Second quarter economic growth revised up as jobless claims fall
The revised data on total economic output, also known as gross domestic product, narrowly beat expectations and came as the Labor Department reported another hopeful signal -- weekly claims for unemployment insurance dropped by 37,000 last week to 391,000, the lowest figure since early April.
Economists say claims below 400,000 are a positive sign for job growth. The unemployment rate was 9.1% in August after the economy failed to add any new jobs.
The two government reports indicate fears of another recession are unwarranted right now, said Chris Rupkey, chief financial economist for the Bank of Tokyo-Mitsubishi in New York.
"The economy is not teetering on the edge of a cliff, getting ready to fall over into a recession," he said.
The definition of a recession is two straight quarters of negative growth. In the first three months of the year, the economy barely grew, expanding at an annual rate of just 0.4%, leading to fears of double-dip recession as the economy struggled to recover from the deep downturn that technically ended in June 2009.
The Commerce Department originally had estimated second-quarter economic growth at 1.3% in July, but revised the figure down to 1% last month.
Despite the somewhat improving outlook, major corporate chief executives aren't very optimistic about the direction of the economy. Their expectations for sales, capital expenditures and adding U.S. jobs dropped significantly in the third quarter, according to findings released Thursday from the Business Roundtable's CEO Economic Outlook Survey.
"While we still see strong business fundamentals in America, the quarterly survey results reflect increased uncertainty among CEOs concerning the economic climate and business environment, said Boeing Co. Chief Executive Jim McNerney, chairman of the group.
For example, the survey found that 36% of CEOs expected to add employees in the U.S. in the next six months, down from 51% in the second-quarter survey; 24% expected to lay off workers over the same period, up from 11%.
McNerney and the group's president, John Engler, said that although the outlook by corporate leaders was down, they were not anticipating a recession. The survey's overall index showed expectations of positive growth.
"We’re still in the expansion category, albeit at a slower anticipated rate than the last quarter," McNerney said.
The CEOs survey estimated that GDP would grow by 1.8% in 2011, down from a projection of 2.8% in the second quarter survey.
-- Jim Puzzanghera
Photo: Boeing Co. Chief Executive Jim McNerney. Credit: Bloomberg.