2Q GDP Revised From 1.9% to 3.3%, Yet Jobless Claims at 425,000

After last month’s report showing 2Q2008 GDP at 1.9%, the number has been revised upward to show that the economy actually grew by 3.3% in the second quarter. Yet also today, jobless claims for the week were reported at 425,000. Regarding GDP, a Bloomberg report said the revision higher was due mostly to an export surge that may wane as Europe and Japan economies weaken.

Trade contributed the most to U.S. growth in almost three decades. The expansion is likely to weaken in the second half as consumers burdened with falling home values and dwindling job prospects rein in spending. Separate figures today showed the number of Americans collecting unemployment benefits reached a five-year high last week.

Next month, we will find out if 1Q2008 GDP of 0.9% and if today’s 2Q2008 GDP of 3.3% will be revised. The final 4Q2007 GDP was -0.2%. A recession is defined as two consecutive quarters of negative GDP growth, but all the revisions are why it’s so hard to call a recession until after the fact.

Stocks rallied on today’s strong GDP number, which would normally cause rates to rise, but mortgage bonds also did OK today helping rates drop slightly. Usually after a day like this rates will rise again unless there is compelling data otherwise. Tomorrow’s Personal Consumption Expenditures data will give markets new inflation data to deal with on a holiday-shortened trading day.