U.S. Economy limps along in ‘Anemic Zone’ … a place between 0 real growth & Recession …What does this hold for America’s future?

Posted: March 5, 2014 in Economy, GDP
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Captain Rick: Final U.S. GDP for Q4 2013 was a disappointing 2.4%, downgraded from the earlier estimate of 3.2%. Early estimates are notoriously optimistic. This GDP figure sounds a wake-up alarm that America is stuck in the GDP ‘Anemic Zone’ … a place between zero real growth and ‘Recession’. 

GDP (Gross National Product) is the broadest means of quantifying the health of an economy. GDP is the monetary value of all the finished goods and services produced within a country’s borders.

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BLUE LINE: 3.0% GDP Growth is required to keep up with U.S. Population Growth. GDP above the blue line represents real growth that adds real jobs. GDP below the blue line indicates real economic decline that is loosing real jobs. GDP below the blue line, but above zero line (‘Recession’), is what Captain Rick calls the ‘Anemic Zone’.

RED LINE: 2.24% GDP Growth is the average of what the U.S. economy scored in the past 8 quarters (2 years). This demonstrates that the U.S. economy is stuck in the economic ‘Anemic Zone’…not mustering enough growth to keep up with population growth. 

What caused the recent GDP decline?

Weakness in the housing sector is a factor. Investment in residential real estate slowed for the first time in three years. I see that as good, as the previous pace was heading rapidly towards another real estate bubble.  Real estate values have peaked and have begun decline in some areas of the U.S., like Gilbert, Arizona that led the value resurgence a few months ago.  

Perhaps the decline in federal QE (debt) spending played the biggest role as a result of the $20 Billion reduction QE (debt) spending per month. The latest GDP decline demonstrates the power that debt spending can have on the economy. If the U.S. were to curtail the remaining $65 Billion in QE debt spending per month, the U.S. might slip into recession. The bottom line is that the U.S. QE debt spending helps the U.S. economy look like its only anemic…when it is actually in recession. This will play out as the Fed is forced to reduce QE debt spending to keep the U.S. from going over the new U.S. Debt Ceiling, recently raised to $17.2 Trillion by the U.S. Congress.

U.S. Fiscal Reality Check

U.S. GDP: $16.1 Trillion

U.S. National Debt: $17.4 Trillion (already exceeds new ceiling), ($55,000 per citizen, $151,000 per tax payer)

U.S. Debt held by foreign countries: $6 Trillion

U.S Federal Spending: $3.5 Trillion

U.S. Federal Revenue: $2.9 Trillion

U.S. Federal Deficit: $0.6 Trillion

Source: USDebtClock.org

What does this GDP data mean concerning the future of America?

America is stuck in a land of anemic growth…actually declining in real growth because its economy can not consistently rise above 3% growth … a level required to produce enough jobs and income to keep pace with population growth. In reality, this means that America is declining in economic strength. In the coming few years America faces an astronomical increase in expenditures due to entitlement programs like Social Security, Medicare and welfare programs like Medicaid and Obamacare. America’s relatively level revenue will not be able to cover the mushrooming expenditures. Congress will not be able to address this problem by simply ‘kicking the debt can down the road’ as it has in recent years. At some point soon, the fiscal mess that is brewing will explode as America plunges over the pending ‘real fiscal cliff’.  At the bottom lies America as a third world country.

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Interesting ATRIDIM NEWS JOURNAL Report Categories:

GDP

U.S. Debt Crisis

Economy

Entitlement Reform

Social Security

Medicare

Medicaid

ObamaCare

Captain Rick’s Fiscal Cliff Course 101

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