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Discussion: (12 comments)

  1. Michael Smith

    There is no mystery here to me.

    1) On-going, every increasing, massive government spending, which is always done, one way or another, at the expense of private spending plus 2) relentless regulation on top of regulation with constant threats from entities like the EPA who declares its intent to “shut down” coal-fired power plants and damn the explosion in electricity costs that will result plus 3) an Obamacare “law” selectively enforced that implements dozens of new taxes and imposes horrible new burdens on doctors and has coerced millions of Americans into far more expensive healthcare plans plus 4) an openly hostile-to-business President that lies when he sees fit and picks winners and losers and 5) a Justice department determined to punish America’s most successful business with threats of anti-trust prosecutions — just to name a few things.

    The capacity of America’s productive people is limited and cannot carry an infinite government burden.

    1. Thomas Sullivan

      Another gigantic government cost upon the economy is the plain cost of regulation compliance; add to that the disruption cost, keeping business from trying new things because they are intimidated and discouraged. Government spending + compliance costs are well over half of GDP. The business of the US is government.

  2. I’ve often thought that GDP growth should be calculated as it is minus the rate of inflation. So if we have 3% growth and 2% inflation, GDP has a net growth of 1%. At minus 2.9% with inflation running at about 1.5%, that would yield a minus 4.3% real GDP growth.

    Inflation is not adding wealth or value, it is subtracting that.

    1. Bruce, the GDP reported IS calculated minus inflation. It’s real GDP.

      So real GDP dropped at a 2.9% annual rate in Q1. This means it fell about 0.75% (again in real terms,) in 2014 Q1 vs 2013 Q4.

  3. Okay, minus 4.4% … slip of the finger.

  4. The liberal agenda and Monetary and Fiscal policy since Greenspan is what has destroyed this country. The economy and markets cannot function when interventionism takes control. Only those closest to that agenda benefit.

  5. mesaeconoguy

    There is zero mystery here at all: the economic policies of this administration are a total disaster, and extremely dangerous.

    The Obama Administration has laid waste to the private sector, and created a zombie dependency economy with large quasi-fascist and nationalized interests dominant, and zero small business and entrepreneurial activity. What little activity is taking place is largely dominated by unproductive reshuffling of resources meant to deal with the massive new regulatory state.

    The rise of this fourth estate is an extremely dangerous development, and we may have no opportunity to shrink or eliminate it.

    When you saddle the economy with terrible and wasteful regulation, and restrict financial activity as has been done the past 5 years, you do not get robust sustainable economic growth, even and especially when malinvestment in “green energy” and other boondoggles.

    And the rest of year economic predictions remain wildly optimistic, from 3 to 4% in the remaining quarters. Not a chance in hell.

    I will repeat my call from 2010, after Obamascare passed: as long as you want a giant bloated Euro-style bureaucracy and huge entitlements like Obamascare, you will never see full-year GDP growth above 2% again.

    Let’s also not forget that the Obamascare employer mandate has been postponed until 2016, so that weight is yet to be felt fully, and if Weeping Cheeto Boehner’s lawsuit against Obama is successful, that delay may not last, which will further depress this gasping economy.

    1. I agree. Now, the question is, can market forces correct his?

      By market forces, I mean US private sector dynamism that has not yet been snuffed out, combined with market forces from China, etc….

      Europe itself is even worse off. The Eurozone is seeing under 1% ‘real’ GDP growth, and only 1% nominal GDP growth.

      1. mesaeconoguy

        No. There is no dynamism left. That was the major change of the last 5 years.

        Europe is indeed worse off, precisely because they have enacted stifling regulation and enormous entitlement bureaucracy for a longer period. They are lost, as is Japan, who is in a demographic death-spiral.

        The only way you could possibly see any US growth would be to literally wind the clock back to 2007, prior to the enactment of all legislation of the past 7 years. You would need to wipe out all legislation from this most recent period, and that will never happen. We now have mass government dependency, and mass corruption. The entitlement and regulatory state has finally taken over, and it is about to implode of its own weight.

  6. Missourimule

    Speak the words. It shouldn’t be difficult, and in time, everyone will acknowledge. B-a-r-a-c-k O-b-a-m-a

  7. Joe Bannister

    The Fed suffocation of the economy means a bad event—hard weather—can inflict a terrible toll. We do not have robust growth.
    The Fed has not been “easy”. For five years the inflation-hysterics have screamed the Fed is easy, but we have record-low inflation rates. That’s like an anorexic insisting she eats too much, just happens to lose weight.

  8. Forget ‘real’ GDP. Corporate earnings, revenues, and hiring decisions are a function of nominal GDP.

    Nominal GDP contracted -1.7% in Q1. That is very recessionary. Q2 has to be at least +8% just to have an average of +3.2% in 1H. And that is hardly good.

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