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Posts Tagged ‘GDP’
July 30th, 2018 at 1:04 pm
Image of the Day: Inexplicable Economic Surge in 2017 and 2018
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Inexplicably, U.S. economic growth has surged in the first and second quarters of both 2017 and 2018 after a deregulatory and tax-cutting presidential administration replaced a hyper-regulatory and tax-raising one:

Inexplicable Economic Bump

Inexplicable Economic Bump

April 9th, 2018 at 9:21 am
Image of the Day: More Trump Bump, Which They Said Couldn’t Be Done
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During the Obama years, when we endured the worst cyclical economic “recovery” in recorded U.S. history, we were told that the 3% economic growth to which we’d become accustomed since measurement began was a thing of the past, and that “secular stagnation” was the order of the future.  Well, in just the first year of the Trump presidency, a funny thing happened:

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Three Percent Miraculously Returns

Three Percent Miraculously Returns

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February 2nd, 2017 at 12:33 pm
Image of the Day: Obama’s Legacy = Worst Economic Growth Record
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The  Obama Legacy:  the worst economic growth rate of any president since official recordkeeping began.

Obamas Economic Legacy

Obama's Economic Legacy

April 29th, 2016 at 11:42 am
GDP Report Confirms Our Commentary on Obama’s Economic Record
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In this week’s Liberty Update, we highlight the falsity of the persistent claim that Barack Obama somehow prevented a great depression:

[T]he federal government’s own economic data shows that Obama actually inherited an emerging recovery.  The American economy was already rebounding before he even officially became president.  What he has done is impose policies that have resulted in the slowest decade of economic growth in recorded U.S. history.”

Yesterday’s official report on first-quarter 2016 economic performance provided same-day confirmation.  More specifically, the U.S. Commerce Department announced that gross domestic product (GDP), the basic metric by which the economy is measured and by which recessions and recoveries are defined, grew at a disturbing 0.5%.  Not only is that number alarmingly low, it amounts to the worst mark in two years.  Echoing our own commentary, The Wall Street Journal emphasizes how this places Obama’s legacy in perspective:

The reality is that the first quarter is further evidence of what has been the weakest economic expansion in the postwar era.  The 0.5% growth is subject to revision but it follows 1.4% in the fourth quarter.  Growth over the last six months has averaged about 1%, and under 2% over the last 12 months…  The American economy hasn’t grown by more than 3% since 2005 (3.3%), the longest such stretch of malaise that we can find in the Bureau of Economic Analysis tables going back to 1930.  Even the Great Depression saw a snapback to rapid growth from 1934-1936.”

The explanation for that is simple.  Obama has pursued the most hyper-regulatory, big-government, wasteful-spending economic policy in U.S. history.   That’s illustrated among other things by his horrific deficit record, which saw four consecutive deficits in excess of $1 trillion dollars, and more accumulated debt than all previous presidents combined.  Until America has a president and Congress that pursue the proven supply-side policies that result in economic prosperity (see, e.g., Ronald Reagan), this will likely remain the new normal.

November 5th, 2012 at 4:45 pm
Want to Reduce Public Spending? Make Government More Efficient
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There’s a certain strain of thinking on the right that scoffs at the notion of “efficient government.” The skepticism of what seems to be an unobjectionable goal has a few sources.

First, many pundits point out that the nation’s constitutional design is predicated on checks and balances that make government anything but efficient — the explicit goal, after all, is to slow the lawmaking process in an attempt to ensure some measure of deliberation. They’re right about that, of course, but that’s an observation on the lawmaking process, not on implementing or enforcing the law.

Second, conservatives note (also rightly) that government by its very nature (i.e., the lack of market incentives present in the private sector) has a built-in bias towards sclerosis and waste. That’s true as far as it goes, but arguing that government can’t be administered perfectly is not the same as arguing that it can’t be done better.

For a good example of the potential of reformist public administration, one need look no further than the example that Indiana Governor Mitch Daniels set with that most hated of bureaucracies, the DMV (though in Indiana it’s the BMV — The Bureau of Motor Vehicles). Consider this excerpt from Andrew Ferguson’s fabulous profile of Daniels in a 2010 issue of the Weekly Standard:

The state Bureau of Motor Vehicles, another patronage sump that was routinely ranked one of the worst in the country, was drastically reorganized. “[Daniels] likes metrics,” [Director of the Indiana OMB Ryan] Kitchell said. “He likes to measure outcomes.” Every line item in the state budget has at least one objective formula attached to it to indicate how well each service is being delivered. Regulatory agencies track the speed with which permits and variances are granted. The economic development agency has to compare the hourly wage of each new job brought to the state with the average hourly wage of existing jobs. In the case of the BMV, the two most important metrics were wait times and customer satisfaction. Now each receipt is stamped with the time the customer arrives and the time his transaction is completed. Wait times have dropped from over 40 minutes to under 10 minutes. Surveys put customer satisfaction at 97 percent.

