Sunday, August 1, 2010

Second Quarter GDP Does Not Support The V-shape Recovery

The second quarter GDP fell by 11.11% compare with first quarter, it fell from 2.7% to 2.4% . We observed a moderate gain in government purchases that helped to increase the Q-2 GDP. The big problem spot was the worsening in net exports that could be explained by Europe sovereign debt crisis and higher dollar value that put American companies in disadvantage. Year-on-year, real GDP is up 3.2 %, compared to up 2.4% in the first quarter. We should thanks Keynesian economists for encouraging the congress to pass the huge stimulus package.
What you need to pay attention to is that for the “V” shape recovery we need 6% GDP, therefore 2.4% GDP does not suggest the robust recovery.