Here’s what happened first, along with the new projected growth numbers:
The Nation: The paper the House Budget Committee chairman has used as the
intellectual and statistical underpinning for his austerity agenda has been significantly discredited … Ryan went all in … preaching an economic gospel based on his absolute certainty that when a country’s debt level tops 90 percent of its gross domestic product, it’s economy will decline and crisis will ensue.
When debt levels didn't matter....Remember?
The average growth rate of nations with a 90 per cent debt load does not decline by 0.1 percent … Rather, the growth rate is a positive 2.2 per cent. Reinhart acknowledged to the CBC News business reporting team that “Herndon, Ash and Pollin have written a useful paper, finding a significant mistake in one of our figures.”
Notice below the positive growth rate for the last quarter. How’s that for a fact based economic prediction:
AP: U.S. economic growth accelerated to an annual rate of 2.5 percent from January through March, buoyed by the strongest consumer spending in more than two years. Government spending fell, though, and tax increases (SS increase) and federal budget cuts (sequester) could slow growth later this year. Government spending sank at a 4.1 percent annual rate, led by another deep cut in defense spending. The decline kept last quarter's increase in economic growth below expectations of a 3 percent rate or more.
The forced austerity measures allowed by the Republicans in the sequester will result in a slower growth rate. I’m sure they’ll blame Obama for it because...they just hate Obama.
You forgot to mention how debt is now 107% of GDP and how this was the biggest miss in expectations since September 2011. Since GDP is a false indicator of growth and the health of an economy based mostly on spending and consumption, (private consumption + gross investment + government spending + (exports − imports), and the Federal Reserve is expanding it's balance sheet by over $1 trillion each year in order to fund the deficit without any exit plan, the collapse is yet to come. When interest rates go up, which they will never allow, the budget (or lack thereof) will be consumed by interest payments. Since the banks are all insolvent, they cannot let interest rates rise. The Fed will expand it's quantitative easing more and destroy the purchasing power of the currency. At some point, foreign creditors will no longer buy US debt except under the threat of force. Since the BRIC's nations are now financing a new global trade settlement bank by using US treasuries as collateral, it's only a matter of time before we see shortages, rationing, higher crime and higher prices.ReplyDelete
From a research note by Goldman Sachs chief economist Jan Hatzius: The Rapidly Shrinking Federal DeficitReplyDelete
The federal budget deficit is shrinking rapidly. ...[I]n the 12 months through March 2013, the deficit totaled $911 billion, or 5.7% of GDP. In the first three months of calendar 2013--that is, since the increase in payroll and income tax rates took effect on January 1--we estimate that the deficit has averaged just 4.5% of GDP on a seasonally adjusted basis. This is less than half the peak annual deficit of 10.1% of GDP in fiscal 2009...
...In our view, the most important implication from the reduction in the budget deficit for the near-term economic outlook is reduced pressure for further fiscal retrenchment. Partly for this reason, we expect the drag from fiscal policy on real GDP growth to decline sharply from around 2% of GDP in 2013 to around 0.5% in coming years. This is a key reason for our expectation that real GDP growth will accelerate from around 2% (annualized) in Q2/Q3 2013 to 3%-3.5% in 2014-2016.
The Goldman Sachs goons have positioned themselves throughout the Treasury, the Fed, and the US government.ReplyDelete
From Zero Hedge, where you liberals might actually learn a thing or two about economics if you can start thinking for yourself for once, rather than just rely on fudged numbers and quotes released by the fabian socialists (wolves in sheep's clothes) who attended The London School of Economics.....
Back in 2010, Goldman's Jan Hatzius, fresh on the heels of QE2, committed rookie Economist mistake 101, and mistook a centrally-planned market response to what then was a record liquidity infusion, for an improvement in the economy (a move we appropriately mocked at the time, as it was quite clear that the Fed's intervention meant the economy was getting worse not better). It took him about 4 months to realize the folly of his ways and realize no recovery for the US or anyone else was on the horizon. He then wised up for a couple of years until some time in December he did the very same mistake again, and once again jumped the shark, forecasting an improvement to the US economy in 2013, albeit in the second half (after all nobody want to predict an improvement in the immediate future: they will be proven wrong very soon) based on consumer strength when in reality the only "reaction function" was that of the market to the Fed's QE4 (or is it 5, and does it even matter any more?). Four months later we get this...