The Real Reason For 2% GDP

[longknife]

by Matthew Boesler @ Q3 GDP Government Spending - Business Insider

http://static4.businessinsider.com/image/508a8c7becad04b937000014-400-/uss-eisenhower.jpg
USS Eisenhower

Today's Q3 GDP release beat expectations – the economy grew 2.0 percent in the third quarter, according to this first reading, while economists expected a 1.8 percent gain.

The main reason the report cited for the acceleration in Q3 GDP growth from Q2's 1.3 percent rate was "an upturn in federal government spending," which was a positive contribution to GDP since the third quarter of 2010.

And the primary driver of the spending increase came from investments in national defense.

In fact, defense spending amounted to 0.64 percentage points of the 2.0 percent rise in GDP – or 32 percent of the economic growth in the third quarter (click to enlarge):

GDP defense spending

So, if you stripped out defense spending, the economy grew closer to a 1.36 percent rate in Q3, closer to Q2's final estimate of 1.3 percent.

Much more @ link

Another example of the administration's desperate atempt to hide the truth from the American people.

 

[Wiseacre]

I'm guessing that 2% growth rate will get lowered a few points in the coming months, as will that ridiculous Sept UE rate get adjusted up to 8.0%.

 

[Mick01]

All I know is that post election, the US is going for a long ride downhill.

 

[longknife]

It should also be pointed out that federal government spending is high at the start of every fiscal year. Thus, this supposed "lift" in the economy is another administration desperate attempt to shore up the Inept-in-Chief.

 

[jwoodie]

Whoopee 2%: Talk about lowered expectations! We need PRIVATE SECTOR JOB GROWTH and we need it NOW.

 

[Freemason9]

Whoopee 2%: Talk about lowered expectations! We need PRIVATE SECTOR JOB GROWTH and we need it NOW.

Yes, and the election of Willard "Nine Wives" Romney will create Private Sector Job growth. The mere presence of a corporate white man as president again will be like Viagra to the limp dick of American corporate responsibility.

LOL

 

[Wiseacre]

Whoopee 2%: Talk about lowered expectations! We need PRIVATE SECTOR JOB GROWTH and we need it NOW.

Yes, and the election of Willard "Nine Wives" Romney will create Private Sector Job growth. The mere presence of a corporate white man as president again will be like Viagra to the limp dick of American corporate responsibility.

LOL

Pretty sure he'll do a better job than Obama did, at least we should try a different approach. BTW, you're a dipweed. "Nine wives"?

 

[waltky]

CBO growth analysis report...

CBO: Scarcity of Young and Females in Labor Force a Drag on Economic Growth
December 5, 2012 - The Congressional Budget Office has published an analysis of why recent economic growth—and, more tellingly, potential economic growth---has been less than half of what it typically has been in post-World War II recovery cycles.

Its conclusion: The single biggest factor slowing the growth of the potential Gross Domestic Product of the United States is declining growth in the potential labor force. One reason for this is that some people have been out of work so long it may be difficult for them to return to the labor force or they may no longer want to return. But other reasons are likely to have a more long-term negative impact on American economic growth: There are relatively fewer young people entering the labor force in America today than there used to be and the percentage of American women entering the labor force—which grew steadily in the first five decades after World War II--has peaked.

To put it in terms that the CBO did not use: The Baby Boom generation and its successors did not have enough babies, and the capacity of the American culture, economy and government to lure or push women into the work force who have had babies, or who have other reasons to prefer not working outside the home, has been exhausted. “In the current recovery, both potential GDP, a measure of the underlying productive capacity of the economy, and the ratio of real GDP to potential GDP have grown unusually slowly,” said CBO in a November report entitled, “What Accounts for the Slow Growth of the Economy After the Recession?” “In the first 12 quarters after the last recession, both potential GDP and the ratio of real GDP to potential GDP grew at less than half the rate that occurred, on average, in the aftermath of other recessions since World War II,” said CBO. “Potential output,” CBO explained, “is determined primarily by three factors: potential employment, potential total factor productivity, and the productive services available from the capital stock in the economy."

