Captain Rick: The U.S. Economy officially tanked big time in the first quarter of 2014…the first slowdown since early 2011. It is a ‘wake-up call’ that America is heading into ‘Recession’ in spite of the ‘it was just a hard winter’ hype that many ‘blind’ economists have been pumping.
Last month I posted a report showing the US government’s second estimate of GDP dropped to –1% in the first quarter of 2014…a drop from the first estimate in April of a gain of 0.1%. This third and usually final government GDP report shows that the US economy plummeted soundly into ‘recession’ territory during the first quarter of 2014.
The weather had an effect…but perhaps not as much as other factors like the curtailment of ‘Quantitative Easing’ … the pumping of tens of billions of U.S. debt dollars into the economy each month to make the economy look like its doing OK, when in reality, it is not.
This severe drop of GDP into negative territory (–2.9%) is a sign that another recession might be looming. A recession is generally defined as two consecutive quarters of negative growth. Overall, the U.S. economy continues in limp along in anemic growth…and now negative growth, as shown in the chart below.
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: 2.1% GDP Growth is the average of what the U.S. economy scored in the past 12 quarters (3 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.
GDP…What is it?
‘GDP’ represents ‘Gross Domestic Product’…a market value of all officially recognized final goods and services produced within a country in a year. GDP performance (increases and decreases) present a broad-based picture of the health of a country’s economy. High GDP growth is typical of a healthy economy. Low GDP growth (below 3%) is typical of an unhealthy economy. Negative growth is typical of an economy in recession.
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.
What can be done to better America and other countries?
Lots can be done! Take notice of what our elected officials do. Vote them out…replace them if they do not perform to your expectations. You might even consider running for an office. The world is in extremely short supply of intelligent people who care about our lands and well being of our people. Go for it. Run for an elected office. Help our world from plunging over the pending ‘real fiscal cliff’…before its too late.
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