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Explanation: 1.5% GDP Q2

July 28, 2012


Source:  Zero Hedge  [click here to enlarge]

Explanation: GDP Q2

The US economy has never been so sluggish this long into a ‘recovery’.  Ever.  In fact, the US ‘recovery’ is the weakest of any in the world since 1970.  Team Obama claims the ‘economic recovery’ has been so slow because it is still suffering from the aftermath of Bush policies and the 2008 financial crisis. But the US is not the first country to suffer a recession and a financial crisis.  And the U.S. recovery is doing worse than all of them, as this chart shows.

As Zero Hedge has observed, over the past two years, the US has added 2.42x more debt than it has added in GDP.  Throwing gas on the fire, The Thomson Reuters/University of Michigan final index of U.S. consumer sentiment for July fell to 72.3 from 73.2 at the end of last month.  And, weekly jobless claims ending July 14 reached 386,000.  Real unemployment (U6) is 15%.

The U.S. Q2 economy grew at an annual clip of just 1.5% [down from 2.0% Q1] from April through June as consumers cut back on spending amid a weak job market. Growth at or below 2% won’t lower unemployment.  And most economists don’t expect growth to pick up in the second half of the year.  By way of example, a 2% annual growth rate would add only about 90,000 jobs a month.  That’s not even enough to keep up with population growth.

The figures came in the Commerce Department’s quarterly report on gross domestic product (GDP). GDP measures the country’s total output of goods and services, from the purchase of a bagel to a car to the sale of Chinook helicopters. But, without FedGov deficit spending there would be no growth at all.  In Q2, the US added $274.3 billion in debt while adding $117.6 billion in GDP.  Another way of visualizing the above statement is the graph below.

In other words, we added $2.33 in debt for every $1.00 in GDP.  Put another way, we’re losing $1.33 cents on every $1.00 we make on GDP.  As you can see from the graph below (12/31/09 — 06/29/12) total debt under Obama has exploded.  The total US Debt/GDP ratio is on the verge of crossing 102%, the highest since WWII.  Ponzi pyramid economics.   Click here to enlarge.

Source:  Zero Hedge

Every grocery shopper knows that inflation is eating up their family budget.  The Fed often focuses on core inflation, so the government conveniently leaves out the two most important items to the consumer budget – food and fuel.   The Cost of living increase is escalating more than is being publicized.

GDP is one of the few government economic statistics that is not adjusted for inflation.  The government officially defines a “recession” as 2 consecutive quarters of no GDP growth, without adjustment for inflation.  Any grocery shopper can guarantee that real inflation (not the phony CPI) is more than 1.5%.  And the unadjusted-for-inflation GDP growth is an annualized 1.5%.  That means that, adjusted for inflation, the economy has actually contracted.

From the graph below.  If you take inflation into account then we are in a sliding depression at -2% GPD, not 1.9% growth.  If you add population growth, take away government spending and Fed borrowing and printing money, welfare etc., you see we are not producing.  So inflation is now growth to these liars.  If things cost 10% more then we grew by 10% according to these propagandists.

The blue line represents the GDP adjusted by an inflation rate that measures the cost of a set standard of living, not a declining standard of living.  So image if FedGov spending were removed.  Factor-in built-in upside bias in official reporting and distortions in government inflation and you can see there is a decline, not growth.  Inflation is not growth.  We are in a sliding depression.

Source:  Shadow Government Statistics [SGS]

The latest Q2 GDP numbers of 1.5% are ‘pitiful’.  During a recovery, real GDP growth should be moving along at 4.0%-4.5%+, on average. For the past three years, real GDP growth has averaged a mere 2.2% – half of where we should be.  And, the FedGov’s economic statistics have been repeatedly revised downward. Even worse, business investment is slowing.  As noted in GDP data, gross private domestic fixed investment continued a three-quarter slowdown:

  • 15.5% – Q3 2011
  • 10% – Q4 2011
  • 9.8% – Q1 2012
  • 6.1% – Q2 2012

The main takeaway from the Q2 GDP report is Obama’s economy is severely stalled.  The Fed is the only game in town now and additional easing, even if implemented, would have minimal effectiveness in boosting the economy.  Last year, the Fed purchased a stunning 61% of the total net Treasury issuance. In case anyone is confused, its called ‘monetizing the debt’, which increases the money supply, which usually leads to inflation.  That is what has happened.

Since inflation is under-counted, the GDP is over-counted.  There is no growth.  Zero.  Without REAL growth in the economy there is no job growth.  Our nation’s economic condition and the governments job numbers are worse than what is being portrayed and reported.   We are in a sliding depression.  And it will get worse between now and the Nov. 6th election – and into 2013.

By every single quantitative measure Obama is the worst US President in history. And he is not done. For the 80% of Americans born after World War II, this is their Depression. And, Barack built it.

One Comment leave one →
  1. MaddMedic permalink
    July 28, 2012 10:02 am

    Reblogged this on INTERNED in Northfield!!!.

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