October 29, 2010

3Q10 GDP An Annualized +2.0% (Update: Q3-Q5 of Recovery Score Is Reagan 25.9, Obama 7.4)

Filed under: Economy,Taxes & Government — Tom @ 7:40 am

Well, this should be interesting. Will there be tangible improvement, or continued mediocrity?

Five quarters of growth since the end of the recession have failed to put much of a dent in the unemployment rate (9.5% in June 2009, the last month of the recession; 9.6% in September 2010). The number of jobs in the economy has also contracted by 439,000 seasonally adjusted jobs since June 2009 (-1,052,000 from June to December 2009, +613,000 after that to September 2010), a singularly unimpressive performance for a recovery:

BLStotalJobs2009and2010

Additionally, the economy has only recovered about 70% of the ground it lost during the recession as normal people define it phase of the POR (Pelosi-Obama-Reid) Economy (before considering population increases):

POReconGDPlossThru2Q10Final

Last quarter’s 1.7% annualized GDP growth was especially disappointing, having started at +2.4% and then diving to 1.6% in the first revision before recovering a bit.

Some predictions for today’s report:

A 2.0% annualized result would get the economy about 80% of they way back to where it was at the end of the recession.

The short-form release will be here at 8:30 a.m. The long-form report with tables will be here.

THE NEWS: Here we go –

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.0 percent in the third quarter of 2010, (that is, from the second quarter to the third quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.7 percent.

… The small acceleration in real GDP in the third quarter primarily reflected a sharp deceleration in imports and accelerations in private inventory investment and in PCE that were partly offset by a downturn in residential fixed investment and decelerations in nonresidential fixed investment and in exports.

The downturn in residential fixed investment is well-known, given that the past four months have been the worst in about 50 years of recordkeeping for housing starts and building permits.

But five quarters into an alleged recovery, and we get “decelerations in nonresidential fixed investment”? One more time: “It’s the Uncertainty, Stupid.”

________________________________________________________

UPDATE: “Deceleration”? More like a “disappearance.” Fixed investment advanced by less than 1% (nonresidential fixed was up by an annualized 9.7%, down from 17.2%). The following graphic chronicles the decline –

GDPfixedInvestment3Q07to3Q10

After declining by relatively nominal percentages during the four quarters before the recession as normal people define it began, Fixed Investment began a four-quarter cliff dive. The patient barely has his head above water. The level of such investment is less than 80% of what it was three years ago (and less than 83% of what it was when the real recession began in the third quarter of 2008). The nonresidential fixed component, which ignores inventory changes, is almost as bad (down about 17% from when the normally-defined recession began).

Companies and others are holding back on investments as much as they can, and will continue to do so as long as this government is congenitally hostile towards the private sector.

UPDATE 2: Updated charts breaking out Uncle Sam vs. the rest of the economy and all government vs. the private sector are here.

UPDATE 3: As seen in the updated “Reaganomics vs. Obamanomics” graphic in the far right column, the contest between Reagan’s tax-cut policies vs. Obama’s stimulus attempts is officially a rout.

In the five quarters presented, before compounding, post-recession growth under Reagan totaled 31.3 points (annualizes to 6.2% growth with compounding considered). Under Obama? 14 points (annualizes to 2.7%).

In quarters 3 through 5 of the respective recoveries, reported growth under Reagan totaled 25.9 points (annualizes to 8.6% growth). Obama? 7.4 points (annualizes to 2.5%).

This is an economic policy rout of epic proportions.

That there is even a debate over which approach works better is an insult to a thinking person’s (i.e., a sensible conservative’s) intelligence.

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1 Comment

  1. [...] updated charts illustrate who the winners were in the most recent quarter and beginning with the first full quarter after the POR (Pelosi-Obama-Reid) Economy began in in [...]

    Pingback by BizzyBlog — October 29, 2010 @ 1:23 pm

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