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GDP: Contraction

IS ANOTHER RECESSION ON THE HORIZON? || By FITSNEWS || Is up down? Or is down up?  Who knows anymore … Last week we wrote of the “double seasonal adjustment” to the U.S. economy’s first quarter gross domestic product data – which was expected to turn 0.2 percent “growth” into…

IS ANOTHER RECESSION ON THE HORIZON?

|| By FITSNEWS || Is up down? Or is down up?  Who knows anymore …

Last week we wrote of the “double seasonal adjustment” to the U.S. economy’s first quarter gross domestic product data – which was expected to turn 0.2 percent “growth” into 1.8 percent growth. Well now we’ve got the “second” official estimate of first quarter growth (.pdf here) – in which 0.2 percent “up” has suddenly become a 0.7 percent down.

As in a contraction …  

So much for all those “rainbows and unicorns” predictions, right?

Meanwhile second quarter growth estimates (as of June 1) are currently hovering at 0.8 percent … unchanged from the previous week’s depressing outlook.

What gives?  It’s easy: The economy is stuck because consumers have no money to spend.  And they have no money to spend because their’s rampant joblessness and zero income growth.

And this phenomenon isn’t exclusive to the “new normal” either.  As government has marched on its upward trajectory over the past three decades, growth has suffered.  The U.S. economy hasn’t grown at an annual rate of three percent in ten years.  It hasn’t hit four percent growth in fifteen years.  And it hasn’t hit five percent growth in more than thirty years.

By contrast, growth exceeded five percent in twelve out of thirty years from 1950-1980.  And it exceeded four percent in seventeen out of those thirty years.

We’ve said it before and we’ll say it again: Rather than embrace the free market, the federal government has chosen to continue its entitlement perpetuationwealth redistributioncrony capitalism, welfare statism, socialized medicine and global interventionism (even though it’s already more than $18 trillion in the hole).

Until that changes, nothing will change.

Listen to us now, hear us later …

***

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30 comments

E Norma Scok June 2, 2015 at 4:51 pm

YAY more bad news!

Hey if you want to be a real genius, tell me the date and time the apocalypse is going into full effect.

Srsly…Get some help man. Living with depression is a real bitch.

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FastEddy23 June 2, 2015 at 8:14 pm

Yeah, thank you O’Bummer.

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tomstickler June 2, 2015 at 5:35 pm

If you would abandon this “free market” fantasy and worship of Randite libertarianism, you might begin to understand that austerity in a depressed economy further depresses that economy. Continuing to cut taxes for the benefit of the rich makes things worse, not better, since they have no need to increase their consumption.

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Limbaughsaphatkhunt June 2, 2015 at 7:33 pm

Shhhh…best not talk sense here. It falls on deaf eyes.

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FastEddy23 June 2, 2015 at 9:44 pm

That’s the trouble with most of UR dogma. No one on the leftist side ever will admit it when they are proven wrong, repeatedly.

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euwe max June 2, 2015 at 10:35 pm

I’m pretty sure I would if someone did.

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FastEddy23 June 6, 2015 at 6:03 pm

I stand corrected. I have never, ever seen you be wrong. … The rest? … a bunch of helots, falling for what they see on TV.

Limbaughsaphatkhunt June 2, 2015 at 10:56 pm

And you are the ambassador of comeuppance are you?

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Jon Snow June 2, 2015 at 7:45 pm

