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CNN Live At Daybreak

America's New War: Second Quarter GDP Released

Aired September 28, 2001 - 08:37   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: Just a quick reminder now that stock market trading opens an hour from now, and investors are hoping to end the week on a positive note. A key economic number has just come out, and Andy Serwer of "Fortune" magazine is here with some perspective. So how did the GDP look?

ANDY SERWER, "FORTUNE" MAGAZINE: GDP for the second quarter, the quarter ending June, was now, the final revision is now up .3 percent. The economist had been expected up .1 percent. This is significant, of course, Paula, because if be we had gone below zero, it would be the first quarter to indicate we're going into a recession, but you have to say, that's kind of ancient history going back that far, isn't it?

ZAHN: OK, but what quarter are we talking about here?

SERWER: We're talking about the quarter that ended if June, so now we are -- that's the second quarter.

ZAHN: But there's been significant softening of the economy since then.

SERWER: Oh absolutely, and we're going to be talking about the third quarter, which had significant weakness very soon.

But the point is, is that now, if in fact we are in a recession, officially, we can't say that we were in a recession, according to this theory that you need two down quarters in a row until March of 2002, which is sort of ridiculous. isn't it?

ZAHN: Yes, but just about every economist that we've had on the air says that's ridiculous. You can't live by that traditional definition, because they say, and a number of them have been quoted in "The Wall Street Journal," that we are indeed in a recession.

SERWER: I think that's probably true, but according to the official government definition, the second quarter was the beginning of the recession.

ZAHN: How did futures react to this news?

SERWER: Futures reacted very positively. They've been up about 40 points on the Dow. Now, they're up about 70 points, and we do see indications of a higher Wall Street open today, Paula. Japan up nicely, up 8/10th of a percent, Europe up strongly, and we're seeing American stocks, like Microsoft and Wal-Mart trading very nicely in Europe.

ZAHN: Quick overview what we saw Monday through Thursday in the market.

SERWER: Well, we saw the markets responded very nicely to the drop of the previous week, which we were down 14 percent. The previous week, this week, we're up, so far, 5.4 percent, or 448 points. Again, we should caution people not to think we will get a dramatic turnaround here. They should be thankful for stabilization and a little uptick, and that's what we're getting here.

ZAHN: All right, Andy. We should remind you all that Andy will be with us in the next hour to answer your e-mail questions about the economy and your finances.

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