2nd Quarter GDP Down Only 1 Percent

NEW YORK (CNNMoney.com) — The pace of economic decline slowed substantially in the second quarter, as the U.S. economy shrank at an annual rate of 1% — far less than it did in the first quarter, according to a government report released Friday.

Economists surveyed on Briefing.com expected the second-quarter reading to show the economy contracted at an annual rate of 1.5%.

The economy has been mired in recession since December 2007, worsening in recent quarters. The fourth quarter of 2008 and first quarter of 2009 measured the worst two quarterly declines in 26 years — the nation’s gross domestic product fell a revised 5.4% and 6.4% respectively.

The slower second-quarter contraction was largely due to a smaller decline in exports as consumer prices and government spending rocketed higher.

That partially offset a 1.2% decline in consumer spending in the second quarter, which makes up about 70% of GDP. The decline in business inventories also took a significantly smaller bite out of GDP last quarter than in the previous two quarters.

GDP, the broadest measure of economic activity, has contracted for four straight quarters — the first time that has happened since the Commerce Department began tracking that measure in 1947. But the most recent quarterly decline is the smallest since the third quarter of 2008, giving hope to some economists that the recession is at or nearing an end.

Economy Stabilizing

From the AP:

WASHINGTON – The economy is finally beginning to show signs of stabilizing in some regions of the country, bolstering hopes of a broader-based recovery this year.

A Federal Reserve snapshot of economic conditions issued Wednesday found that most of the Fed’s 12 regions indicated either that the recession was easing or that economic activity had “begun to stabilize, albeit at a low level.”

The economy remains fragile. But the fact that some Fed regions reported signs of activity beginning to level out raises hope that the recession, which started in December 2007, is drawing to a close.

Four Fed regions — New York, Cleveland, Kansas City and San Francisco — pointed to “signs of stabilization,” the survey said. Two regions — Chicago and St. Louis — reported that the pace of economic declined appeared to be “moderating.”

Five other regions — Boston, Philadelphia, Richmond, Atlanta and Dallas — described activity as “slow,” “subdued” or “weak.” Only one region — Minneapolis — indicated that its downward slide in economic activity had worsened.

Combined, the assessments of businesses on the front lines of the economy appeared to be brighter than those they provided for the previous Fed report in mid-June.

June New Home Sales Rise 11 Percent

From the AP:

WASHINGTON – New U.S. home sales rose by the largest amount in more than eight years last month, in another sign the housing market is finally bouncing back from the worst downturn in decades.

The Commerce Department said Monday that sales rose 11 percent in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000.

It was the strongest sales pace since November 2008 and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 360,000 units. The last time sales rose so dramatically was in December 2000.

Sales have risen for three straight months. The median sales price of $206,200, however, was down 12 percent from $234,300 a year earlier and down nearly 6 percent from $219,000 in May.

Watch the Data You Read

From the Big Picture:

Barron’s Alan Abelson discusses the lack of media skepticism when reporting most economic data these days.

Excerpt:

“Take the big play given to the 3.6% rise in sales of existing homes last month, which helped power a nearly 200-point rally in the Dow that lifted that venerable index over 9000 for the first time since January. Adding to the excited stock market response was the refrain in virtually every story, whether recounted in print or on the Internet and the tube, that this was the third month in a row of higher sales, signaling that the long-awaited but frustratingly elusive bottom in housing had been reached. Really?

As Mark Hanson of the eponymous real-estate advisory points out, it’s a seasonal phenomenon that until recent years has happened every year.

Indeed, the wonder of it is that, with prices soft and mortgage rates down, sentiment better and supply restrained by foreclosure moratoriums, sales weren’t higher than a year ago. Some of those benign factors are changing, and not for the better: Rates are creeping up, moratoriums are ending and foreclosures are on the rise.

Prices, moreover, are also rising, Mark points out, “but only at the low end, as investors and first-time home owners slug it out for $150,000 foreclosure sales.”

Prices at the middle and high end are a whole different and not very happy story. And Mark notes ominously, “rising foreclosures as the market enters the slow season is a negative housing leading indicator that wasn’t in place in July 2008, but was in place in July 2007,” when the roof started to fall in.

Although it may sometimes seem as if we do, it isn’t that we believe every hopeful bit of news should be dumped on. But an account tempered by a little perspective might give investors and everyone else a truer picture of the way things are rather than the way we wish they were.”

Do Californians Pay Too Much in Taxes

This chart shows the percent of taxes we pay California and our local governments. As you can see, Californians pay 10.5%. This is higher than the national average of 9.7%.

Napa County’s Unemployment Rate is 3rd Lowest in California

California’s unemployment rate remained steady at 11.6 percent from May to June, the highest in modern record-keeping. The jobless rate for Napa is the third lowest of any California county.

The federal government last month reported an 11.5 percent jobless rate in California but later revised the number to 11.6 percent. In Napa, the unemployment rate for June was 8.3 percent, down two-tenths of a point from May and down from April’s 9 percent.

California’s Unemployment Rate Steady at 11.6 Percent

California’s unemployment was 11.6 percent in June. Another 66,500 jobs disappeared during June.

California’s unemployment was the sixth highest in the nation. Michigan’s was highest, at 15.2 percent.

The statewide unemployment rate was actually unchanged from a month earlier. The rate for May was originally reported at 11.5 percent, but that was revised upward a tenth of a point. But the continued job loss showed the state remains firmly in the grip of a nasty recession. In the past year, some 766,300 jobs have been lost.