So it can be done. And by the way, it’s also a cracker jack method for keeping government outlays under control. From Walter Russell Mead, writing at his Via Meadia blog:

… By 2025, fully 34 percent of US GDP will be eaten up by the cost of providing public services. Throw in little items [like] interest on the burgeoning national debt and pension and other liabilities, and we are looking at basic governance costs and obligations close to 40 percent of GDP—and heading inexorably higher…

There are two basic drivers behind these numbers: the first is the well known demographic problem that comes from the combination of increased longevity and falling birth rates. Programs like Medicare cost more as people live longer, and reduced population growth means that the workforce grows more slowly than the number of old people drawing on government services and transfer programs.

But the second driving force, which [an] Accenture [study] highlights very usefully, is less well understood: the catastrophically slow growth of productivity in the government workforce. Think of this as “bureaucracy drag;” while productivity in the workforce as a whole is rising by 1.7 percent per year, and in private sector service industries it is rising by 1.5 percent each year, in government productivity is rising by a miserable 0.3 percent per year.

Bureaucrats aren’t getting the job done. And the rest of us are paying the price. It’s time for public sector executives around the country to take a page out of Mitch Daniels’ playbook.

April 18th, 2012 at 9:10 am
A Federal Budget That Ignores the Constitution
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Writing in the Washington Times, Richard Rahn — Senior Fellow at the Cato Institute and Chairman of the Institute for Global Economic Growth — puts the current state of federal spending in rather horrid relief:

The federal government is spending about 24 percent of gross domestic product (GDP). Most of it goes for Social Security, Medicare, Medicaid and other entitlement programs. The “discretionary” portion of the budget equals about 9 percent of GDP, with about half going for defense. Until 1930, the federal government normally spent less than 4 percent of GDP, except for the periods during World War I and the Civil War. The Constitution gives the federal government very few tasks for which it is required to spend money — the big item being the “common defense.” Again, up until 1930, the courts forced the federal government to live largely within the confines of the Constitution. Deducting defense spending from the federal budgets before 1930 shows that the federal government lived perfectly well on 2 percent to 3 percent of GDP for the first 140 years of the republic.

What all of this means is that approximately three-quarters of all federal government spending is not required by — and often is contrary to — the Constitution.

Conventional wisdom in Washington increasingly holds that those who wish to see the federal government pare back its expenditures rather than increase the tax burden on the American people are delusional, if not antediluvian. Yet for the majority of American history, the federal government was only a fraction of what it is today — and the Republic did quite well for itself.

Are we really to believe today that spending cuts that would still leave the federal government’s share of GDP several multiples higher than it was less than a century ago mark some civilizational rot? Because by all indicators (Europe comes to mind), the failure to prune seems to be the more perilous course.

April 3rd, 2012 at 12:53 pm
How to Avoid Bank Bailouts: Make the Bankers Liable
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Over at the Wall Street Journal, James Grant, editor of Grant’s Interest Rate Observer has a perceptive review of the new book, “White House Burning: The Founding Fathers, our National Debt, and Why it Matters to You,” by former IMF Chief Economist Simon Johnson and University of Connecticut law professor James Kwak. Two passages deserve special attention.

On the banking system, Grant writes:

Here’s an idea: Let’s try capitalism for a change.

Rather than the bureaucratic monstrosity called the Dodd-Frank Act, for instance, why not hold the bankers personally accountable for the solvency of the institutions that employ them? Until 1935, bank stockholders would get a capital call if the company in which they had invested became impaired or insolvent. It was their problem, not the government’s. In the same spirit, suggests the New York investor Paul J. Isaac, let the bankers forfeit a portion of their past compensation—say, that in excess of 10 times the average manufacturing wage—if they steer their employer on the rocks. And let them surrender not just one year’s worth but rather seven year’s worth—after all, big banks don’t go broke all at once. Proceeds would be distributed to the creditors, as in days of yore. Bankers should not only take risks. They should also bear them.

