The GDP shrank in the last quarter of 2012, declining a small 0.1 percent. While that is minimal, it is the first negative quarter since the second quarter of 2009 and a sharp slowdown from the 3.1 percent growth in the third quarter. Government spending was down sharply, while businesses cut inventories. Foreign trade was down 5.7 percent. But consumer spending was up 2.2 percent, an increase from the previous quarter. And housing continued its slow recovery.
So what’s going on? Good question. It could just be a blip or it could be the start of a new recession. (The usual definition of a recession is two consecutive quarters of declining GDP, or what economists, with their usual talent for assaulting the English language, call “negative growth.”)
Certainly the uncertainty about future government policy, the effects of Obamacare, and the ever-mounting national debt, haven’t helped. Neither have even greater economic problems in other parts of the world, especially Europe. India lowered its bank rate yesterday and China is facing rising labor costs and labor unrest. Even Canada, which has been a bit of a golden boy of fiscal responsibility and good economic management in recent years, has seen its big banks taken down a notch in the last few days.
The stock market, meanwhile, has been booming, up nearly 1,500 points on the Dow since mid-November and now only a couple of hundred points off its all-time-high, reached in October 2007. The stock market is almost always a leading indicator, foretelling the future of the economy. That could be the case here, or it could just be a lot of foreign money fleeing to safer quarters from such deeply troubled economies as Spain, Argentina, and even France, whose employment minister the other day publicly described the country as “totally bankrupt.” He walked it back, of course (one can imagine the phone call from François Hollande), but still.
The GDP dip is certainly no cause for panic. It is trends that matter in economics, not one-time statistics. But it is clearly a time for caution.
Regardless of Barry's statements, his agenda is the transformation of America into a socialist state.. n nand if the economy totally tanks, that is what he is prepared to sacrifice, while he blames the dismal economic and job situation on the Republicans. n nThe MSM helps him do that. n nAnd criticism of Obama is stifled by cries of racism and bigotry- n nWe are in the middle of a perfect storm, which will only gather more intensity with the coming immigration 'reform'.
I guess socialist is a verboten word?
The NY metro area is 10% of GDP. Between StormSandy, and the beginning of a flu epidemic, did that not make this dip possible? n nnot that the data gatherers are to be trusted, but…
I see the MSM are using "negative truth" to explain away GDP's "negative growth" under Dear Leader's "stewardship".
The economy is, the WH informs us "poised to rebound"–so the lower it gets from here on out the more it is heralding the imminent Obama great leap forward. n nWell, worked for Mao.