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Economic Growth in Terms of Real GDP Was Strong from 4th Q 2002 Until Late 2007 Essay

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Economic Growth In Terms Of Real GDP Was Strong From 4th Q 2002 Until Late 2007 Essay

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¶ … Economy http://ycharts.com/indicators/real_gdp/chart#series=type:indicator, id:real_gdp,calc:&zoom=10&startDate=&endDate=&format=real&recessions=false

The above chart shows that economic growth in terms of real GDP was fairly strong from 4Q2002 (barely a year after 9/11) until about early to late 2007, when it nose-dived to roughly 12.75 trillion. It has since started to rise again and now is above the high point in 2007/2008. GDP growth over recent years has not been blowing the doors off, but it has steadily gone upward for the last 3-4 years.

On a similar note, unemployment spiked very high, leveling off north of ten percent in late 2009/early 2010. It has since tapered down to 7.70%. However, as it relates to the current state of the economy, that figure is extremely misleading. First, anyone that has exhausted their 99 weeks (or applicable tenure) of unemployment benefits is not included in this figure nor is anyone that has voluntarily...

Finally, people that are employed but are "under-employed (e.g. people that work PT but want to be FT) are also not included in that rate. This is the "U-3" rate as deciphered by the United States Department of Labor.
The U-6 unemployment (which includes under-employed people and a lot of other dimensions that the U-3 rate does not) was in the 8-10% range for much of the 2000's, spiked to nearly 18% (nearly a FIFTH of the workforce!) and has since only fallen to just over 14%. This speaks to a labor market that is very tentative and very disinclined from making investment and hiring more people.

As it pertains to Ben Bernanke and the Fed, they do not have a lot of tools left in their arsenal. Several "stimulus" packages have emanated from Congress and the Fed has engaged in several rounds of quantitative easing (two so far…a third on tap) and the economy is still stuck in low gear.

A lot of people disagree (or roundly…

Sources used in this document:

Regardless, the it is clear that the current state of the economy is that the underlying fundamentals are strong. The housing correction that has happen after the 2007/2008 credit crash seems to be subsiding and corporate revenues across the entire economy are strong. Consumer confidence is starting to rise and if that continues to happen over a long enough time, the purse strings of corporations flush with cash will start to ease up.

That being said, throwing more and more regulations/taxes at businesses is a bad idea. If there is a tangible need for it, that's fine. But punishing an entire industry for the actions of a few (think: Enron) or complaining abou the rich not paying enough taxes (when 47% of individual taxpayers pay ZERO federal income tax) is just so off-base. A lot of small-business owners are the "top 2%) that will get hit in the shorts by taxes going up. If they are the ones doing the hiring, they should not be punished during or in advance of doing so.

Lastly, the ongoing patchwork of short-term budget fixes such as the current fiscal cliff morass needs to stop ASAP. A common-sense long-term solution needs to be figured out, put in place and then the government needs to leave it alone. The reason for the current state of low-gear economic performance is due to people not knowing what their tax/compliance expenditures will be not even 30 days from now (let alone years down the road).

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