And on the endless invocation of the Great Depression as the sole object lesson in how to respond to a severe economic downturn:

Messrs. Johnson and Kwak, who draw the usual conclusions from 1929-33, fail to mention the depression of 1920-21. Yet this cyclical downturn was as instructively brief as it was ugly. Peak to trough, nominal GDP plunged by 23.9%, wholesale prices by 40.8% and the CPI by 8.3%. Unemployment, as it was then inexactly measured, soared to 14% from a boomtime low of 2%. And how did the successive administrations of Woodrow Wilson and Warren G. Harding, along with the Federal Reserve, meet this national disaster? Why, they balanced the budget and raised interest rates. Yet for reasons never examined in the pages of this book, that depression promptly ended and the 1920s roared.

Grant’s theme? Responsibility, both personal and collective. That has the great virtue of being the right thing to do. It also has one even greater virtue: it works.

January 27th, 2012 at 2:10 pm
Union Membership Falls to New Low, NLRB to Compel Employees’ Private Phone Numbers and Email Addresses
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Today, the Department of Labor announced that the 2011 union membership rate fell to a new record low of 11.8%.   Disturbingly, the rate among public-sector workers now stands at 37%, whereas the membership rate for private-sector employees stands at a historic low of just 6.9%.

Now, National Labor Relations Board (NLRB) chairman Mark Pearce has announced that Obama’s NLRB will push for new rules forcing employers to turn over lists of employees’ private phone numbers and email addresses in a shameless attempt to assist Big Labor in its desperate organizing activities.  After all, unless labor leaders can wrench more dollars from employees’ paychecks, they won’t have as much to spend on Obama’s reelection campaign.  Meanwhile, the government also announced today that the U.S. economy only grew a lackluster 2.8% in the fourth quarter of 2011.  That illustrates once again that Obama’s policies aren’t helping the economy, they’re subduing what should by now be a much sharper recovery.

As we have observed, if the Obama Administration behaves this thuggishly during an election year, just imagine how heedlessly it would behave during a second term when it needn’t worry about reelection.

October 28th, 2011 at 12:21 pm
2.5% GDP: Lackluster Is the New Outstanding in the Age of Obama
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So the government reported tepid 2.5% gross domestic product (GDP) third quarter growth yesterday, and the market celebration it triggered says a lot about the bleak nature of the Obama economy.

First of all, that reading fell below consensus expectations of 2.7% growth.  Second, 2.5% falls almost a full percentage point below the post-war historical average of 3.3% quarterly growth.  Third, GDP should be growing even faster than that 3.3% long-term average during a period of so-called “recovery” – recall that the most recent recession officially ended nine quarters ago in June 2009.  At a similar point during the Reagan recovery in 1984, GDP grew at a 7.1% rate following consecutive quarters of 9.3%, 8.1%, 8.5% and 8.0% growth.  And at the same point during the Bush recovery from the Clinton/Gore tech bubble downturn and 9/11, GDP grew 3.7% following a previous quarter of 6.7% growth.  Fourth, 2.5% growth is insufficient to significantly improve the nation’s festering unemployment problem.

A 2.5% rate certainly beats the 0.4% and 1.3% readings for the preceding two quarters of 2011, but America’s desperate need for new economic leadership becomes clear when such a lackluster result is seen as “good” news.

August 25th, 2011 at 12:42 pm
Taxing the Rich Won’t Fix the Deficit

In a brilliantly written refutation of the Obama-as-Genius argument, Mortimer Zuckerman explains why even taking all the money from “rich” people and corporations won’t solve the deficit problem:

Even if the government instituted a 100% tax on both corporate profits and personal incomes above $250,000 per year, it would yield enough revenue to run the government for only six months. Why? Because under Mr. Obama’s presidency, government spending has swelled to 24% of GDP from 18%.

Spending is Obama’s original sin as president.  Unless he’s willing to repent of that folly and ratchet back on the flow of money, the American economy will stay mired in a recession.

July 29th, 2011 at 12:34 pm
Pathetic Economic Growth Report Illustrates Failure Of Obama Spending “Stimulus”
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Barack Obama and liberals fraudulently claim that their massive spending binge “prevented another Great Depression.”

It’s more accurate to say that their spending and regulatory onslaught stifled our natural cyclical recovery and heaped more debt upon the American people.

