Behind the numbers: How drought dragged down America’s spring GDP

America’s worst drought in decades was hurting the nation’s economy in the spring—and the forecast for the rest of the year doesn’t look much better—The Wall Street Journal reports. Earlier this month, the newspaper reported that despite some soothing rain from the remnants of Hurricane Isaac, some of the drought’s economic damage had already been done. Michael Feroli, an economist at J.P. Morgan Chase & Co., says the nation’s growth in the second half of the year could take a small hit from America’s most widespread drought since 1956. Turns out, American GDP is already suffering. The economy grew at an annualized rate of 1.3% in the second quarter, a steep drop from the first quarter’s 2% and the fourth quarter’s 4.1%—and significantly lower than the government’s earlier estimates of 1.7% and 1.5%. One factor in the 0.4 percentage point revision: Government statisticians factored in a drop in June in farmers’ inventories, revising these down by some $8 billion. In other words, 2012’s hot, dry weather has decimated corn and soybean crops, along with hay, making feed for cattle, hogs and chickens prohibitively expensive and pushing farmers to take livestock to slaughter early to avoid feed costs—a trend that diminishes their animal inventories and technically detracts from the nation’s GDP growth rate. Meanwhile, roughly 65% of the contiguous United States are now in some form of drought, up from 63% a few weeks ago. Get the full story here.