The official release of the advance estimate of Q2 GDP today was actually greeted with a sigh of relief. What does it say about the economy when at 1.7% rate generates relief? The relief of course is because it is not worse, but this number is subject to significant revision and so it may only be a temporary stay. I get asked on the radio all the time about economic recovery. The answer remains the same: there is recovery, but it is wholly inadequate to make people “feel” like recovery has taken hold.

Whether it is the most important gauge or not, people focus on the unemployment rate right now. The level of growth in the economy right now is not adequate to appreciably change that number. The NFIB reported in June that 18% of small businesses still look at weak sales as their biggest problem. With demand side concerns there will not be significant hiring by firms, plain and simple. As a result, unemployment will likely only decrease due to labor force departures by discouraged workers. Not what you want to see in your economy some five years after the onset of a crisis event.

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