Tom, please take a course in Economics. And History. No one has cut taxes for the “rich” since Obama took office. Taxes have increased, thanks to the RINOs in the House who talk the talk but don’t walk the walk. Spending has increased EXPONENTIALLY. The Obama Experiment is proof that JMKeynes was WRONG. Borrowing and spending as a way out of recession works ONLY if the money is paid back in times of growth. This no longer happens. The Government just takes and spends more. The only economists who endorse JMK are committed Statists who loath the free market and advocate income equality and a centralized managed economy – like China’s. Ask France about wage control and redistribution. Or Greece. Or Spain. It kills productivity. But if you have nothing, that’s what you want. Taxes can only be paid by people with money. If you tax the “rich” more, you further inhibit capital creation. Inhibiting the creation of capital – real capital, not inflated money created by the Fed buying up its own debt with borrowed funds – kills capitalism. That’s what Obama and Hillary and Warren WANT. Their liberal utopia where we are all “equal.” Except some are more equal that others. That’s Orwell. Go read him. Rich people INVEST their capital where they can earn a fair return – they don’t bury it in their back yards. Investment creates growth. Government on the other hand does NOT invest the capital it takes from the market – instead, it wastes and spends it in a highly inefficient manner. Eight years of borrowing and spending has not created economic growth. The Government does not “create jobs” – because for every job created with public funds, one (or more) is lost through the taxation necessary to obtain the public funds. Only the private sector truly “creates” economic growth, and it cannot do so unless it has capital to invest. Pro growth governmental policy – lower taxes, less regulation, reduced spending, sound currency, free trade, fair enforcement of the rule of law, and a non-interventionist foreign policy – creates growth. This is not a mystery. The data shows this. This is not exclusively a Republican idea – far from it – look at the first years of the Kennedy administration, Clinton’s second term (when Gingrich was speaker), and Reagan’s first term – when Congress was led by Democrats who understood free market economics and how make a deal with the Rs. Big R government with unrestrained military spending and rampant cronyism is just as destructive as Big D government, with unrestrained borrowing and entitlement growth. Both are anti-capitalistic. Both are wrong. Who was right? Ron (not Rand) Paul – and you saw what happened to him. It will take an economic disaster of epic scale to get the US economy back on the right track. This is coming, regardless of who the next President is. Tacking a bit to the right or a bit to the left accomplishes nothing. Lesson? Personally, it is simple. Get out of debt. Reduce your consumption to the bare minimum. Buy hard assets – like gold or land – and get healthy. Do not count on the Government to do anything other than steal from you. You heard it here. Winter is coming. Words are wind. All men must die.

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FastEddy23 June 2, 2015 at 8:12 pm

Very good. Yes, the republicrats are no better at managing the taxpayers’ resources.

Your sail boat analogy only works in a linear world. The real world is not linear.

That “epic economic disaster” could still be avoided with a whooping giant permanent tax cut, but with the two indistinguishable major parties still in charge …

There is only so much Gold and Silver each taxpayer can buy before food and fuel and rent take priority. Locking down the g’ment money printing to Gold and Silver would not necessarily improve the management of the taxpayers’ resources.

Yes, Kennedy did cut taxes and stop some of the foolish spending … then here comes Johnson and the Woodrow Wilson “progressives” in democrat clothing (again), furthering “Great Society” Fascism.

(Ron is correct on many things. Rand is correct on many things, too. Just as my Dad was more correct than me, early on.)

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SCBlues June 3, 2015 at 5:19 am

“Buy hard assets – like gold or land – and get healthy”
And follow Glennie Beck and do everything he tells you to do. Gold! Gold! Gold!

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The World Is Ending!!!!!!!!!!! June 3, 2015 at 9:00 am

Gold and silver, land, guns, ammo, an underground bunker, survivalist gear, rations. That is seriously what these guys tell you to buy to prepare for something that they say is just around the corner. I know Ron Paul in the 80’s was saying this and here it is 2015 and it’s still right around the corner!! Just like the rapture!!

Ron Paul holds hands with Potter Stansberry on this crap, who was sued by the SEC for fraud. Potter sells shitty newsletters and books now to rob libertarian retards of their money.

