Posted on 07/29/2024 1:12:07 PM PDT by Red Badger
Persistently high government spending under the Biden administration propped up U.S. economic growth in the second quarter of 2023, economists told the Daily Caller News Foundation.
Real gross domestic product (GDP) grew 2.8% in the second quarter of 2024, far higher than economists’ expectations of 2.1%, according to the Bureau of Economic Analysis (BEA). However, a significant portion of the recorded growth in the quarter was driven by government spending, both directly through a rise in government expenditures and indirectly through growth in sectors that benefit heavily from taxpayer dollars, according to economists who spoke to the DCNF.
“Government spending has played a large role in much of the economic growth seen over the past few years,” Peter Earle, a senior economist at the American Institute for Economic Research, told the DCNF. “The problem with that, of course, is that government spending is redistribution: taxing certain citizens or floating more trillions of dollars in debt to send those dollars to other citizens. It’s not innovative entrepreneurship or other productive commercial undertakings.”
In the second quarter of 2024, government consumption grew 3.1%, up from 1.8% the quarter prior, and was responsible for approximately 19% of the quarter’s total growth, according to the BEA.
“We’re borrowing $1.8 trillion this year to get 2.8% growth this quarter, and we got 1.4% last quarter. So we’re getting approximately 2.1% growth by spending almost $2 trillion,” Michael Faulkender, chief economist at the America First Policy Institute, told the DCNF. “How do you not get 2% GDP growth when you’re borrowing $2 trillion? It is not an accomplishment… It’s not a reflection of sustainable economic policy.”
E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF that even the increase in consumer spending, which totaled 2.3% in the second quarter — up from 1.5% in the previous quarter — was also partially driven by government expenditures.
“Government purchases do not include all of government spending. When government takes money from one person and gives it to another in the form of welfare, for example, it gets counted as consumer spending,” Antoni told the DCNF. “Currently, about $4.2 trillion of annual consumer spending is government transfers, illustrating how total government spending is much larger than the GDP report indicates.”
Consumer spending in the second quarter totaled an annualized $19.38 trillion, meaning over one-fifth of personal consumption expenditures come from government transfers, according to the BEA.
The U.S. national debt currently sits at around $35 trillion as of July 29, an increase of around $7.3 trillion from when Biden first took office on January 20, 2021, according to the Treasury Department.
“What were the big things that contributed to the GDP number? You have a big increase in health care spending, which is consistent with all the jobs we’ve seen in health care, and a lot of that is paid for by government,” Faulkender told the DCNF. “You have money going into transportation investment, which is deficit-funded [Inflation Reduction Act] money [and] you had the increase in government spending.”
Healthcare spending was responsible for approximately 16% of GDP growth in the second quarter, according to the BEA. In 2022, government sources accounted for just over 45% of healthcare spending, according to the Congressional Research Service.
The healthcare industry has also underpinned recent U.S. job gains, accounting for 49,000 of the 206,000 nonfarm payroll jobs added in June, and approximately 29% of all jobs added in the last twelve months, according to the Federal Reserve Bank of St. Louis (FRED).
GDP figures also benefited from sustained consumer spending despite the personal savings rate falling from 3.8% in the first quarter of 2024 to 3.4% in the second quarter, far from its peak of 32% during the COVID-19 pandemic, according to FRED.
The second quarter also brought record credit card delinquencies. At the end of March, 2.59% of credit card balances were more than 60 days overdue, more than double the lows seen during the COVID-19 pandemic.
“It’s very surprising that U.S. consumers are continuing to spend, even as savings rates are plummeting, unemployment is beginning to tick up, and 30/90 day payment arrears on several types of consumer loans are rising,” Earle told the DCNF. “It’s difficult to say where it’s coming from — maybe home equity loans, maybe buy-now-pay-later plans, or maybe the data we use doesn’t accurately capture consumer spending wherewithal — but in any case, it’s surprising that it has gone on for as long as it has, and the runway must be running out. Inflation is still almost twice what it was four or five years ago, interest rates are much higher and the pandemic stimulus savings are gone.”
Earle and Antoni were also skeptical about the BEA’s topline GDP number, expecting it to be revised down in future estimates, due to the possibility of statistical issues, more complete data and weakness in the manufacturing industry.
“While revisions are standard operating procedure, they balance out in the long run. In other words, some are up, others down, and they average out to zero over time,” Antoni told the DCNF. “That’s not what we’ve seen recently and it’s clear that statistical problems have developed in the post-pandemic world, causing problems with our economic metrics.”
