The graphic, showing the percentage of year-over-year quarterly growth in gross domestic product, shows our problem. Our problem received an adamant punctuation mark with today’s report that output grew a mere 0.1 percent annualized rate in the first quarter. In the fourth quarter of last year, it increased 2.6 percent.
True, GDP doesn’t measure national happiness, the social rate of return of our economic activities, the cost of “externalities,” or many other important things. Yet it remains a gold standard and not out of habit. Without strong GDP growth, we won’t see employment rise enough to make up for the losses of the Great Recession and the jobs gap left by that calamity.
Without this, employers will feel no pressure to raise wages and, helped by many oligarch-sponsored policies, inequality will worsen. Most working people will have a difficult time supporting the “consumer” spending upon which some 70 percent of the economy depends. Slowness is perpetuated. The circle keeps going round, or circling the drain.
Note above how our rebounds have been getting weaker since the early 1980s. But even in the 1980s and 1990s, we saw sustained periods of close to 5 percent increases. That changed in the 2000s, even with Alan Greenspan’s Federal Reserve and the religion of deregulation pumping up the greatest speculative bubble since the 1920s.
Performance in the recovery has been somewhat better, but not enough to result in sustained and large increases in job growth — and it faced the headwinds of government austerity. Now we face the 1Q 2014 report. Economists had expected at least 1.1 percent. Exports and imports fell. State and local government austerity hurt. The housing bust trails us, with residential investment as a percentage of GDP still below the levels of previous post-World War II recessions.
This is the advance report. It may be revised upward. One quarter does not a trend make. But, as the graphic shows, there is a trend and it is feeding many other economic ills.
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Today’s Econ Haiku:
Meanwhile at Fed
Decisions on the taper
How about duct tape