The Economy Is Worse Than You Think

by Chris | June 9th, 2011

Expect more bad news until someone enacts a plan to bring deficits under control without raising taxes.

The policies of the Obama administration have led to the weak condition of the American economy. Growth during the coming year will be subpar at best, leaving high or rising levels of unemployment and underemployment.

The drop in GDP growth to just 1.8% in the first quarter of 2011, from 3.1% in the final quarter of last year, understates the extent of the decline. Two-thirds of that 1.8% went into business inventories rather than sales to consumers or other final buyers. This means that final sales growth was at an annual rate of just 0.6% and the actual quarterly increase was just 0.15%—dangerously close to no rise at all. A sustained expansion cannot be built on inventory investment. It takes final sales to induce businesses to hire and to invest.

The picture is even gloomier if we look in more detail. Estimates of monthly GDP indicate that the only growth in the first quarter of 2011 was from February to March. After a temporary rise in March, the economy began sliding again in April, with declines in real wages, in durable-goods orders and manufacturing production, in existing home sales, and in real per-capita disposable incomes. It is not surprising that the index of leading indicators fell in April, only the second decline since it began to rise in the spring of 2009.


See the complete article By MARTIN FELDSTEIN in WSJ
here.

 

 

 

17 Responses to “The Economy Is Worse Than You Think”

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  7. While I can appreciate the points in Tea Party Roundtable » Blog Archive » The Economy Is Worse Than You Think, I am tired and sick of hearing about the “US economic recovery”. The US government borrowed and spent $6.1 trillion in the last 4 years to generate a cumulative $700B rise in the nation’s Gross domestic product. This means we’ve borrowed and spent $8.70 for every $1 of nominal “economic growth” in Gross domestic product. In constant dollars, Gross domestic product is flat, we’ve got no “growth” at all for our $6.1T. In constant US dollars, the GDP in 2011 might get back to the 2007 level, if the US economy continues “growing” at the same pace reached in the first ninety days of 2011. If not, then the GDP will actually be below before recession levels. There is no recovery, the facts prove this.

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  9. I am sick and tired of hearing about the “US economic recovery”. The Federal government borrowed and spent $6.1 trillion in the last four years to obtain a cumulative $700B rise in the nation’s Gross domestic product. This means we’ve borrowed and spent $8.70 for every $1 of nominal “economic growth” in Gross domestic product. In constant $, Gross domestic product is flat, we got no “economic growth” at all for our $6.1T. In constant dollars, the GDP in 2011 might return to the 2007 level, if the economy continues “growing” at the same rate reached inside the first three months of 2011. If not, then the Gross Domestic Product will in reality be below pre-recession levels. There is no recovery, the facts prove it.

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