By Bob Turner

(AXcess News) Washington - The Obama administration indirectly admitted to softening economic data during the recession that was revealed by the latest U.S. Department of Commerce GDP report in which revisions where made going back as far as 2007.

Former Chief Economist at the U.S. International Trade Commission, Prof. Peter Morici, at the Smith School of Business, University of Maryland, said, "The White House is pumping sunshine--the economy is in tough shape."

This morning the U.S. Department of Commerce released the first estimate of gross domestic product (GDP) for the second quarter of 2010.  Real GDP grew 2.4 percent at an annual rate in the second quarter, following a gain of 3.7 percent in the first quarter.  Economists at large were expecting to see GDP results of 2.6 percent for the period, which at the opening bell in New York caused the Dow to drop, though stocks recovered by late morning.

In a statement released soon after the GDP data, U.S. Commerce Secretary Gary Locke said during the recession real GDP data was revised downward from 3.7 percent to 4.1 percent, indicating that the U.S. economy was in far worse shape than the Obama administration had previously revealed.

In commenting on the government's revised GDP data Locke said, "Today's data shows us that the recession was steeper than initially estimated."

Locke attempted to soften the blow while propping up Obama's government in saying, "Eight million jobs were lost and a full recovery will not happen overnight. But America is undoubtedly moving in the right direction and this administration remains singularly focused on strengthening the economy and ensuring that every American who wants a job can get one."

While the government data indicates gross domestic product growth in the second quarter was 2.4 percent, Professor Morici said you have to take into context that 1.1% of that growth was businesses rebuilding inventories.

"This indicates actual demand in the economy is growing a scant 1.3 percent a year," state Morici.

Morici blames Obama

"Almost the entire trade deficit is oil and China but the president is not doing enough about either," explained Morici.

In February 2009 Treasury Secretary Timothy Geightner stated: The Obama administration's financial stability plan was to "deploy our [full arsenal] to attack the credit crisis on all fronts."  But what he didn't say was that if nudging economic data a little would help sway fears over the United States' economic shape that perhaps China would buy more treasuries and supply badly needed cash to fund Obama's wild spending of taxpayer monies.

Even though the economy as it turns out is in much worse shape than the Obama administration let on, Morici says there is a way out.

"We get out by dealing with China on the trade deficit - either it revalues the yuan or we revalue it by taxing or licensing dollar yuan conversions. Create a Savings and Loan Crisis era Resolution Trust," explained the economist.

"Start building many more gasoline efficient vehicles - the emphasis on electrics is nice but their large impact is many years away

"Develop more domestic oil and gas.

"Even with those problems addressed, small and medium sized businesses are not doing well because they can’t get credit from regional banks. An audit of U.S. banks by the IMF says the four largest banks have adequate capital but the regional and small banks need another $19 billion - all those toxic assets that did not get cleaned up.

"Do not expect to hear the President talking about this out on the hustings this weekend," he concluded.