Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
Login Archives Your Team About Us FAQ
[mmpazkzone name="azk58712-mobile-nav" network="9794" site="307044" id="222451" type="5"]
  • Subscribe
Enter stock ticker or keyword
×
[mmpazkzone name="azk58712-mobile-sticky" network="9794" site="307044" id="222451" type="5"]
Join 100,000+ Like-Minded Investors Today
Twitter
Tags: Government Spending, Stock Indexes

U.S. Economy Surges in the Second Quarter, Struggles After That

By , Money Morning • September 28, 2007

Start the conversation

By Jason Simpkins
Staff Writer

The U.S. economy made a strong showing in the second quarter, with growth surging at an annual rate of 3.8% -- a major improvement over the anemic 0.6% advance of the first quarter, according to The Associated Press. It was the strongest quarterly showing in more than a year, the U.S. Commerce Department reported yesterday (Thursday).

U.S. corporate profits helped fuel that economic improvement in the second quarter, with companies reporting that their bottom lines expanded at a 5.2% clip - more than three times the 1.5% rate of the first quarter. Third-quarter earnings season will be under way in the next several weeks.

The outlook ahead isn’t nearly so upbeat, however.

The National Association for Business Economics believes growth in the third quarter decelerated to a 2.4% pace in the third quarter and predicts that economic growth will remain relatively flat in the year’s final quarter, advancing at a 2.5% clip.

However, other analysts believe that the weight of the slumping U.S. housing market - and the accompanying credit crunch that has spread worldwide - will cause growth to slow much more significantly. Indeed, many economists anticipate that the housing downturn won’t reverse itself until well into 2008.

The Commerce Department said yesterday that new home sales fell 8.3% in August. The decline drove sales down to a seasonally adjusted annual rate of 795,000 units, the lowest rate in seven years. The median price of a home dropped 7.5% from a year ago. The number of homes for sale at the end of the month fell 1.5%, to 529,000. However, the inventory of unsold homes is up 8.2% at the current sales pace. The number of properties completed and waiting to be sold also rose by 2,000 to 180,000.

The worst housing slump since 1991 has taken a harsh toll on economic development. Higher interest rates have squeezed homeowners and defaults particularly in the subprime market have spiked dramatically.

Some good news breached the labor front as the Labor Department reported a drop in the number of new applicants for jobless benefits. The department said that new applications for jobless benefits dropped by 15,000 to 298,000 last week. Some analysts had predicted that the number of applicants would swing in the other direction, rising by as many as 7,000.

ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us How Money Morning Works FAQs Contact Us Search Article Archive Your Team Text Messaging Terms of Use
TOPICS
AI Investing Best Stocks to Buy Stock Forecasts Stocks to Sell Now Technology Stocks Best REITs to Buy Now IPO Stocks Penny Stocks Dividend Stocks Cryptocurrencies How to Trade Options Best Trades to Make Now Options Trading Strategies Weekly Trade Recommendations Income Investing Guide Retirement Articles Special Investing Reports Meet Our Experts
PREMIUM SERVICES
Money Map Press Home Fast Fortune Club Microcurrency Trader Rocket Wealth Initiative Quantum Data Profits Darknet Alpha Accelerators Brutus Alerts Resource Traders Alliance Rob Roy Trader Long-Term Equity Profits

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information