Qarterly Growth Rates
The revised econominc growth rate has come in at -1%. This is the second negative quarter of growth we have had during the Obama recovery which critics point out as the weakest recovery history.
Growth rate statistics can be misleading. The thing you have to understand is that by definition they are numbers that are arrived at by comparing ne period's number to the prior period's number. That essentially means that if you have a good year, or good couple of quarters statistically it becomes more difficult to have high growth numbers. Of course you can, but the economy simply has to perform well to keep the growth rate high. The same is true in reverse.
What makes these numbers even worse is that we haven't had sustained high growth recently. The Obama administration keeps spinning this as steady growth but we are more than 5 years into his administration we are only averaging less than 2% growth since 2010. In the past whenever we had a significant recession it was followed by strong growth. In the early 80's we had nearly 5% growth following the first 4 years of a similar deep recession. In the early 90's we had about 3.5% growth in the four years following only a mild recession and during the early 2000's we averaged about 3% following what was nothing more than a minor slow down in the economy.
Clearly, by any objective standard this is a big deal. We are several years into a recovery and relatively speaking it is still in the dumps. When president Bush came into office the economy was already slowing and the media, including cnn, went hysterical. When the economy started performing much better the coverage ranged from ignoring the economy to pessimistic reporting regarding how strong the economy really is. Yet statistically, objectively speaking, it was a stronger recovery than this one even though there was much less to recover from.
I am not aware of any coverage on CNN TV regarding this economic data but I found this from CNN online. The article says that inspite of the latest GDP numbers, their is still plenty of evidence of a strengthening economy. I ask, by what standard is the economy strengthening. Of course since 2010 the economy has been growing, but at a slow rate, not high enough to boost the standard of living. In fact median household income adjusted for inflation is still about 6 percent lower than what it was at the end of 2007 when the recession began. The article points to falling unemployment rates and hiring numbers but fails to point out that the labor participation rate is still historically low, although up slightly. Some point out that many jobs people are getting are part-time or they are under-employed. Another article on CNN says it's not a big deal. The article says that it was caused by the weather and was expected. It was not expected to drop to - 1%. Furthermore, as stated in the article, cold weather usually stunts consumer sales but consumber sales were strong, rising 3.1%. The problem as stated was investment which points to something more serious, such as business not believing that spending will be rising in the future.