Of these three, it is “potential employment”—or the potential size of the labor force—that has been the greatest recent drag on potential GDP. “By CBO’s estimates, the slower growth of potential employment, as compared with the average during previous recoveries, directly accounts for more than a third of the slowed pace of growth of potential GDP since the end of the last recession,” said CBO. “Potential employment grew by 2.3 percent between the second quarter of 2009 and the second quarter of 2012,” said CBO. “That figure is less than half the 5.0 percent average increase during previous post–World War II recoveries, although it is close to the growth following the mild recession in 2001.”

Why is the potential employment of American workers growing more slowly than it did earlier in the post-World War II era? “That slower growth of potential employment primarily reflects three developments,” said CBO. “The most important is that, since about 1980, demographic trends have slowed the growth of the population that is working age and, therefore, the growth of the potential labor force.” “In several earlier recoveries, the baby boomers were entering the labor force; now, they are beginning to retire,” said CBO. “Another important development is an end to the long-standing increase in women’s participation in the labor force, which had boosted the growth of the labor force in recoveries before 2000,” said CBO.

MORE

See also:

CBO: Current Law Brings 55% Increase in Annual Spending, $4.25T in New Debt--And Record Taxation
December 5, 2012 - If Congress allows current laws signed by President Barack Obama to stand and follows the fiscal path they have set for the next decade, federal tax revenues will rise to a record level as a percentage GDP, according to the Congressional Budget Office, but annual federal spending will also increase by 55 percent and continuous deficits will require Congress to lift the federal debt limit by another $4.25 trillion even as the government rakes in unprecedented tax revenue.

Under the so-called "fiscal cliff" scenario, in which all of the Bush tax cuts are allowed to expire and “sequestration” of some anticipated federal spending takes place, the federal government still will not balance its budget. In the "baseline projections" published in its latest update on the budget and economic outlook for the period from 2012 to 2022, CBO assumes that “current law” will remain in place.

This current law includes no patch to spare the middle class from the Alternative Minimum Tax, no extension of the 2-point cut in the Social Security payroll tax, and the expiration of all the tax cuts enacted under President George W. Bush as of the first of the year. The current law also includes a deep cut in the fees that Medicare pays to physicians, the end of extended emergency unemployment benefits, and automatic “cuts” to previously anticipated defense and domestic spending starting after the end of the year as negotiated by President Barack Obama and House Speaker John Boehner in the deal they made to lift the debt limit by $2.4 trillion in August 2011.

With the tax increases scheduled to take effect under current law, federal tax revenue will climb to 21.4 percent of GDP by the beginning of 2022. According to the Office of Management and Budget, which has calculated historical federal tax revenue as a percentage of GDP back to 1930, that would be a record. So far, there have been only three years since 1930 when federal tax revenues have gone as high as 20 percent of GDP. In 1944 and 1945, during World War II, they hit 20.9 percent and 20.4 percent; and, in 2000, they hit 20.6. According to CBO’s estimates, federal tax revenues will increase as a percentage of GDP each year for the next decade, hitting a new record of 21.1 percent of GDP in 2020, then climbing to 21.2 percent in 2021, then 21.4 percent in 2022. Despite this record level of taxation, federal spending will at all times outstrip federal revenue.

In 2012, according to CBO, federal spending was $3.563 trillion. Under current law, it will climb to $5.509 trillion in 2022. That is a $1.946 trillion increase in annual federal spending—or a jump of 55 percent. Despite record-high federal revenues, the federal debt subject to the statutory limit will increase to $20.644 trillion by 2022, which is $4.25 trillion beyond the current debt limit of $16.394 trillion. Thus, even with the largest tax hike in history and automatic spending “cuts,” Congress would still need to lift the debt limit by $4.25 so the executive branch could borrow the additional money to spend what the government would spend as the law now stands.

