And in "fun with economics" news, this from Nouriel Roubini. My headline is his headline. Some selections (emphasis mine; see below for links):
The curtain has opened on Act Two of our “Year of Two Halves”—RGE’s theme since the end of 2009—with the slowdown forecast for H2 2010 getting here a bit earlier than expected. Growth in Q2 2010 registered a very weak 1.6%, revised down from an original estimate of 2.4%—a sharp slowdown from the 3.7% of Q1. This implies much weaker growth in H1 than even bearish forecasters had expected. Moreover, most of the growth was driven by a temporary inventory adjustment; final sales grew a mediocre 1.1% in Q1 and 1.0% in Q2.
Personal consumption—70% of aggregate demand—seems off to a rocky start this quarter: Core retail sales for July showed the third decline in the last four months. In the week ending on August 21, same-store sales data released by ICSC-Goldman Sachs showed a fourth straight decline. With inventory restocking over, the investment outlook is equally bleak. Corporate sector capital expenditure, the only component of aggregate demand that grew robustly in H1, appears set to slow[.]
A growth rate of 1% or lower (now likely for H2 2010) is a severe growth recession, as potential growth is closer to 3%.Note that last — he's saying H2 GDP potential is close to 3%, and the "demand gap" (unrealized growth) could be most of it.
GDP of at least 2.5% is one of our magic numbers. Krugman says we need 2.5% growth to keep unemployment stable.
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