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Friday, July 29, 2016

Now Back To Reality -- GDP is Barely Growing

The government released the first numbers for economic growth in the second quarter of 2016.  The "experts" told us that they estimated growth of just under 3%.  The actual growth number was 1.2%.  It is a terrible number, particularly since it come after two previous quarters of next to no growth.  The average growth rate for the last three quarters is less than 1%.  It is the worst nine month period since the big recession in 2009.  Many economists expected a bounce in the economy in the second quarter as things recovered from what they thought was a momentary slowdown during the previous six months.  Obviously, these economists were wrong.  The economy is slow and not recovering. 

Even worse news is the reason why the GDP grew so slowly.  There was a major decline in investment by business in all possible phases.  Construction of new plants and buildings declined.  Investment in new equipment for business declined.  Business investment in inventories declined.  Still worse, these declines in investment happened even though personal consumption grew.  That means that even though consumers were buying, business was not investing.  The business community does not see a continuation of future growth.  Remember business investment is the single biggest producer of future economic growth.  That means that today's report is actually an indicator that a future recession is just around the corner.

These GDP numbers are really bad news for Hillary Clinton and the Democrats.  They show that the American economy cannot withstand Hillary's "plan" announced last night.  We Hillary to enact even half of the huge tax increases that she calls for, a recession would be inevitable.  It's as if she is campaigning with the slogan "Help Me Destroy Jobs!"  I do not know if this truth will get through the media maze and all the distractions.  It had better, however.  Otherwise, the economic future looks bleak.

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