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Rocky June 3, 2015 at 8:03 am

Interesting thoughts. So consider this – Bill Clinton increased taxes on the highest earners, restructured out debt and reduced the deficit over 6 years into a surplus. The 1990s were without a doubt (and we’re talking 93-2000) a huge economic expansion period. George Bush cut taxes across the board (though weighed heavily toward the rick), we experienced an immediate 600B swing in the deficit (200B surplus to 400B deficit), at a time of moderate growth, and never recovered. The difference between spending increases in 2000-2008 and 2009 to today – was that we had no choice but to recapitalize the financial sector, and then later larger manufacturing, while getting some activity going. As even the Conservative George Will pointed out last night on The Roosevelts – FDR cut spending too soon. He should have extended it through 1938. To say Keynesian theory failed, I’d point out to you that without the spending in 2009 / 2010 the current mortgage rates would be 8%, not 4%, housing would have lost 60 to 65% of it’s value, rather than the 25 to 30%, manufacturing would have been stripped of available and affordable credit and unemployment that peaked around 12% would have ballooned over 30%.

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Orwell June 3, 2015 at 9:01 am

You do know I was a socialist, right? Not the fake socialists you idiots call Democrats, but a real, actual, card-carrying socialist?

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FastEddy23 June 2, 2015 at 7:48 pm

You fools could make the free market illegal, and it would still flourish.

“If you live outside the law, you gotta be honest.” – the only song writer who is honest, Bob Dylan

Ok, how about a whooping big tax cut for the poor? Like no taxes on food or fuel?

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Rocky June 3, 2015 at 7:56 am

Ding ding ding – we have a winner. Now thems the types of tax cuts that increase consumption.

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Rocky June 3, 2015 at 8:05 am

I might add, tax credits for new plant and equipment to become more competitive also is know to help.

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FastEddy23 June 6, 2015 at 6:05 pm

Absolutely. Consumerism is not dead at all. It is just asleep, waiting for a better deal.

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Bible Thumper June 2, 2015 at 6:16 pm

“By contrast, growth exceeded five percent in twelve out of thirty years from 1950-1980. And it exceeded four percent in seventeen out of those thirty years.”

I know. Let’s have a World War that kills fifty million in the developed world and destroys the world’s industrial infrastructure except the US and Canada. Precede that with a depression that suppressed birth rates and then follow the war with a ban on all birth control. That ought to encourage growth rates of four and five percent.

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FastEddy23 June 2, 2015 at 7:42 pm

… and that 1950 thru 1980 boom came to a halt during the Carter Administration.

“It is the labour government that has brought us the highest peace time taxes … They have the usual socialist disease, they have run out of other people’s money.” – Margaret Thatcher … in 1976.

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Rex June 2, 2015 at 6:22 pm

Another recession? All across the internet by financial experts, that’s what is being warned. They are sounding the alarm everywhere.

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Rocky El Oro June 2, 2015 at 6:26 pm

Oh My God. Its over. The world is over. There’s only one thing we can do. BUY GOLD NOW!!!

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FastEddy23 June 2, 2015 at 7:40 pm

Oh Bummer! … or as they say in France, Oh Bummaire’!

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Rocky June 3, 2015 at 8:06 am

Or as they say in Allendale – Sheeee-iiiiit!!!

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erneba June 2, 2015 at 6:57 pm

“..government has chosen to continue its entitlement perpetuation, wealth redistribution, crony capitalism, welfare statism, socialized medicine and global interventionism..”
Ladies and gentlemen, boys and girls, an economy burdened with those soci-economic anchors is destined to go absolutely nowhere. If this condition continues at this rate, buy some books about Greece, read them, we will be there soon.

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FastEddy23 June 2, 2015 at 7:39 pm

“The bureaucracy is expanding to fulfill the needs of an expanding bureaucracy.”

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Limbaughsaphatkhunt June 2, 2015 at 7:31 pm

Yawn…..

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Job Creatin Fool June 2, 2015 at 8:25 pm

Only thing left to do is cut taxes for the wealthy so they can have more money to”invest” and “create Jobs!”

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FastEddy23 June 2, 2015 at 9:46 pm

Much better: cut the taxes on the poor.

“It’s the economy, stupid.” – Bill Clinton.

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Crooner June 3, 2015 at 3:35 pm

Sounds like a good argument for more stimulus.

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