The White House Blog

Advance Estimate of GDP for 2010:Q2 and GDP Revisions

Today’s report shows that real GDP, the total amount of goods and services produced in the country, grew at a 2.4% annual rate in the second quarter of this year, the fourth straight quarter of positive growth.  Growth in the first quarter was revised up to 3.7%, meaning that growth has averaged over 3% for the first half of 2010.  This solid rate of growth indicates that the process of steady recovery from the recession continues.  Nevertheless, faster growth is needed to bring about substantial reductions in unemployment.  Much work clearly remains to be done before the U.S. economy is fully recovered.  The comprehensive data revisions released with the report provide further evidence of just how severe the recession has been: the fall in GDP between 2007:Q4 and 2009:Q2 was 4.1%, making this the deepest recession since 1947.

Recent Growth

The overall growth of GDP in the second quarter of 2.4% was divided across the various components of output and demand in a way that suggests balanced recovery.  Consumer expenditures rose at an annual rate of 1.6%, down slightly from the first quarter, but more rapid than in the fourth quarter of last year.  Fixed investment (that is, investment in nonresidential structures, equipment and software, and housing) grew at an annual rate of 19.1%, the fastest pace since 1983.  Business investment in equipment and software increased by over 20% for the second consecutive quarter, indicating a welcome return to investment by private firms.  Inventory investment contributed just over 1 percentage point to GDP growth, substantially less than in the previous two quarters.  Thus, the steady growth occurred with relatively little inventory bounce.
 
In addition to the solid growth in the second quarter, real GDP growth in the first quarter was revised up substantially to 3.7%.  Growth has averaged over 3% for the first half of the year.

Moderate, sustained GDP growth is a vast improvement over the terrible declines in GDP of late 2008 and early 2009, and reassuring given the turbulence in financial markets following debt problems in Europe.  However, growth is below the rapid rate of increase needed to bring the unemployment rate down quickly.  For this reason, it is essential that Congress take the additional targeted actions that the President has recommended to further stimulate growth and job creation, such as increased lending and additional tax cuts for small businesses, aid to state and local governments to prevent the layoffs of hundreds of thousands of teachers, firefighters, and police, and tax credits to promote energy efficiency and clean energy manufacturing.

Data Revisions

The comprehensive GDP data revisions, which are released each July, show that the recession was deeper than previously reported, particularly in the second half of 2008.  GDP growth in 2008:Q3 was revised down from -2.7% to -4.0%, and growth in 2008:Q4 was revised down from -5.4% to -6.8%.  Growth in 2009:Q1, on the other hand, was revised up from -6.4% to -4.9%.  It now appears that the financial crisis may have affected production substantially more quickly than was previously reported or realized at the time.  But, the revised data also emphasize the dramatic positive shift in GDP growth over the past year and a half—from a decline of 6.8% in the last quarter of 2008 to 2.4% in the most recent quarter. 

Overall, the decline in GDP from its high in 2007:Q4 to its low in 2009:Q2 was 4.1%, making this recession the deepest since the official quarterly data began in 1947.  Since 2009:Q2, GDP has risen 3.2%.  That real GDP has not yet returned to its previous peak, much less its long-run trend path, emphasizes how much work remains before the U.S. economy is fully and truly recovered.

The data revisions, together with recent estimates, also provide some important new information about longer-run trends.  Revisions to both personal income and consumer spending have led to estimates of the personal saving rate in 2008 and 2009 that are substantially higher than previously reported.  The average saving rate in 2009, for example, is now 5.9%, 1.7 percentage points higher than previously reported.  In 2010:Q2, the saving rate is 6.2%.  This higher saving rate is consistent with estimates reported in the Economic Report of the President of likely consumer behavior in the wake of the financial crisis.  The higher level also suggests that there is room for further consumer spending growth as consumers become more confident, without returning to the very low saving rates of the past decade.
 
The revised data also indicate that productivity growth in 2008 and 2009 has averaged roughly 3%, slightly above the average from 1995 to 2007.  Productivity growth fell sharply in 2008 (now estimated at an annual rate of -0.3%) and rose even more sharply in 2009 (at an annual rate of 6.3%).  That the average over the recession and the first stages of recovery is equal to the historical average could suggest that the financial crisis has not damaged productivity growth (as some have argued).

 

 

Christina Romer is the Chair of the Council of Economic Advisers

West Wing Week: "The Men in Blue Jumpsuits"

Thanks for checking out the West Wing Week, your guide to everything that's happening at 1600 Pennsylvania Ave. This week, walk step by step with the President as he fights for campaign finance reform, boosts small business, meets with Space Shuttle Atlantis astronauts, commemorates the 20th anniversary of the Americans with Disabilities Act, welcomes the 2009 Softball World Series champions, makes an appearance on The View and much more. 

Find more video, photos, and information on the events featured in this episode below:

Monday, July 26, 2010

• The President speaks about limiting special interests and the DISCLOSE Act 
• The President thanks Space Shuttle Atlantic astronauts 
• The President commemorates the 20'th anniversary of the Americans with Disabilities Act

Tuesday, July 27, 2010

• The President meets with bi-partisan leadership in Congress

Wednesday, July 28, 2010

• The President speaks about small businesses and apple pie in Edison, New Jersey 

Thursday, July 29, 2010

• The President speaks about education 

Arun Chaudhary is the official White House videographer

President Obama on Education: “The Status Quo is Morally Inexcusable”

Today, President Obama delivered an address on education at the Urban League’s 100th Anniversary Convention highlighting the steps his Administration has taken over the past eighteen months to improve the education system in America.  The President stated that education reform is a top priority for his Administration because the “status quo is morally inexcusable, it’s economically indefensible, and all of us are going to have to roll up our sleeves to change it.”

