So US 'real' GDP grew a measly 1.7 per cent over 2011?

Business Insider

That's the final, pathetic growth number for 2011.

From the just-released GDP report:

Real GDP increased 1.7 percent in 2011 (that is, from the 2010 annual level to the 2011 annual level), compared with an increase of 3.0 percent in 2010.

The increase in real GDP in 2011 primarily reflected positive contributions from personal consumption expenditures (PCE), exports, and nonresidential fixed investment that were partly offset by negative contributions from state and local government spending, private inventory investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

I know this is from Business Insider but data is data and I like the way they present the broader picture on US GDP growth: 'Pathetic'. With so much in the way of stimulus and easy money, so it should be cast in such a light. However, what 'real' GDP at 1.7 per cent means compared to the headline figure of an annualized 2.8 per cent, I'm not sure, there's so much the way the figures are played, but anyway....

A lot of that growth (about 1.9%) was due to inventories.

Economic Growth Picks Up, So Why All the Gloom?

Pierpoint Securities chief economist Stephen Stanley notes the bulk of the increase — nearly 2 points — came from inventories. A big increase in inventories is not a good sign because it means companies aren't selling as much and need to cut back on production.

New York Times

Even so, both figures were below the average speed of economic expansion in the United States since World War II. And it would take above-average growth to recover the ground lost during the Great Recession.

“At this rate, we’ll never reduce unemployment,” said Justin Wolfers, an economist at the University of Pennsylvania. “The recovery has been postponed, again.”

Markets apparently reacted negatively to the news, and as I was reading in one of the articles, this is probably why Bernanke expressed that he was not ready to call the US economy had returned to a solid recovery.

More on the contributions from inventories....

Marketwatch

Yet about two-thirds of the increase stemmed from a buildup in inventories. Businesses may have accumulated excess stock on hand and didn’t sell as many products as expected during the holiday season, analysts say.

Inventory spending surged to an estimated $56 billion after a $2 billion decline in the third quarter.

“Overall, the pick-up in growth doesn’t look half as good when you realize that most of it was due to inventory accumulation,” said Paul Ashworth, chief U.S. economist at Capital Economics.

As a result, most economists expect companies to cut back on inventories in the first three months of 2012. Growth is expected to slow to 1.9% in the first quarter, the latest MarketWatch forecast shows.

“The economy gathered some momentum in the fourth quarter, but the result was still below what many were hoping for,” said Jim Baird, chief investment strategist at Plante Moran Financial Advisors.

Reflecting the disappointment, U.S. stocks fell in Friday trades. In a healthy economy, GDP usually grows 3% or more each quarter.

So the 2.8 per cent figure missed expectations of 3 per cent. This news was 'disappointing'. Looking forward, it appears GDP will weaken. But, well, there was certainly no recession in the United States in 2011.

What are the thoughts and opinions of other ATSers?

reply to post by surrealist


Could be better news but I think the operative word is grew.
Surprised more people didn't comment...

Originally posted by newcovenant
reply to post by surrealist

 

Surprised more people didn't comment...

If it was heralding the collapse of the economy, the anti-fear mongers would of gate crashed the thread to spew forth their hatred and criticism. And since it isn't announcing any imminent disaster, noone is interested.

1.7 growth of $14.58 Trillion = $247,000,000,000,00 [+ / - ]

247 Billion in GDP growth is still larger than most countries on the planet Total GDP.

But still nothing to write home about.
LINKY

reply to post by SLAYER69


Not sure of the numbers but I understand that GDP growth was way less than US debt increase over the same period. So the ratio between GDP and debt is expanding.... and not in a good way at all.

reply to post by surrealist


Oh I agree, Don't get me wrong that's why I wrote

"Nothing to write home about"

But it is moving in the right direction finally.

Well if McCain were elected in '08, and was running the show right now (or actually ANY Republican for that matter, GOD FORBID!!!) the GDP right now would be a HUGE MINUS percentage and FALLING faster by the day...

At least we're going in a positive direction. Thank goodness that there isnt another republican in office right now or it would have to take 20 continuous back-to-back terms of democrats to clean up the mess that republicans ALWAYS leave this country in when they are done.

Democrats ALWAYS have to clean up the HUGE MESS that republicans leave this country and economy in. Always.