April 15, 2011

GDP Since the Beginning of the POR Economy: Honey, They Still Shrunk the Private Sector

Filed under: Economy,Taxes & Government — Tom @ 12:34 pm

Commenter “Jerry in Detroit” this morning nudged me to update something I last tracked sometime last year, and to which I dedicated a column in February 2010, namely the separate and diverging private and government GDP growth and dollar components.

This is an especially opportune time to do so, since the now-finalized fourth quarter of 2010 (pending the annual comprehensive revision which will go back several years) represents the first quarter during which real GDP for the entire economy actually exceeded the value seen in the second quarter of 2008. It was during the latter one-third to one-half of 2Q08 that the POR (Pelosi-Obama-Reid) Economy began.

So here’s where things stand, in 2005 chained dollars (i.e., adjusted for inflation):

GDPsinceQ208

Jerry in essence indicated that he didn’t think the private sector has grown since the recession as normal people define it began. Jerry is correct; what I will from this point forward refer to as PDP (Private Domestic Product) has contracted by 0.67% since the second quarter of 2008. But it is clear that FDP (Federal Domestic Product) has rolled merrily along at what would be considered a booming rate if an entire economy were involved.

Keep in mind that the above excludes government transfer payments, which began to grow excessively when the recession began, and have zoomed out of control since the Obama administration took over.

Given that recent 1Q11 GDP forecasts have been revised downward to an annualized 1.5%-1.7% range, it looks like it might be a couple more quarters before the private sector goes positive (not annualized and assuming/hoping all the growth is private, the GDP forecast is about 0.4%, which is less than the 0.67% shortfall above).

As far as the private sector is concerned, we’re still asking “Rebound? What Rebound?” — and apparently will be for some time.

Phil Gramm on the Obama Economy: Trailing Reagan by 15+ Million Jobs and $4,100+ in Per-Capita GDP

Filed under: Economy,Taxes & Government — Tom @ 8:01 am

I’m glad to see that somebody besides yours truly is referencing the booming Reagan post-recession economy and noting how it makes the pathetic “Rebound? What Rebound?” experience we’re currently enduring courtesy of the Obama administration — which all began as the POR (Pelosi-Obama-Reid) Economy three years ago — pale embarrassingly in comparison.

Phil Gramm does just that today in a Wall Street Journal op-ed, and ominously notes that while Reagan’s policies put American on a long-term higher trajectory, the pain the Obama administration is inflicting on the economy and the national economic psyche threaten to do the opposite:

Had the U.S. economy recovered from the current recession the way it bounced back from the other 10 recessions since World War II, our per-capita gross domestic product (GDP) would be $3,553 higher than it is today, and 11.9 million more Americans would be employed.

Those startling figures are based on the average recovery rate of real GDP and jobs three years after the beginning of each postwar recession. Some apologists suggest that the current recovery is so weak because the recession was so deep. But the totality of our experience in the postwar period is exactly the opposite—the bigger the bust, the bigger the boom that follows.

On average, three years after the four deepest previous recessions started, real GDP was 7.6% higher than the pre-recession level. During the Obama recovery, real GDP is up only 0.1%. Forty months after the start of the 1953, 1957, 1973 and 1981 recessions, total employment was on average 4.7% higher than the pre-recession peaks, while total employment today is still down 4.7%—that’s a total employment gap of 13.9 million jobs.

The problem is not just the weak recovery but increasing evidence that the economy is now on a growth path far different from the previous quarter century.

If we had matched the 1982 recovery rate, today annual per-capita income would be $4,154 higher than before the recession—that’s an extra $16,600 for a family of four—and some 15.7 million more Americans would have jobs.

… A compelling case can be made that Reagan’s tax cuts, Social Security reforms, regulatory reforms, and limits on the growth and power of the federal government not only helped the economy shake off the malaise of the 1970s but generated an economic growth premium that bore dividends for Americans until 2007. (In my opinion, “compelling” should be replaced with “airtight” — Ed.)

And if the Reagan policies of the 1980s were sufficiently different from those of the previous decade to generate a growth premium, cannot a case be made that the policies of the Obama administration are sufficiently different from those of the previous quarter-century to alter the growth trend and impose a growth discount?

The recovery is being stifled by the unprecedented policy changes undertaken by this administration and the previous Congress. Whether in absolute or relative terms, whether in comparison to our own experience or the performance of our competitors, America’s wealth-producing ability has been diminished.

… Big government costs more than higher taxes. It is paid for with diminished freedom and less opportunity. You can’t have unlimited opportunity and unlimited government.

Read the whole thing.

Another indicator that our economic trajectory may be changing for the worse on a longer-term basis is that what jobs have been added since the recession ended have been entirely in the area of temporary help services — and then some:

TotalAndTempJobsThru0311

In 21 post-recession months, 263,000 non-temporary jobs have lost (+245K overall less 508K temps), on top of the millions of jobs lost during the recession itself.

Heckuva job, Nancy, Barry, and Harry.

The Obama administration-induced negative economic orientation could not have have come at a worse time. If its current trajectory become the news normal, we may not be able to avoid hitting the 90%-of-GDP tipping point for the level of federal debt held by the public, no matter what eleventh-hour steps Washington takes to rearrange the deck chairs on the federal Titanic.

Positivity: Pope John Paul II’s biographer welcomes new feast day, Oct. 22

Filed under: Positivity — Tom @ 6:00 am

From Rome:

Apr 12, 2011 / 11:29 am

Pope John Paul II’s biographer is welcoming the announcement of a new feast day for the soon-to-be beatified pontiff. The Vatican has declared that Oct. 22, the day he became Pope, will now mark the occasion.

“I think it’s an entirely appropriate date, for this was the day that Karol Wojtyla formally began his service to the universal Church and issued that ringing cry to freedom and evangelism: “Be not afraid! Open the doors to Christ,” George Weigel told CNA.

As is customary with beatified persons, the feast day will be inserted into the Church calendar of only those places where Pope John Paul II lived and worked – the diocese of Rome and the dioceses of Poland.

In other places, local bishops will have to formally ask the Vatican for permission to mark the feast day. The same restrictions also apply to the naming of churches for Pope John Paul.

In a break with custom, though, the Vatican is giving Catholics throughout the world a year to celebrate a Mass in thanksgiving for the beatification.

In an April 12 statement the Vatican said this is due to “the exceptional character of the beatification of the Venerable John Paul II, recognized by the entire Catholic Church spread throughout the world.” …

Go here for the rest of the story.