bureau may sweeten that forecast a bit.

It's the monthly trade balance data for May and it shows net exports unexpectedly increasing.  The trade deficit still increased, compared to May 2007, but it fell 1.2% from April 2008 (versus expectations that it would increase by 2.8%).  The net effect is a monthly trade deficit that's 4% smaller than economists expected.

It's gummint data, so it's slow in coming and we don't have June yet, but assuming it failed to improve further and simply held steady, this unexpected outperformance would result in roughly a 0.2% increase in the quarterly GDP growth rate (assuming net exports represent about -5% of quarterly GDP).

If that bears out, it could mean second quarter economic growth accelerated (again), from 1.0% to 1.2%.  Still pokey, but positive and trending upward.

The sad part of all this is that accelerating economic expansion tends to cause recession fetishists great consternation.  Maybe they can shut their eyes tight and make a wish for a big financial crisis in the second half of the year, one sufficiently dire as to succeed at dragging the economy into recession, where credit, housing, and oil crises have thus far failed.