According to official US economic data, the US Gross Domestic Product (GDP) has expanded for 22 quarters, raising real GDP 12.1% above its high prior to the 2008-09 economic contraction. Yet, US manufacturing output and US industrial production have not recovered to their pre-contraction high. So what is driving the real GDP growth? In my opinion, the rise in real GDP is an illusion produced by the under-measurement of inflation.
The headlines blare Obamcare will cause over two million more jobs to be lost by 2017 and the losses will grow to 2.5 million jobs by 2024. That analysis is from the Congressional Budget Office in their 2014 Budget Outlook report. Unfortunately, the rationale behind the CBO claims are that the subsidies to buy health insurance for individuals are larger than the wages earned working full-time hours. From the report:
The economy has been debilitated by the offshoring of middle class jobs for the benefit of corporate profits and by the Federal Reserve’s policy of Quantitative Easing in order to support a few oversized banks that the government protects from market discipline. Not only does QE distort bond and stock markets, it threatens the value of the dollar and has resulted in manipulation of the gold price.
One might think that $11 dollars less per month in food stamps for an individual is not a big deal. But considering the maximum monthly amount one could have is $200 a month, now $189, it is. A whopping 15% of the population are on food stamps and now will experience a 5.4% cut in benefits, just in time for the holidays. As of July 2013, 47,637,407 people were receiving SNAP benefits.
Once again our daily barrage of economic injustice news is overwhelming. From lobbyist lies to interest rate swap rigging to killing workers by the hundreds to our best and brightest working jobs flipping burgers, here are some quick economic news shorts that you don't want to miss.
The United Kingdom's bond rating was just downgraded by Moody's from AAA to AA1, in part due to the U.K.'s austerity measures which repressed economic growth.
Nowhere is the evidence of unbridled corporate greed stronger than in what the financial crisis did to the U.S. economy. The losses are staggering. Economic growth was killed to the tune of over $13 trillion. Homeowners lost a whopping $8.1 trillion in home values.
While the Dow hit 14,000 and Wall Street cheered, economic indicators cast a broadening dark shadow. Wall street is partying like it is March 2000. Yet Q4 GDP showed economic contraction.
Superstorm Sandy's economic effects are popping up like the dark clouds of a hurricane. In The Perfect Storm we predicted Sandy would negatively impact Q4 GDP by 0.5 percentage points. The Philadelphia Federal Reserve's survey of professional forecasters recently downgraded their Q4 GDP estimates by 0.4 percentage points to 1.8% annualized Q4 GDP growth. There are some estimates which are as low as 0.5% Q4 GDP, much of the downgrades due to superstorm Sandy.
Now the data is rolling in, like the storm surge itself. Sandy hit the New Jersey coast on October 29th. Even while the damage, loss of power, business closings and economic activity would seem to go negative after that date, October industrial production was hit with a full percentage point of Hurricane Sandy related contraction.
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