Submitted by: Donald Hank
What the authors may not realize is that GDP doesn't mean what people think it does. With all those borrowed dollars added in, it does not mean the kind of economic growth that generates jobs. If you had borrowed $200,000 from the bank to buy a house, and you had only paid a $5000 down payment and nothing toward the mortgage, you might be able to list the full $200,000 as part of your assets, but your creditors would not accept that as fact. Your actual equity in the house would be $5000.
But our government does that with GDP. It includes the full amount borrowed -- an amount that in no way indicates economic growth -- as part of the stated GDP. This is why each administration tries to borrow as much as it can, because the borrowed amount is added into GDP and the government can say to the public: "Look, we grew the economy." NO THEY DIDN'T. What they really did was jeopardize the economy and add an unconscionable burden to your and your children's debt.
So while this is total nonsense, they get away with it because even "conservative" news outlets like Newsmax report the GDP without breaking out the part that is borrowed.
The true GDP without this borrowed money is much less and the "growth" is actually negative and increasingly indicative of the coming collapse.
When the market figures out how phony this whole scenario is, people will stop lending to the US and we will be forced to live within our means. Then we can start to recover and truly grow the economy. If we haven't forgotten how.
Economy Grew Only 1.3% [maybe] in Spring After Nearly Stalling in Winter
The U.S. economy grew less [Depending on how much was borrowed at that time, it didn't grow at all--Don] than forecast in the second quarter, after almost coming to a halt at the start of the year, as consumers retrenched.
Gross domestic product rose at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than previously estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, climbed 0.1 percent.
Slower job and income gains raise the risk that a pickup in purchases during the remainder of 2011 will fail to materialize. The faltering economy will probably complicate the debt-ceiling negotiations in Congress and is one reason why Federal Reserve Chairman Ben S. Bernanke has said policy makers need to keep all options open.
“The transition into the second half is on rocky footing,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, said before the report. “Consumers are just refusing to increase their spending, which sets the stage for a stagnant economy. We’re in economic doldrums right now.”
Forecasts of 85 economists in the survey ranged from 0.9 percent to 2.9 percent. At $13.27 trillion in the second quarter, GDP has yet to surpass the pre-recession peak.
Gross domestic product rose at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than previously estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, climbed 0.1 percent.
Slower job and income gains raise the risk that a pickup in purchases during the remainder of 2011 will fail to materialize. The faltering economy will probably complicate the debt-ceiling negotiations in Congress and is one reason why Federal Reserve Chairman Ben S. Bernanke has said policy makers need to keep all options open.
“The transition into the second half is on rocky footing,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, said before the report. “Consumers are just refusing to increase their spending, which sets the stage for a stagnant economy. We’re in economic doldrums right now.”
Forecasts of 85 economists in the survey ranged from 0.9 percent to 2.9 percent. At $13.27 trillion in the second quarter, GDP has yet to surpass the pre-recession peak.
Read more: Economy Grew Only 1.3% in Spring After Nearly Stalling in Winter
Important: Can you afford to Retire? Shocking Poll Results
Sorry guys, the clock has rung. It’s not ringing any more, it has rung and the spring-powered alarm has run out. Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.3 percent in the second quarter of 2011, (that is, from the first quarter to the second quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.4 percent. That’s a monstrous revision to the first quarter. For those who forgot, we were told it was 1.8% on April 28th. Oops. Why the major change? Annual revisions. The answer is this: What recovery? Now I have to go back and revise all my working tables. There is no recovery to speak of. Four years into this the policies of the government and Fed have failed. It gets worse: The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 3.2 percent in the second quarter, compared with an increase of 4.0 percent in the first Excluding food and energy prices, the price index for gross domestic purchases increased 2.6 percent in the second quarter, compared with an increase of 2.4 percent in the first. Your standard of living is being shredded. Real personal consumption expenditures increased 0.1 percent in the second quarter, compared with an increase of 2.1 percent in the first. Spending has effectively collapsed. This puts into stark relief the reality of the government deficit spending – it is doing nothing more than covering up an economic Depression, and the so-called “exit plan” – that private consumption, investment and borrowing will “take the baton back” is not working. The deficit spending must stop now before the tax base folds back and forces a disorderly collapse.  Discussion (registration required to post) |
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