Sunday, July 31, 2011

Anemic GDP Growth Showing Evidence of Double Dip

For all those concerned about the prospect of a double dip recession, this chart unfortunately gives strong credence to those fears. Essentially it shows that every time year-over-year GDP growth dips below 2%, a recession always follows. With the release of Q2 GDP on Friday (which showed a paltry 1.3% annualized growth rate), the year-over-year growth rate is dangerously close to this 2% threshold. Given the downward revision to Q1's GDP growth from 1.9% to an anemic 0.4%, future revisions of Q2 GDP could very well show that year-over-year growth is trending well below the 2% line in the sand.

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