Plus: GDP Growth Revised Down, Jobless Claims Rise Again and Consumer Confidence Falls.

Q2 GDP Growth Downgraded
United States economic growth for the second quarter of 2011 was revised downward largely due to reductions in private inventory investments and a slowdown in exports, according to the U.S. Department of Commerce on Friday.

The country’s real gross domestic product (GDP) growth increased 1 percent in Q2, down from the initial estimate of 1.3 percent growth and following an anemic 0.4 percent growth rate in the first quarter. The sluggish GDP growth in the first half of the year has reignited concerns over a protracted economic downturn.

“While the economy has expanded at an average rate of 2.5 percent over the past two years, that’s much slower than is typically the case after a sharp recession. What’s more, the unemployment rate remains unusually high at 9.1 percent at this stage of the economic cycle,” MarketWatch explains. “A slew of recent economic data point to continued economic weakness. Some reports appear to suggest that another recession might be in the cards while other data indicate that the economy is still growing, but at a crawl.”

The downward revision stemmed mainly from lowered estimates for export growth, which fell from 6 percent to 3.1 percent, and private business inventories, which were revised from $49.6 billion in the initial estimate to $40.6 billion in the final estimate.

“[T]he malaise seems to be taking hold, with consumers pulling back sharply in the second quarter,” CNNMoney reports. “Overall, consumer spending, which accounts for roughly 70 percent of GDP, picked up only 0.4 percent in the second quarter. That was slightly better than the initial 0.1 percent estimate, but marks a significant slowdown from growth of 2.1 percent in the first three months of the year.”

The International Monetary Fund (IMF) is also likely to cut its growth forecasts for the U.S. in an upcoming economic outlook, according to Reuters. The IMF will reportedly slash the U.S. economic growth projection for 2011 as a whole from 2.5 percent to 1.6 percent.

U.S. Manufacturing Growth to Outpace Overall Economy
In its latest Quarterly Economic Forecast, the Manufacturers Alliance/MAPI downgraded its 2011 GDP forecast from 2.7 percent to 1.6 percent, and the 2012 forecast has been lowered from 2.9 percent growth to 2.1 percent.

“The economy was in much worse shape than expected (in the first half of 2011) and the 2008-2009 recession was worse than previously estimated,” Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, said in a statement. “Unfortunately, there are relatively few economic drivers that are likely to accelerate over the rest of the year.”

As such, manufacturing production is expected to outpace the overall economy and is expected to show 4.1 percent growth in 2011 and 3.2 percent growth in 2012. Both figures have been adjusted downward from MAPI’s May forecast of 6.2 percent and 4.2 percent, respectively. Exports and imports are forecast to show gains. Inflation-adjusted exports are anticipated to improve by 8.1 percent in 2011 and by 7.7 percent in 2012. Imports are expected to grow by 5.1 percent in 2011 and by 3.1 percent in 2012.

While MAPI forecasts overall unemployment to remain high, averaging 9.1 percent in 2011 and 9 percent in 2012, manufacturing is expected to add 270,000 jobs in 2011 and 273,000 jobs in 2012.

Jobless Claims Rise to 417,000
New initial jobless claims rose unexpectedly in the latest week reported, according to the U.S. Department of Labor. Seasonally adjusted unemployment claims for the week ending August 20 increased to 417,000, a 5,000 increase from the previous week. The four-week moving average totaled 407,500, a 4,000 increase.

Most of the gain is being attributed to the recent strike among Verizon Communications workers. Striking Verizon employees filed 8,500 new jobless claims in the Aug.14-20 period, following 12,500 claims the prior week. The strike ended early last week, though its effects are likely to influence the monthly payroll report for August.

While the Verizon strike does not reflect broader conditions in the labor market, there are some signs of concern. Economists generally consider that jobless claims must fall below the 400,000 threshold to reach the level at which the economy is creating net new jobs.

“The [Labor Dept.] report signals that excluding the communications dispute, companies are slowing the pace of firings, which may ease concern that consumers will cut back on spending,” Bloomberg News notes. “At the same time, an unemployment rate at 9.1 percent is a reminder that a sustained labor-market rebound has yet to develop two years into the economic recovery.”

Consumer Confidence Falls in August
The Conference Board’s latest monthly Consumer Confidence Index plummeted in August after a slight improvement in July. The index now stands at 44.5, the weakest since April 2009. Economists had expected the August gauge to fall to 52 from 59.2 in July, according to the median forecast in a Bloomberg News survey.

Consumers expecting business conditions to improve over the next six months dropped from 17.9 percent to 11.8 percent, while those expecting business conditions to worsen surged to 24.6 percent from 16.1 percent.

Consumers anticipating more jobs in the months ahead fell from 16.9 percent to 11.4 percent, while those expecting fewer jobs rose from 22.2 percent to 31.5 percent. The proportion of consumers anticipating an increase in their incomes sank to 14.3 percent from 15.9 percent.

“Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. “Consumers’ assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence.”

The measure of expectations for the next six months slid to 51.9, the weakest since April 2009, from 74.9. The measure of present conditions declined to 33.3, the second-lowest this year, from 35.7 in July.