GDP growth at 1.3% annual rate, House fails to pass debt bill: Look out below!

No surprises here that GDP was overstated for the first quarter and was well below consensus for the second.

According to the Bureau of Economic Analysis this morning, first quarter GDP was revised down to a .4% annual rate, and the second quarter’s initial estimate is just 1.3%. Also, revisions now detail — again, no surprise — that the recession was worse than previously thought.

From the BEA news release:

For the period of contraction from the fourth quarter of 2007 to the second quarter of 2009, real GDP decreased at an average annual rate of 3.5 percent; in the previously published estimates, it had decreased 2.8 percent.

For the period of expansion from the second quarter of 2009 to the first quarter of 2011, real
GDP increased at an average annual rate of 2.6 percent; in the previously published estimates, it had increased 2.8 percent.

Calculated Risk’s post about this includes this graph:

And this grim news comes on the morning after House Republicans failed to pass a bill that would extend the debt limit. As early as next week, the U.S. will begin defaulting on payments already authorized by Congress, in many cases years ago.

The major U.S. markets open in about 20 minutes.