Today’s economic growth report card from the Commerce Department provided the latest evidence of that reality, as if any additional clarity was necessary.  For the second quarter of 2011 (April through June), American gross domestic product (GDP) only grew 1.3%.  That fell substantially below the expected 1.8% rate, which itself constitutes sluggish growth.  Moreover, first quarter GDP was revised shockingly downward to 0.4% from its initial 1.9% estimate.  That is simply pathetic and unacceptable.

In comparison, the American economy jolted to life after Ronald Reagan’s very different response to the early 1980s recession (which was actually worse than the most recent recession, despite liberals’ persistent claims to the contrary).  According to the Bureau of Economic Analysis, in the eight quarters since Obama’s wasteful “stimulus” in 2009, we’ve witnessed growth rates of 1.7%, 3.8%, 3.9%, 3.8%, 2.5%, 2.3%, 0.4% and now 1.9%.  That’s an average of just 2.5%.  But in the eight quarters following the effective date of the Reagan tax cuts, GDP exploded at rates of 5.1%, 9.3%, 8.1%, 8.5%, 8.0%, 7.1%, 3.9% and 3.3%.  That’s an average of 6.7%.

Today’s depressing report simply shows once again that lower taxes and less government create prosperity, while bigger government and more spending create stagnation.

October 29th, 2010 at 12:50 pm
Today’s GDP Report: Latest Proof of “Stimulus” Failure
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Today, the U.S. Commerce Department reported disappointing 2.0% gross domestic product (GDP) growth for the third quarter of 2010.  Not only is that number below the expected 2.2% rate, it’s also below the rate needed to substantively reduce our 9.6% unemployment rate.  This now means that GDP growth rates for the five quarters of our current “recovery” have been 1.6%, 5.0%, 3.7%, 1.7% and now 2.0%.

Here’s how that compares to the Reagan recovery, which focused instead on cutting taxes and reducing government regulation.  In the five quarters following implementation of the Reagan tax cuts in January 1983, we posted remarkable growth rates of 5.1%, 9.3%, 8.1%, 8.5% and 8.0%.

So remind us again:  Who is the one blinded to “facts and science,” Mr. President?

May 28th, 2010 at 11:52 am
Is the “Obama Recovery” Really the “Obama Malaise?”
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Regardless of one’s political preference, no patriotic American welcomes economic misfortune.  With this week’s news, however, one wonders whether we’re witnessing the onset of “Obama Malaise.”

Yesterday, the Commerce Department revised its already-sluggish initial 3.2% first quarter gross domestic product (GDP) estimate downward to 3.0%.  Additionally, the Commerce Department reported that corporate profits slowed to 5.5% in the first quarter of 2010, down from the 8% growth rate of the 2009 fourth quarter.

These numbers are disturbing because our economic recovery should be much stronger at this point, and gaining steam rather than slowing.  Coming out of the 1981-1982 recession, the last downturn comparable to the 2008-2009 recession, the U.S. logged remarkable GDP quarterly growth rates of 5.1%, 9.3%, 8.1% and 8.5% for 1983.  America’s torrid Reagan Recovery continued into 1984, with 8.0% and 7.1% growth rates in the first two quarters.  That constituted impressive growth, on the heels of Reagan’s tax-cutting and deregulatory platform.

In contrast, we’ve now witnessed GDP growth rates of 2.2%, 5.6% and now a deceleration to 3.0%.  Obama and Democrats take joy in claiming credit for our natural cyclical recovery, but what they should instead be doing is explaining why their policies are tossing a wet blanket over what should be stronger growth.

March 25th, 2010 at 4:07 pm
Report: Europe Continues to Stagnate. So Why Do Liberals Seek To Emulate It?
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American liberals love to praise supposedly superior European governance and culture, oblivious to the irony that they nevertheless continue to live in the United States.  This phenomenon became particularly visible during the ObamaCare ordeal, as liberals claimed that we must somehow join the rest of the “industrialized world” in providing unsustainable government-controlled healthcare.

Well, here’s a dose of sobering reality.  As noted on a front page story in today’s Wall Street Journal entitled “Europe’s Choice:  Growth or Safety Net,” Europe has stagnated economically for the past two decades compared to the United States.  Worse, this has occurred even as Europe continued its failure to carry their own weight with respectable defense expenditures.  From 1990 to 1999, Europe’s gross domestic product (GDP) grew 2.0%, compared to 3.3% for the U.S.  From 2000 to 2008, Europe only grew 1.7%, whereas the U.S. grew 2.2%.

Yet we’re supposed to emulate their example?  Can’t liberals just move there instead?