I saw this article on hotair about the recent GDP report. As you may know, the first estimate for Q2 GDP growth is 2.4%. This number needs to be broken down a little bit further so you can see the significance of the difference between 2.4% growth and, say 3% or higher, which hasn’t been seen except for that temporary inventory-building/government-spending driven growth spurt we saw in the 4Q 2009.
There are about 130 years of usable data on US GDP, going back to 1880. We have the most comprehensive and oldest records of economic data of any nation. These records show that the US has had an extremely stable long run growth path of 2.8% of GDP. This is made of two components, population (and labor force) growth, and productivity increases. Population growth has averaged 1%, productivity growth 1.8%. Therefore, GDP growth of over 2.8% is necessary to reduce the unemployment rate. Anything less, and businesses can get more out of the workers they have while not hiring enough to keep pace with population growth, and the unemployment rate rises. This analysis doesn’t even factor in the larger productivity increases seen in this and other recent recessions. This means that even with discouraged workers exited the workforce, it is likely that the unemployment rate will rise over the next six months as economists predict a slowing to an average as low as 1.5% pace in the second half of the year. All this while Obama wants to tax another $700 billion dollars out of the economy to serve his political interest in pushing class warfare.
I stress, however, that we are not doomed. My next post, coming shortly, details why I think this election has the opportunity to be a fundamental realignment of our country’s politics on a scale not seen since the one party domination of the Democratic-Republicans early in our nation’s history. As an eternal optimist, it’s gonna take more than a couple bad years, or even a bad decade, to make me answer “falling” to the question “Is the US a rising or falling power?”