Economic Growth Update You Won’t Hear Much About: It Shrunk!


Janet Yellen

Janet Yellen, feeding the beast.

The Bureau of Economic Analysis posted the economic growth for the 1st quarter of 2014 at a pitiful 0.1 percent. In the last quarter of 2013, growth was 2.6 percent. In their excitement to post the numbers, they forget to consider US wholesale inventories which were unexpectedly large in March. The U.S. trade deficit and construction spending were also softer than expected.

It is now looking like the economic growth numbers might be wound down, putting us in negative territory.

Economists now predict gross domestic product will be revised down to a decline of 0.2% to 0.4% in the first quarter. A handful of Wall Street firms trimmed their growth forecasts after Tuesday’s trade report.

Our administration and economists are blaming it on the weather. It must be that global warming which had us all freezing this winter and kept us from shopping. It can’t be that the policies currently in place are damaging our economic growth.

As the weather improves in the 2nd quarter, some economists believe we will see a big bounce back.

If not, and if the economy contracts for two quarters in a row, we are officially in a recession.

Bank of America, a bailed-out bank that can’t be trusted, incredibly predicts no recessions from now until 2025. They think the growth will surge to 3.4% in 2016 and it will taper off, evening out at 2.2% in about 2025. We hear that Jay Leno writes their punchlines.

There is zero reason to think our economy is going to improve given our high taxation, Obamacare, and the heavy regulations that stifle business growth but let us hope they are correct and let us also hope that the powers-that-be tell us the truth about the numbers. Does anyone really believe the unemployment is at 6.3% for instance?

We are bailing out Wall Street with tens of billions of dollars each month. What would our economy look like if that wasn’t the case?

Last week, Fed Chair Janet Yellen said that bailouts will continue.

A high degree of monetary accommodation remains warranted,” Yellen said on Wednesday in testimony prepared for delivery to the Joint Economic Committee of Congress. “Many Americans who want a job are still unemployed, and inflation is below the central bank’s 2% target,” she said

“Data show solid growth in the second quarter, bolstering the case for a faster expansion this year,” Yellen said. “Gains in household wealth from rising home prices, less drag from federal and state and local budgets, and stronger growth abroad should all drive investment and consumption.”

“While conditions in the labour market have improved appreciably, they are far from satisfactory,” Yellen said. She called the unemployment rate, which stood at 6.3% in April, elevated, and said the share of the labour force that has been unemployed for more than six months, as well as those working part-time who would prefer full-time work, are at historically high levels.

As we have reported here, the numbers of people on disability and who have left the work force are at historically high levels.

We have 3.9 million fewer jobs than we had when Mr. Obama took office. Our economy might have contracted in the 1st quarter. Our unemployment is now down to 6.3% but most of the jobs created were part-time or low wage jobs. The numbers of people leaving the work force was a whopping 806,000. Only two-thirds of Americans who are eligible to work actually work. There are 92,594,000 Americans not working. Women not in the labor force has hit a record high.

Wall Street didn’t think much of the news and they would know.