NOT GOOD!!!! Our beltway parasites need a history lesson. The federal government’s own Bureau of Economic Analysis has released its third estimate of first quarter GDP growth. Their first estimate showed a measly 0.1% growth, the second estimate negative 1%, and their third and current estimate negative 2.9%. What should be the obvious, historical solution to our economic problem is first to cut government spending, and secondly to reduce taxes, especially capital gains and corporate taxes, which are strangling investors and preventing investment, increased employment, and wealth creation, all of which contribute again, on the backside, to tax revenue. There is historical precedent for this remedy. In 1920 our economy crashed, due to government spending to fund WWI. It was nearly a carbon copy of the crash of 2008, which we are still recovering from. Unemployment was 11.7%, and economic growth was stagnant. By simply slashing government spending, by a drastic 65%, our stagnant economy turned into a booming economy within a year, and unemployment dropped to 2.4% by 1923. It isn’t rocket science. It just takes elected leaders with common sense, a regard for history, and a collective conscience….

U.S. GDP Dropped 2.9% In The First Quarter 2014, Down Sharply From Second Estimate

The latest data shows the U.S. economy contracted significantly more than previously estimated in the first quarter of this year.

On Wednesday, the Bureau of Economic Analysis released its third and final estimate of real gross domestic product for the first three months of 2014. The release showed output in the U.S. declining at an annual rate of 2.9%. This is relative to fourth quarter 2013, when real GDP grew 2.6%.

The final number is also down from BEA’s negative 1% second estimate released last month and even more sharply from its first estimate that showed GDP growing 0.1%. While this makes Q1 the economy’s worst since Q1 2009, the heart of the recession, economists were anticipating the further downward revision.

“The bad weather in much of the U.S. in early 2014 was a significant drag on the economy, disrupting production, construction, and shipments, and deterring home and auto sales,” wrote PNC Senior Economist Gus Faucher in a note out prior to the release. “But data show growth rebounding in the second quarter, with improvements in home and auto sales and residential construction.”

The major stock indices slipped into the red as the opening bell approached but quickly returned to positive territory. This seems to indicate that investors were also writing off the contraction as temporary.

In an interview following the release Stephen Auth, Chief Investment Officer at Federated Investors, called the revision “pretty incredible” but says that underlying trends have shown improvement that has simply been “masked” by the weather. He expects second quarter GDP growth to come in north of 4% and continual market gains.

The revision, BEA explained in a release, was largely due to a smaller than previously estimated increase in personal consumption and larger that previously estimated decline in exports. The 2.9% decrease in real GDP reflected the negative contribution from exports as well as declines in private inventory investment  both residential and nonresidential fixed investment and lower local government spending. The rate was also negatively impacted by an increase in imports but partially offset by an increase in federal government spending (the first in a year and a half) and in personal consumption.

About thomas madison

Dedicated to the restoration of and strict obedience to the United States Constitution.
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