U.S. GDP Release: Three Paradoxical Observations
- After the worst recession since the 1930s, the recovery continues to be disappointing in strength. Over the first seven quarters of the current U.S. economic recovery, real GDP grew at an annualized rate of 2.8%. That’s better than the 2.0% pace over the first seven quarters of recovery in the previous business cycle but not to the extent one would expect given the severity of the prior recession. The pace of expansion during the initial seven quarters of the three earlier expansions was 4.6% annualized after the recession that ended in the first quarter of 1975, 7.1% in the recession that ended at the end of 1982, and 3.3% following the recession that finished in the first quarter of 1991.
- The claim that government spending has been recklessly rampant during the Obama administration is not substantiated by the U.S. national income accounts. Public-sector real expenditures rose only 1.1% in Obama’s first year, that is between the first quarter of 2009 and 1Q10. That pace slowed to a 0.2% trickle between the first quarter of 2010 and the first quarter of this year. Last quarter, government spending plunged 5.2% annualized.
WE RECOMMEND THE VIDEO: Forex - Major Level Structure Powerful Strategy | Trade Like A Pro | Lastly Spoken
Forex - Major Level Structure Powerful Strategy | Trade Like A Pro | Lastly Spoken Recommended Low Spread Forex Broker: - Join ...
- A severe recession became inevitable because of an unsustainable buildup of structural imbalances, reflected in vast current account deficits and surpluses. One purpose of the recession was to promote a rotation of U.S. economic growth away from consumption and toward net exports. The dollar has depreciated sharply, enhancing U.S. competitiveness, and demand in emerging markets is expanding much faster than in advanced economies like the United States. In fact, net foreign demand made a negative contribution to U.S. GDP growth in six of this recovery’s seven quarters, including a minuscule drag of 0.08 percentage points in 1Q11. With the public sector out of commission and net exports not pulling its weight, the United States remains overly dependent upon consumption. When households tighten up like last quarter when foul weather played havoc with shopping, GDP growth slows. As it turned out, moreover, inventory building accounted for more than half of the 1.75% annualized advance of real GDP in 1Q11.
Copyright Larry Greenberg 2011. All rights reserved. No secondary distribution without express permission.
This entry was posted on Thursday, April 28th, 2011 at 1:55 pm and is filed under Deeper Analysis. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Comments are closed.
Currency Thoughts has evolved from a blog to a full-functioning website. This new design provides easier access to your favorite features and new capabilities to accept ads. In the future, it will be possible to register to accept emailed updates.
Thursday, December 19, 2019