The federal government released GDP growth figures on Friday, with the Department of Commerce reporting that the U.S. economy expanded at an annual rate of 2.4 percent – positive, but less than first-quarter figures of 3.7 percent or 2009’s solid 5 percent growth rate.
The news had a generally negative impact on markets, as it confirms that while the U.S. economy is recovering, it is doing so with less and less conviction. Job growth has been a particular issue, as national unemployment floats above 10 percent – far more in the areas most affected by the collapse of the subprime bubble.
“Given how weak the labor market is, how long we’ve been without real growth, the rest of this year is probably still going to feel like a recession,” Prajakta Bhide, a research analyst at Roubini Global Economics, told the New York Times. “It’s still positive growth — rather than contraction — but it’s going to be very, very protracted.”
The growth also missed forecasts, although only slightly; Bloomberg’s survey of analysts delivered a projected growth figure of 2.6 percent.
Stock index futures dropped abruptly – contracts on the Dow Jones Industrial Average Index were down 82 points to 10,327 at 9:15 a.m. EST. S&P 500 futures slid 10.3 points to 1,086.7 and Nasdaq 100 futures dropped 15.75 points to 1,841.5, giving the bears more fuel. The
Mexican Bolsa and the Brazilian Bovespa also saw losses, as traders fear that slumping recovery will cut into exports at commodity-producing companies in those nations.
Similar effects were seen in commodities themselves – West Texas International light, sweet crude oil futures slipped 1.6 percent to $77.10 per barrel, and natural gas was down about .3 percent. Gold posted the slightest of gains, and silver saw a hefty 1.46 percent jump to $17.875 per troy ounce.
The dollar also resumed its usual role as a haven, with traders leaving the British pound, Swiss franc and euro currencies to seek haven in the greenback – despite the fact that the weak growth came from America, not the euro-zone or Asia.
Further trading through the day will determine how events play out, but the GDP figures have likely set the stage for some persistent weakness in industrial commodities and equity futures over the next few weeks or even months.
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