I think this contraction will lead to more growth for the next quarter. One, because investment is still very high and does not appear to slow down as the Dow Jones is over 14,000 for the first time since 2007. Also spending cuts on Defense are going to begin very shortly with all of the fiscal cliff issues looming.
Classical!! Government spending does not help with confidence but the financial market (Zombie idea as Quiggin would put it). The GDP is going to grow and fueled by private investment and improved financial market!!
Yeah, I think this last quarter was more of a blip than a real problem (for all we know, the data could end up being revised up). Growth in jobs and disposable income doesn't really match a 0.1% decline in GDP. It was just weird timing of defense outlays and the decline in inventory. I think the more important number was that annual growth in 2012 was an okay but not great 2.2%, which was a slight increase over the 2011 growth of 1.8%, which was a slight increase over the year before. I think in the future, we'll continue to see more reports of slow but steady 1-3% growth.
I think this contraction will lead to more growth for the next quarter. One, because investment is still very high and does not appear to slow down as the Dow Jones is over 14,000 for the first time since 2007. Also spending cuts on Defense are going to begin very shortly with all of the fiscal cliff issues looming.
ReplyDeleteClassical!! Government spending does not help with confidence but the financial market (Zombie idea as Quiggin would put it). The GDP is going to grow and fueled by private investment and improved financial market!!
ReplyDeleteYeah, I think this last quarter was more of a blip than a real problem (for all we know, the data could end up being revised up). Growth in jobs and disposable income doesn't really match a 0.1% decline in GDP. It was just weird timing of defense outlays and the decline in inventory. I think the more important number was that annual growth in 2012 was an okay but not great 2.2%, which was a slight increase over the 2011 growth of 1.8%, which was a slight increase over the year before. I think in the future, we'll continue to see more reports of slow but steady 1-3% growth.
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