The US Economy Shrank by 2.9%

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Registered: 01-03-2001
The US Economy Shrank by 2.9%
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Wed, 06-25-2014 - 9:23am

According to Yahoo News, the US Economy has shrank by a suprising 2.9%. Many experts are saying it is temporary decrease due to the harsh winter we have just come through. What do you think? Are you worried?

Karla
Community ModeratoriVillage.com

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Registered: 07-30-2004
Thu, 06-26-2014 - 10:55am

      Karla, the National Bureau of Economic Research (NBER) is a private organization, founded in 1920, which sets dates for the being and end of recessions (contractions).  It does not define a recession in terms of two consecutive quarters of decline in real GDP, but instead defines a recession as “. . . a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”  Never-the-less, if the economy declines in the second quarter by a significant amount I feel that the other criteria for a recession might also be met and the NBER will might declare the nation is in recession.  On the other hand the Conference Board’s Index of Leading Indicators has been positive for four consecutive months.  This Index is somewhat associated with economic performance six months in the future, so this suggests that the third quarter will show positive growth.  So, even if there are two consecutive quarters of economic decline the NBER may not consider it long enough for it to be a recession.  My feeling is that it is not certain that the nation is in recession now, but the likelihood of it being in recession is greater now than it has been at any time since June of 2009 when the last recession ended.

      Now, recessions do occur every once and awhile.  Since the end of World War II recessions on average have occurred 58 months after the end of the previous recession.  If it is determined that a recession started in December of 2013, it would have been 54 months since the last recession ended, so that is not too far out of the average.  Also, since the end of World War II the time period between the end of one recession and the beginning of the next has been as short as 12 months and as long as 120 months, although the time between recessions has become longer.  Six of the eleven expansions (an expansion is the period from the end of one recession and the beginning of the next) since World War II have been shorter than 54 months and five have been longer.

      As to whether I am worried.  Recessions effect people differently.  For myself I am not worried.  As to the economy in general, no recession is good, but I believe that if there is a recession it will not be anywhere as severe as the last one although the more I learn about economics the more I realize how difficult it is to make predictions so I am the first to say that I could be mistaken.  Also, since the New Deal legislations of the 1930’s people who are hurt the most by a recession receive help such as unemployment payments.  This does not make things perfect for them, but it protects them somewhat from the worst of recessions.

      If you have any questions about what I wrote I will be happy to answer you.  Thank you for posting such an interesting issue.

      Tom,

iVillage Member
Registered: 03-08-2011
Thu, 06-26-2014 - 6:58pm

How the government cheat you on GDP of 1st quarter of 2014.

 

    1. Apr 30, 2014. They said it increased 0.1%.

    1. May 29, 2014. They said it decreased 1.0%.

    1. Jun 25, 2014. They said it decreased 2.9%.

    1.  

Quote:
U.S. First Quarter Gross Domestic Product (Text)

 

By Chris Middleton    Apr 30, 2014

 

Following is the text of the Gross Domestic Product report from the Commerce Department:

 

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 0.1 percent in the first quarter (that is, from the fourth quarter of 2013 to the first quarter of 2014), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.6 percent.

http://www.bloomberg.com/news/2014-04-30/u-s-first-quarter-gross-domestic-product-text-.html

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Quote:
GROSS DOMESTIC PRODUCT: FIRST QUARTER 2014 (SECOND ESTIMATE)

MAY 29, 2014

Lisa Mataloni: (202) 606-5304 (GDP) gdpniwd@bea.gov

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 1.0 percent in the first quarter according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.6 percent.

http://www.bea.gov/newsreleases/national/gdp/2014/pdf/gdp1q14_2nd.pdf

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Quote:
U.S. economy collapses in first quarter, but growing again

 

By Lucia Mutikani  6/25/2014

WASHINGTON (Reuters) -

 

The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the sharpest decline in five years, instead of the 1.0 percent pace it had reported last month.

http://finance.yahoo.com/news/u-economy-contracts-2-9-123534819.html

iVillage Member
Registered: 03-08-2011
Mon, 07-07-2014 - 6:34pm

842. GDP cheating to assure a prosperous stock market (7/6/2014)

 

Although the GDP of the first quarter of 2014 is the sharpest decline in five years, another index of economy goes in contrary way. The Dow Jones index reaches its history high(over 17,000) on July 3, 2014. Since April – despite the poor economy that GDP suffered a big loss – the stock market remains in high level. Obviously, the ruler of this country is planning a rising stock market trap. They don’t want the bad news of fallen GDP to interrupt their plan. Then we saw this dramatic GDP cheating opera. They deliberately put the original report of first quarter GDP having 0.1% increase. That’s the minimum unit to separate two thorough different worlds – positive and negative. With this small 0.1%, people thought the US economy was still increasing, though at the cliff of recession. With other cheating method and propaganda, they keep Americans in a dream that US economy is going to prosperous. Here is how Dow Jones index kept rushing to its recent peak – watch the timing (from April to June) while actually economy is in recession.

 

 

Quote:
Dow Highest Closing Record

 

The Dow historical closing high is 16,947.08 set June 20, 2014. Normally, investors say "sell in May," but that's why you can't time the market. The Dow is on a winning streak, after falling to 15,372.80 on February 3. Here's this year's streak:

 

 •16,945.92 on June 10

•16,943.10 on June 9

•16,924.28 on June 6

•16,836.11 on June 5

•16,743.63 on June 2

• 16,717.17 on May 30

•16,715.44 on May 13

•16,695.47 on May 12

•16,583.34 on May 9

•16,580.84 on April 30

 

Be noticed that April 30 was the day they gave original report of the first quarter GDP. Could you see from this chart how they build this upward ladder to lure innocent people in to join this “rush to pick up the peak fruit” movement?