INTO THE ABYSS – AT 9:03 A.M. ET:  A new, stunning economic report out this morning shows how bad things really are.  There's no getting around these numbers.

(Reuters) - The U.S. economy came perilously close to flat-lining in the first quarter and grew at a meager 1.3 percent annual rate in the April-June period as consumer spending barely rose.

The Commerce Department data on Friday also showed the current lull in the economy began earlier than had been thought, with the growth losing steam late last year.

That could raise questions on the long held view by both Federal Reserve officials and independent economists that the slowdown in growth as the year started was largely the result of transitory factors.

Growth in gross domestic product -- a measure of all goods and services produced within U.S. borders - rose at a 1.3 percent annual rate. First-quarter output was sharply revised down to a 0.4 percent pace from a 1.9 percent increase.

Economists had expected the economy to expand at a 1.8 percent rate in the second quarter. Fourth-quarter growth was revised to a 2.3 percent rate from 3.1 percent.

"The second quarter disappointed, but the first-quarter downward revision is more disturbing. It advances the pangs of concern. The debt ceiling nonsense is not going to help us. We're already in an economy that is subpar," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

COMMENT:  This will only add to the gloom, and the uncertainty among those who hire people.  Translation:  Fewer job opportunities, less growth in the future. 

Add to this the antics on Washington over the debt ceiling.  The American people are getting the impression that we have 1) a dysfunctional president who doesn't even understand his job; 2) two political parties in Congress that are also dysfunctional and lack the statesmanship to get the job done.

One thing I fear here is the emergence of a third party on the right, like the Ross Perot faction in 1992, that will make it impossible for us to elect a new president next year.  I think this fear will grow if both parties continue to perform as they're performing right now.  That development could be a far greater danger to the GOP than anything else. 

Can you just imagine the result if this country reelects the hopelessly incompetent Obama next year?  Think about it.  ut the cash under the mattress.

July 29, 2011