Thursday, September 1, 2011

Gross Domestic Product


It is a measure of a country's wealth, standard of living, and economy.  A country's wealth is not determined by how much gold it has, or money it has in the bank, it is determined by the total amount of stuff it makes, sells, buys...economic activity.

GDP is relative to many things, and is only one of numerous factors.  But this is the number many use to determine if we are in a "recession."

2 Quarters of negative GDP = recession.   (Economists didn't want to get fired tied down to one number, so they also measure 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."

GDP = Private Spending + Gross Investment + Government Spending + Exports - Imports

GDP was .4% in January, February, March of this year.
GDP was 1% in April, May, June of this year.

Opinion:  Is Obama responsible for the red in the chart?  No.  Is Obama responsible for the last two columns.  Yes.

Roughly 70% of GDP comes from Private Spending (every single dollar we spend, rent, food, sneakers, vacation...)

In the last 40 years, Discretionary Spending as a percentage of GDP peaked at 13% (1968) and is much lower now.  Discretionary Spending is the amount the government spends after "Mandatory Spending" like Medicare, Medicaid, Social Security, Debt, etc.

So - if you were President.  Would you think that your "Jobs Program" would focus on Consumer Spending or Government Spending?

This President doesn't even know how to save his own job - let alone yours.

1 comment:

LL said...

I think that he plans on reading from his teleprompter to save his job. Whether he keeps it or not is a function of how stupid the American people are.