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GDP Growth Falls Short Of 1.9 Percent Expectation

Published 08/01/08 Jeff Bennett - Print Article

Announcements on Thursday confirmed expectations that the under-performing economy will continue to remain stagnant when gross domestic product increased at a sluggish 1.9 percent, less than the projected 2.3 percent, according to Bloomberg.com.

Citizens feel the pain of a recession through job losses, rising prices, credit crunches and home foreclosures. More than 80 percent of the nation and many economists believe we are experiencing a recession. However, the White House and Fed deny a ‘technical’ recession is occurring.

A recession is defined as two consecutive quarters of negative growth. Fortunately, GDP has not shown two consecutive negative quarters. Nonetheless, throw the definition of a recession out the door. It is undeniable that Americans are troubled by an inability to spend and fear the uncertainty of these difficult economic times.


Source Bloomberg.com:

The U.S. economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, signaling that the country is in worse shape than investors had anticipated.

…

The economy may weaken further as the temporary boost from tax rebates, which aided a pick-up in gross domestic product last quarter from the previous three months, fades. Stocks and the dollar dropped, Treasuries rallied, and traders reduced bets that the Federal Reserve will raise interest rates this year.

…

Gross domestic product increased at a 1.9 percent annualized rate, the Commerce Department said in Washington, compared with the median projection of 2.3 percent in a Bloomberg News survey. The Labor Department said separately that more Americans filed claims for unemployment insurance last week than at any time in more than five years.

Click Here For Solutions To America's Economic Problems:

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Article Comments From Readers

guest says "US is in recession." on 08/02/08
"A recession is defined as two consecutive quarters of negative growth."

No it isn't. The National Bureau of Economic Research is the organization that defines recessions. From the NBER's website:

"The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. For more information, see the latest announcement on how the NBER's Business Cycle Dating Committee chooses turning points in the Economy and its latest memo, dated 07/17/03."

"Fortunately, GDP has not shown two consecutive negative quarters. Nonetheless, throw the definition of a recession out the door."

That's because the gov't mainpulates the data to show a positive GDP, just like it manipulatesthe CPI, inflation(M3), unemployment, and payroll jobs data.

Case in point: the gov't revised last quarter's GDP from 0.6% to1.0%, claiming it was due to an increase in exports. But exports actually decreased, it's just that imports declined faster than exports, so the government tries to make it seem that exports arte rising. Here are the details:

http://www.unlawflcombatnt.proboards84.com/index.cgi?board=general&action=display&thread=3464

GDP is defined as:

GDP = consumption + gross investment + government spending + (exports less imports), or,
GDP = C + I + G + (X-M)

Consumption is at recession levels. So is business investment. Government spending is mostly financed by debt purchased from Asia. Exports are declining. So how do we come up with a positive GDP number? If the government’s 2nd quarter data show another positive figure, it better provide hard evidence to support it. The gov't is supposed to report the facts, not serve as a propaganda organ for the White House. I don't believe this calptrap and neither should you.

Michael