U.S. first-quarter GDP revised downward in troubling move
The government made a surprise reduction in its estimate of first-quarter GDP this morning, saying the economy grew at a 2.7 percent rate in the first three months of 2010, not a 3 percent rate, as previously computed.
This is troubling news for an economy that is trying to recover -- fighting European debt troubles on the one hand and, here in the U.S., unemployment that still hangs near 10 percent and a stock market that's been volatile.
The government takes several swipes at estimating each quarter's GPD in order to get a good number. Forecasters expected that this revision -- the third for the first-quarter numbers -- would find that GDP remained stable at 3 percent.
But the government found that consumers spent less in the first quarter that previously thought.
At the same time this morning, a consumer sentiment survey showed that American consumers are more optimistic now than at any time over the past two years.
According to the University of Michigan/Reuters consumer confidence survey for June, out this morning, the sentiment index rose to 76 in June, up from 73.6 percent in May. That said, when the economy is in healthy shape, the consumer confidence index usually comes in in the mid-80s.
In response to all of this economic data, stocks are up mildly.
The Dow is up 0.2 percent.
The broader S&P 500 is up 0.4 percent.
The tech-heavy Nasdaq is up 0.3 percent.
June 25, 2010; 10:23 AM ET
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