The Economy: More Bad News

G ross domestic product--the nation’s output of goods and services--grew at an anemic 1.5% rate during the second quarter, the Commerce Department said . The report was a shade better than the 1.4% rate estimated a month ago. The Labor Department reported a big jump of 15,000 in the number of first-time claimants for unemployment insurance -- to 414,000 in the week ended Sept. 12.

GDP: Consumers, who normally fuel two-thirds of economic activity, cut spending by $800 million in the second quarter after boosting it $40.3 billion in the first quarter. Trade with the rest of the world deteriorated sharply, and economists said it may continue to weaken because currency turmoil in Europe will dampen demand for American-made goods. Business wariness showed up in the form of slower production schedules so that stocks of unsold goods could be kept under tight control. The Commerce Department said inventories rose by $7.8 billion in the second quarter, instead of rising $9.2 billion as estimated a month ago. They remain a drag on third-quarter output because these goods must be sold off to justify making more. The White House estimates that GDP will expand a modest 2.7% in 1992, compared to a drop of 1.2% in 1991, but economists called that forecast “exceedingly optimistic” when job layoffs continue to sap optimism about the economy’s direction.

Jobless Claims: The data on initial unemployment claims point to a major deterioration. Damage wreaked by Hurricane Andrew contributed to the latest weekly rise in claims. Aside from the storm, layoffs continued and economists said they expect no quick job market turnaround. In addition, there are another 24,000 jobless people who already have exhausted regular benefits and filed for emergency compensation. Claims, therefore, more accurately rose to 438,000 during the latest week, the highest since March. Some economists consider weekly claims above 400,000 to be at or near recession levels.

Gross Domestic Product

The GDP measures all the goods and services producted in the United States.

2nd quarter (revised): +1.5%