The new Gross Domestic Product numbers for the 3rd quarter of 2004 were announced today. It was up 3.7%, more than last quarter’s 3.3% but less than the expected 4.2%
What the heck does that mean? Well, GDP is everything any of us spend minus any money that got sent overseas. Consumer spending + business investment + government spending – trade deficit = GDP.
In consideration of comments made earlier this week, I would like to direct your attention to a paragraph about halfway into that last link:
“It’s a pretty good growth rate, but it may not be enough to create jobs,” said economist Robert Brusca of Fact and Opinion Economics in New York.
Now think about that, business investment is up 11.7% over last quarter, and that may not be enough to create jobs? That’s just one leg of this table, but frankly without jobs, there can’t be increased consumer spending, the second leg of the table — accounting for 2/3 of the economy all by itself, it’s the most important leg. We know that there is anemic job growth and wages rose less than a percent, but consumer spending rose 4.6%. Therefore either savings are being depleted or debt is being piled up. Neither is good for us in the long run.
So money is coming out of our pockets. Where is it going? Much of it becomes corporate profit. Another large chunk goes overseas, aided and abetted by tax loopholes that encourage companies to move their headquarters if not their workforce overseas and a Treasury Department that is of the mistaken belief that a weak exchange rate for the dollar will improve the trade deficit.
You can see both these forces at work in the world of oil. Look at oil company profits, which come from money that was spent by consumers, businesses, or the government. Oh, and don’t forget that the lions share of that oil came from outside the United States, and therefore gets subtracted from GDP. OPEC believes that the United States could single handedly bring down oil prices, by the way.
That’s right, the big oil cartel thinks the little ol’ United States is controlling oil prices, keeping them artificially high.
If you only have time to read one more thing today, let it be these 100 facts, complete with supporting links.