NEW YORK ( TheStreet) -- The economy did even better than we thought in the second quarter -- but none of it means that interest rates are going anywhere soon.
Gross domestic product rose at an annual 4.2% clip between April and June, as private investment was significantly better than first estimated, the Commerce Department said Thursday. Last month, the government's first estimate said the economy grew at a 4.0% rate after declining 2.1% in the weather-addled first three months of 2014.
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In a normal expansion -- we're more or less past the point of calling this a recovery any longer -- a number like this would be an occasion for expecting the Federal Reserve to raise interest rates fairly soon. But investors shouldn't be lulled. Though the number is very good, the broader backdrop policy makers are looking at is much less positive.
Two speeches last week by central bankers at the Jackson Hole economic conference make the point clearly.
The most recent problem is the ongoing woes in Europe, which led European Central Bank chief Mario Draghi to say the ECB is still actively worried about deflation and fiscal austerity, and will likely be pushing rates lower rather than higher. When Germany's economy is shrinking, Europe has problems that can't be ignored.
But for U.S. markets, Federal Reserve Chair Janet Yellen matters more. And she argued that "underutilization of labor resources still remains significant.''