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The government reported today that GDP grew by 1.89% for the second quarter. This is the sixth time in the last eight quarters that GDP growth has come in less than 2.7%. The government also revised its numbers for each quarter going back to the start of 2005.

The revisions aren’t terribly dramatic but they mostly say that growth has been weaker than we thought. From the fourth quarter of 2004 to the first quarter of 2008, the original forecast had been that real GDP grew by 8.4%. Turns out it was just 7.9%. That may not sound like much but it’s over $50 billion that’s vanished with a keystroke. I know I miss it already.

We also learned that the fourth quarter of 2007 was in fact, a negative quarter, and the first quarter of 2007 was just barely positive. The newspaper definition of a recession is back-to-back quarters of negative growth. In reality, the official timers of recession use a much more sophisticated method for pinpointing the beginning and end of a recession. What we’re experiencing may be an extended period of low growth, but where the economy doesn’t experience much actual contraction.

Here's real GDP growth, old and new (in trillions):

Posted by edelfenbein at July 31, 2008 9:38 AM