Saturday, July 16, 2011

GDP: Are we in decline and, if so, who's to blame?

I have wondered, as many of my readers have, about the apparent decline of our economy in recent years. Many, especially the far right in the Republican Party, have blamed President Obama for this and many on the left have blamed George Bush for this. Are these points of view true? Let's look at the facts over time. The fact is that our economy has been in decline now for many years. The first chart below shows GDP for the period of 1960 to 2011. I have drawn red lines at the top GDP levels after eliminating the highest value for each line segment. So for the period of 1960 to 1979, I did not draw the line at the one highest point of 15%, but rather of the several lower ones at 10%. Imagine that, a several quarters of 10% GDP or greater. back then we were just like China today!

You can see from the 3 red lines that we have steadily dropped in GDP and that the years from 2000 to 2011 are the lowest GDP periods in the past 50 years. In fact the lower GDP period has mostly been for all of the years of the Presidency of George W. Bush and the years with President Obama. The facts are still unknown whether President Obama will be any better or worse than President George Bush was. Right now they look the same to me, but there isn't enough data to be conclusive. Let's look a little closer at the years from 2000 to 2011 and see more closely where we are. The next chart below shows this period. I'll let you interpret what you are observing here. But before you look, be aware that your point of view will determine what you see! Be honest with yourself here, as it is a great learning point.

What have you learned? Can you be honest with yourself and be an objective observer or are you biased to your original point of view. I say this to both Republicans and Democrats. Dare to make a comment on your learning? I invite you to make a comment below. But let us know if you are a Republican or Democrat in those comments. It makes the comment so much richer and interesting.

One last chart. below, I just had to post and this one is of GDP since 1947. It is similar to the chart from 1960. Charts constructed from data

Thanks! And while you are at it, take my Mini poll on the right margin.

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Anonymous Anonymous said...

Brian Belski, chief investment strategist for Oppenheimer is saying that "The next great Bull Market is soon to begin." American companies are the best positioned companies right now for the next cycle. He is saying that investors should be overweight stocks for the next ten years.

Since TZA had a recent reverse split. I am now looking at a share price of over $100 before I am seeing a point of break even. After seeing the market shrug off any and all negative news, I am seeing my purchase in TZA a total loss and a very bad mistake. I should had continued to hold my shares in stock.
very painful mistake

1:47 PM  
Anonymous Jolly Roger said...

I think that you have to go beyond partisan identification here, and look at actual policy. Many have charged that policy-wise, the present Presidency is the third term of George W. Bush, and I believe they are right. The so-called "stimulus" that contained a few crumbs for 98% of us (and a goodie bag of tax givebacks for the rich) is an excellent example of this. The fact that the Bush-era tax cuts were left in place (and they are directly linked to the economic situation we find ourselves in right now) is another example.

A turd with a "D" painted on it will smell every bit as bad as a turd with an "R" painted on it.

2:13 PM  

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