Almost irrespective of what happens in the current negotiations to avoid a U.S. debt default and potential downgrade of the country's credit rating, the preliminary report of second quarter GDP and its attendant revisions to prior period economic activity raises the possibility that the U.S. will sink back into recession in the second half of this year or in 2012. While clearly, a debt default would insure an economic relapse back into recession, the data presented in the Commerce Department's preliminary report confirm the warning signs we have been writing about in our website and blog articles since June.

The preliminary report on second quarter economic activity in the U.S. showed GDP growth of 1.3%, below most economists’ expectations and below our downwardly revised projection of 1.5%-2% growth, (See out blog article of July 17, "Second Quarter Backsliding). We firmly believed second quarter growth would be below the 1.9% recorded in the first quarter. It was. However, in the annual revisions to the GDP data for prior years, first quarter GDP ... Log in to view full article.