The President began his remarks by discussing the importance of education for the success of our economy and our nation:

I know some argue that as we emerge from a recession, my administration should focus solely on economic issues.  They said that during health care as if health care had nothing to do with economics; said it during financial reform as if financial reform had nothing to do with economics; and now they're saying it as we work on education issues.  But education is an economic issue -- if not “the” economic issue of our time. 

It’s an economic issue when the unemployment rate for folks who’ve never gone to college is almost double what it is for those who have gone to college.  It’s an economic issue when eight in 10 new jobs will require workforce training or a higher education by the end of this decade.  It’s an economic issue when countries that out-educate us today are going to out-compete us tomorrow.

A Common Sense Approach to Cranes, Derricks and the Safety of America's Construction Workers

Each year, close to 100 workers are killed, and hundreds more are injured in workplace incidents involving cranes and derricks in construction. These incidents and their catastrophic impact on the lives of workers and families in America are preventable. For the first time in nearly forty years, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) has announced new rules to do just that.

Yesterday, after years of extensive research, consultation and negotiation with industry experts, OSHA announced the publication of a new rule covering the use of cranes and derricks in construction. This long overdue rule addresses the key hazards related to cranes and derricks on construction worksites, including the four main causes of worker death and injury.  

Insurance for Americans with Pre-Existing Conditions

For too long, too many Americans with pre-existing conditions were left out of the health insurance marketplace. Health insurance companies could charge these Americans more or simply refuse to cover them. But thanks to the Affordable Care Act, the health care system will no longer leave out the people who need care the most.

Starting September 23, the new law makes it illegal for insurance companies to discriminate against children under 19 with preexisting conditions. In 2014, discriminating against anyone with a pre-existing condition will be illegal, but we know Americans need relief now. That’s why the new law created the Pre-Existing Condition Insurance Plan. This plan offers coverage to uninsured Americans who have been uninsured for at least six months and unable to obtain health coverage because of a pre-existing health condition like cancer, diabetes or lupus.

Summertime Means Construction, Jobs for Ohioans

Cross-posted from the U.S. Department of Transportation blog

Few things say summer like a state fair. And, as a graduate from the nearby University of Dayton, I was thrilled to take part in today's opening of the 157th Ohio State Fair with Governor Ted Strickland.

A proud Buckeye tradition, the Ohio State Fair has delighted locals and visitors since 1850. Last year alone, over 800,000 people turned out to take part in the livestock competitions, concerts, rides, and butter sculptures that make up a true state fair experience.

Deputy Transportation Secretary John Porcari speaks at the opening of the 157th Ohio State Fair. July 28, 2010.

The Vice President & the Recovery Act Go to Yellowstone

Ed. Note: Also watch a video of President Obama and his family's visit to Yellowstone National Park in the summer of 2009 along with some historical context.

On Monday, I joined Vice President Biden at Yellowstone National Park as he continued his Recovery Summer tour.  Under overcast skies, we walked up a new gravel road to see the construction of the new Madison wastewater treatment plant, a $4.6 million project that will service the campground in this beautiful part of the park. This project replaces the weary wastewater plant, constructed in 1959, which was not built to meet today’s wastewater treatment needs or function throughout the year. The new design will be less visible from the main road and with its new treatment technology (better bugs as the project manager told us) no longer waft offensive odors over the campers. The work at Madison is being done by Dick Anderson Construction – a contractor based out of Bozeman, Montana. Ed Venetz, VP for the company spoke about how the ARRA funds have really helped keep his workers employed and how much he likes projects like this one in the National Parks. Ed later introduced the Vice President to a back drop of the Madison Valley and National Park Peak, the site of the legendary campfire where the idea of National Parks was born.  

Vice President Joe Biden meets Director of the National Parks Jon Jarvis before touring a recovery act project in Yellowstone National Park, Wyoming, July 26, 2010. (Official White House Photo by David Lienemann)

Not Your Ordinary Website Demo

It’s not every day that the President takes time out of his schedule to record a video about a website.  But that’s just what happened with HealthCare.gov, the new consumer-oriented website from the Department of Health and Human Services.  In the video, he shows how anyone can learn about new rights and benefits available to them as a result of health reform law, and, for the first time ever, see all their insurance coverage options in one place.  Check it out:

Making useful, easy-to-use information available online is a priority for this Administration.  And putting power back into the hands of Americans is a primary focus for the President.  HealthCare.gov accomplishes both.  So, take a moment and check it out.

And don’t forget to leave your feedback in the yellow boxes throughout the site.  The team at HHS is reviewing them on a regular basis and it’s a great way to help make HealthCare.gov a better resource for all of us.
 

Clean Energy and National Security

Yesterday, we hosted a lively forum at the White House, which brought more than 130 stakeholders– civilian and uniformed officials from the Department of Defense (DOD) and our armed services, policy makers from the Department of Energy (DOE), think tanks, and business entrepreneurs – together for a discussion on the importance of clean energy for our national security.

Secretary of the Navy Ray Mabus, delivered the keynote address, and highlighted not just the great progress happening at the Department of the Navy in terms of greening its fleet, powering its jets with biofuels, and testing new, experimental technology in efficiency and alternative energy, but also underscored just how much further we have to go to ensure our energy independence.  Deputy Secretary Dan Poneman of the Department of Energy echoed these sentiments, and challenged the audience to think about ways in which our challenges might instead be viewed as opportunities for both improved mission capability, and an enhanced energy security.