The business media examine the GDP
The U.S. gross domestic product numbers were reported Wednesday and came in stronger than many economists expected. But much of the media coverage talked about how the uptick is still considered lackluster.
The Wall Street Journal story ran with this simple headline, “U.S. Economy Grows Faster Than Expected.” Here’s the lead of the piece:
The U.S. economy is faring a little better than previously thought, but the overall picture is still one of lackluster growth.
The nation’s gross domestic product, the broadest measure of goods and services produced across the economy, expanded at an annualized 1.7% pace from April to June, beating expectations for a 0.9% increase. The second quarter reading follows a downwardly revised 1.1% for the first quarter of 2013.
But broad revisions to GDP figures also showed that the U.S. economy expanded at a stronger pace in 2012 than was previously thought. GDP last year expanded at a 2.8% pace versus a previous estimate of 2.2%, according to the revised figures released by the Commerce Department. The change comes as part of a comprehensive overhaul of gross domestic product data dating from 1929 through the first quarter of 2013.
The second-quarter report—led by businesses, consumers and the resurgent housing market—suggests that the U.S. economy may be gaining a little momentum after absorbing hits from slow growth abroad, domestic political uncertainty, higher taxes and sweeping federal budget cuts. But it also shows a recovery that remains slow by historical standards four years after the recession ended.
The New York Times chose to go with a straightforward GDP is up better-than-expected lead and headline. Here’s the top of its story:
The United States economy performed a bit better than expected in the second quarter, shrugging off some of the impact from higher taxes and lower federal spending in the spring, the government reported Wednesday.
The gross domestic product grew at an annual rate of 1.7 percent, hardly indicative of an economic boom, let alone enough to bring down elevated levels of unemployment soon. It is also the third quarter in a row in which growth failed to top 2 percent, the average since the recession ended in 2009.
Still, the increase was an acceleration from growth in the first quarter of 2013, which was revised downward to 1.1 percent from an earlier estimate of 1.8 percent by the Bureau of Economic Analysis.
“It was a reasonable performance,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “In the long run, it’s not enough, but I’ll take growth wherever I can get it.”
Note the fairly positive quote for the lead.
The Reuters lead struck the most positive note of all, wrapping in decent ADP job numbers as well:
U.S. economic growth unexpectedly accelerated in the second quarter, laying a firmer foundation for the rest of the year that could bring the Federal Reserve a step closer to cutting back its monetary stimulus.
Gross domestic product grew at a 1.7 percent annual rate, the Commerce Department said on Wednesday, stepping up from the first quarter’s downwardly revised 1.1 percent expansion pace.
The economic picture was further brightened by the ADP National Employment Report, which showed private employers added 200,000 jobs in July, maintaining June’s pace. It offered hope the government’s comprehensive employment report on Friday could show a recent run of fairly strong job gains extended to July.
“The economy is improving and the ADP report is emblematic of a pattern of growth that will continue to tilt to the upside,” said Eric Green, chief economist at TD Securities in New York. “That is enough for the Fed to taper in September.”
Economists polled by Reuters had forecast the economy growing at a 1.0 percent pace after a previously reported 1.8 percent advance in the first three months of the year.
The surprisingly better GDP report buoyed U.S. stocks and lifted the dollar against a basket of currencies. Investors sold U.S. Treasury debt, with the price on the 30-year government bond falling a full point at one stage.
The Washington Post’s WonkBlog had a post saying people should be “horrified” by the GDP number:
When the Commerce Department reported the latest numbers on U.S. economic growth Wednesday morning, it was received with cheers. Gross domestic product rose at a 1.7 percent annual rate in the spring months! And that is a higher number, you may note if you are good at math, than the 1 percent that analysts had forecast. It is what markets and the journalists who write about them like to call a “huge beat.”
The good news first: The economy is growing a little faster than economists had feared. And it seems to be relatively well-balanced growth, with personal spending driving the growth train (responsible for 1.22 percentage points of the total growth) and business investment and housing making significant contributions. Trade was a significant negative, as imports rose faster than exports, and government spending subtracted from growth for the third straight quarter, though less dramatically than in the recent past.
The economy also did better in 2012 than had been earlier thought. In the Commerce Department’s re-benchmarking of data reflecting new calculation methods for GDP, the growth numbers came in at 2.8 percent, not the 2.2 percent earlier believed.
But the bad news is this: The better-than-expected second-quarter number came at the expense of a downward revision to estimates to the first part of the year, from 1.8 percent to 1.1 percent. Add in anemic growth (at only an 0.1 percent pace) in the fourth quarter of 2012, and we’ve now faced nine months of an expansion at a bit less than a 1 percent annual rate. Every two steps forward for growth seems to be accompanied by a step and a half back.
While it is just one of many economic indicators, GDP is an important number. Delving beyond the headlines and parsing the real meaning can be difficult, especially when the “beat” comes from revising old numbers and other moving parts. The picture for the economy might be mixed, but it’s clear that journalists are looking at all the angles given this coverage.