U.S. GDP is growing

The annualized GDP growth rate in the second quarter was 1.9 percent. To confirm: the economy is growing, not shrinking. That's really good news, and despite everything else you hear, the smart folks at the Federal Reserve under Ben Bernanke's guidance seem to have done a masterful job at avoiding a recession in 2008.

The best analysis of the GDP numbers you are going to find is Jim Hamilton's blog. Don't waste your time reading anything else I (or anyone else) have to say.  Just go to Jim's blog.  Seriously.  Go.

Comments

[Shawn Ritenour]

Tim,

Note the following, however, from the chart that accompanies Hamilton's analysis:

The two components that contributed the vast majority of GDP expansion were consumption spending and government spending. Increases in these two sectors are not the way to promote either long run or short run growth.

Best wishes,

Shawn Ritenour

[Todd]

I agree with Shawn.

I'm trying to educate myself on these economic issues, but the "stimulus" checks seemed like a shot in the dark. Getting the money is nice, but really, what was the point? To bump up GDP in one quarter? Please, someone explain this to me.

Understand that I would always choose having the money in the public's hands over the government's. However, if the government is running a deficit, where are they getting this money to "give away."

Again, the reason I've subscribed to Growthology is to help me learn about economics etc. So any input from the readers is greatly appreciated.

[Lucas Engelhardt]

What was the point of the stimulus checks? Well, the cynical side of me says "politics". The less cynical side says "bumping up GDP for a quarter". Naturally, if we believe that government policy should be used to stabilize the economy, then giving GDP a little upward bump today (when it would be falling otherwise) is sensible. Of course, that leaves whether "stabilization" is really a sensible policy goal in the first place. If we're interested in economic growth, I'd suggest that the answer is "no". Not that the government should intentionally foster instability, but government interference in the workings of the economy can create inflexibilities which will hamper growth (which is, by nature, a process of change).