Wednesday, June 17, 2015

Economy Falls Short Again : GDP Negative - Climate Change?

Several good reason that can explain the real reasons for slow growth and the one at the top of list is global warming. Climate change has a terrible negative effect on consumers, depressing their hope for a not only for a bright future, but any future at all, maybe as soon as this week end. We just don't know.

And another reason is George Bush's economic policies were so bad that Mr Obama and the progressive socialist liberal democrats couldn't fix his failures. They did everything they could, Lord knows, but 7 years just isn't enough time.

 There are more reasons for a sluggish economy but these two are the big ones.

Economic Growth Sluggish in 2015
Source: Ben Gitis and Gordon Gray, "State of the Economic Recovery: 5 Economic Indicators to Watch," American Action Forum, May 27, 2005.

May 29, 2015

 Last month the Bureau of Economic Analysis (BEA) released its first estimate of the growth in real Gross Domestic Product (GDP) during the first quarter of 2015. According to the report, real GDP's annualized growth rate was only 0.2 percent. Some argue that this low estimate is due to an underlying methodological issue that results in a significant underestimate for the first quarter.

However, several economic indicators have decelerated or declined over the last few months, indicating tepid growth in the first quarter. What exactly is the debate over the recent GDP report? At issue are the BEA's seasonal adjusting methods. Most economic raw estimate features significant variation throughout the year due to typical changes in weather and holidays.

In order to uncover those trends throughout the year, officials publish seasonally adjusted estimates, which account for these variations and generally are the headline figures in any report. Economists have noted that even after seasonal adjustment, the BEA's first quarter GDP growth estimates have been consistently lower than the rest of the year. This might suggest that the BEA has been underestimating first quarter growth.

 Economists have found some troubling signs of slow growth:

Total retail sales began to fall at the end of 2014 and continued to decline in 2015. There was a decline in consumer confidence during the beginning of 2015. Durable goods orders excluding defense and aircraft have been falling since summer 2014 and continued to decline into 2015.

ISM's composite index of manufacturing growth, the PMI, has fallen significantly since last summer and continued to fall through the first quarter of 2015, representing a significant deceleration in manufacturing growth. Non-manufacturing was still growing at a decelerated rate at the beginning of 2015.

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