It turns out that the “Recovery Summer” the Obama administration has turned into a national joke really is taking place — just not here.
Uncle Sam's Bureau of Economic Analysis reported its first revision of second-quarter economic growth earlier this morning, estimating that the economy grew at an annualized rate of 1.6%. That's down by one-third from last month's initial report of 2.4%.
The good news is that the hit wasn't as big as expected. Most estimates ahead of the news ranged from 1.2% to 1.4%. CNBC's Jim Cramer notably predicted +0.5% and an ensuing “market panic.” Fortunately, we've been spared from that.
The bad news is that it's still a pretty serious drop, and that the revised second-quarter result is less than half of the first quarter's annualized +3.7%.
Beyond that, the rest of the year looks like it will be no better, and could end up being significantly worse.
Nouriel Roubini, Economist at New York University's Stern School of Business, is with what seems to the current consensus that second-half growth will come in at an annualized 1.5%. But he goes further, warning that 2011 will be no better, and will seem worse: “Even at 1.5%, it's going to feel like a recession even though technically it's not a recession.” The way things are going, we'll be lucky to hit that 1.5%.
Meanwhile, Germany's economy grew at an annualized rate of over 8% during the second quarter, tripling analysts' expectations (the 2.2% figured noted at the link is before annualization). Its government crowed: “Reunified Germany has never seen such quarterly growth before.” Expectations are that German growth will continue to be strong, though not as robust as the breakout second quarter.
Why is Germany doing so well? I suspect that it's largely because Chancellor Angela Merkel pointedly rejected President Obama's advice in March:
German Chancellor Angela Merkel has reiterated that she does not favor a new package of economic stimulus measures despite US calls for more spending as world leaders prepare for a G20 meeting in London.
Largely as a result, in my view, Germany has a genuine “Recovery Summer” in progress. We don't, and we won't, as long as this administration continues down its current path.