Source

 

[Wiseacre]

" Despite record-high federal revenues, the federal debt subject to the statutory limit will increase to $20.644 trillion by 2022, which is $4.25 trillion beyond the current debt limit of $16.394 trillion. "


I think the federal debt will be a lot higher than this by 2022. We could be close to $20 trillion by 2016, tax and spend policies will see to that.

 

[EdwardBaiamonte]

" Despite record-high federal revenues, the federal debt subject to the statutory limit will increase to $20.644 trillion by 2022, which is $4.25 trillion beyond the current debt limit of $16.394 trillion. "


I think the federal debt will be a lot higher than this by 2022. We could be close to $20 trillion by 2016, tax and spend policies will see to that.

Its no surprise that a president with two communist parents who voted to the left of Bernie Sanders, an open communist, is pushing hard to suspend the debt ceiling so he faces no spending or debt restrictions at all!!

You'd think even a communist would note that the current recession/depression taught us that unlimted borrowing and spending has consequences!!!

 

[ScienceRocks]

Free shit isn't free. Someone has to pay for it...

You're asking the rich to pay for your free shit.

 

[Wiseacre]

Free shit isn't free. Someone has to pay for it...

You're asking the rich to pay for your free shit.

Ultimately they're asking their kids and grandkids to pay for it, which I think is shameful.

 

[Rshermr]

I'm guessing that 2% growth rate will get lowered a few points in the coming months, as will that ridiculous Sept UE rate get adjusted up to 8.0%.

Of course you would. Why would anyone expect anything else from you. Not only are you predicting it, but you are hoping your predictions are true, as hard as you possibly can. Because you are a con tool, and that is what con tools do.

 

[Rshermr]

Whoopee 2%: Talk about lowered expectations! We need PRIVATE SECTOR JOB GROWTH and we need it NOW.

Yes, and the election of Willard "Nine Wives" Romney will create Private Sector Job growth. The mere presence of a corporate white man as president again will be like Viagra to the limp dick of American corporate responsibility.

LOL

Pretty sure he'll do a better job than Obama did, at least we should try a different approach. BTW, you're a dipweed. "Nine wives"?

How is old nine wives doing, by the way???

 

[ScienceRocks]

I'm guessing that 2% growth rate will get lowered a few points in the coming months, as will that ridiculous Sept UE rate get adjusted up to 8.0%.

Of course you would. Why would anyone expect anything else from you. Not only are you predicting it, but you are hoping your predictions are true, as hard as you possibly can. Because you are a con tool, and that is what con tools do.

This is what happens when our educational system fails. You really think we should be rewarding failure?

 

[Rshermr]

I'm guessing that 2% growth rate will get lowered a few points in the coming months, as will that ridiculous Sept UE rate get adjusted up to 8.0%.

Of course you would. Why would anyone expect anything else from you. Not only are you predicting it, but you are hoping your predictions are true, as hard as you possibly can. Because you are a con tool, and that is what con tools do.

This is what happens when our educational system fails. You really think we should be rewarding failure?

Not sure. Did you get a reward?

 

[EdwardBaiamonte]

I'm guessing that 2% growth rate will get lowered a few points in the coming months, as will that ridiculous Sept UE rate get adjusted up to 8.0%.

Of course you would. Why would anyone expect anything else from you. Not only are you predicting it, but you are hoping your predictions are true, as hard as you possibly can. Because you are a con tool, and that is what con tools do.

This is what happens when our educational system fails. You really think we should be rewarding failure?

Of course its quite logical to expect that a socialist president will fail economically. Liberals are too illiterate to know that China just switched to capitalism and now everyone is getting rich rather than slowly starving to death. OUr liberals spied for Stalin, not Adam Smith. That must tell you something.

Perhaps liberals think that if Barry or someone like him had had his way in the USSR and Communist China his particular stimulus would have made communism work??