“What we do know is that during the COVID-19 pandemic, GDP revisions were notably more volatile due to unprecedented economic conditions and difficulty in collecting the data,” Earle told the DCNF. “Given the rapid increase in [the unemployment rate for people without jobs who have looked for work in the past four weeks], an upward trend in both initial and continuing claims, and weakness in the manufacturing indices of the regional Fed banks, I suspect that the second and third runs of the second quarter 2024 GDP will be lower, but I couldn’t guess by how much.”
First quarter growth was revised down to 1.4% from an initial estimate of 1.6%, while fourth quarter growth in 2023 was revised up from an initial estimate of 3.3% to 3.4%, according to BEA data.
“All — or nearly all — the apparent growth in the economy has really just been pulling future growth forward to today, at the expense of future growth,” Antoni told the DCNF. “It’s like when a consumer goes deeply into credit card debt to get a higher standard of living today, only to be drowning in debt payments tomorrow.”
The White House did not respond to a request for comment from the DCNF.
They’re trying to smash the country anyway possible. Open borders, economic voodoo, foreign policies and war where we win nothing but death and debt...Where foreign policies look more like sabotage...
On and on.
Didn’t Biden/Harris campaign on the promise of spending America into prosperity?
Obama tried the same thing. Didn’t work then, either.
The printing presses have been running on overtime since 2008.
The day of reckoning arrived 2 years ago....
The worst is yet to come
Recorded growth in the quarter was driven by government spending.
And when they run out of money tax the hell out of everyone and start spending again.
Only plan the democrats ever and and still doesn’t understand why it never works.
I’m from the government I’m here to help you.
We shouldn’t do anything about it. Let it crash. Like Greece. Then it’ll be possible to do austerity afterwards.
If we're smart, we can postpone the inevitable by 10 years.
If we're stupid by electing Kamala Harris as the next POTUS, the house of cards may collapse as soon as 2025.
“The essential act of war is destruction, not necessarily of human lives, but of the products of human labour. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent.”
― George Orwell, 1984
“Oceania had always been at war with Eastasia.”
― George Orwell, 1984
“...the object of waging a war is always to be in a better position in which to wage another war.”
― George Orwell, 1984
“The war, therefore if we judge it by the standards of previous wars, is merely an imposture. It is like the battles between certain ruminant animals whose horns are incapable of hurting one another. But though it is unreal it is not meaningless. It eats up the surplus of consumable goods, and it helps to preserve the special mental atmosphere that the hierarchical society needs. War, it will be seen, is now a purely internal affair. In the past, the ruling groups of all countries, although they might recognize their common interest and therefore limit the destructiveness of war, did fight against one another, and the victor always plundered the vanquished. In our own day they are not fighting against one another at all. The war is waged by each ruling group against its own subjects, and the object of the war is not to make or prevent conquests of territory, but to keep the structure of society intact. The very word “war,” therefore, has become misleading. It would probably be accurate to say that by becoming continuous war has ceased to exist. The peculiar pressure that is exerted on human beings between the Neolithic Age and the early twentieth century has disappeared and has been replaced by something quite different. The effect would be much the same if the three superstates, instead of fighting one another, should agree to live in perpetual peace, each inviolate within its own boundaries. For in that case each would still be a self-contained universe, freed forever from the sobering influence of external danger. A peace that was truly permanent would be the same as a permanent war. This—although the vast majority of Party members understand it only in a shallower sense—is the inner meaning of the Party slogan: WAR IS PEACE.”
― George Orwell, 1984
10????
It’s already been 16 years!!!!
bush didn’t slow the presses...
fubo didn’t slow the presses...
President Trump didn’t slow the presses...
And biteme kept the good times a rollin...
Time expired 2 years ago
Basically, it’s a fake economy.
Growth based upon government spending, and the secondary growth based upon government spending.
We have inflation (probably 20% per year) from printing money for economic growth, which is at 2.8% (best case scenario).
Seeing that equation, we are losing ground about 6x for quality of living. Add in the debt, and the payback for the Biden/Harris ‘economy’ is going to look angry.
Japan tried it in the 90’s.
Didn’t work for them either.................
We get away with it because of the dollar status as the reserve currency. At this point, there are not really any alternatives. It was supposed to be the Euro but their economy is quite socialist so it didn't take off.
But eventually, we'll have to pay the piper.
There's zero immigration in Japan so their demographics have collapsed. And the Japanese Yen is not the reserve currency.
I do not recall those words. However, not one person I know ever knew spent his/her way to prosperity. Look at how many times Biden has depleted our nation’s gas reserves to win political favor. He is in fact trashing our military’s combat readiness/ability to defend us and defeat any enemy with his actions. How do planes, boats, tanks, and many other military must haves function without fuel?
They can’t print money. That would demolish the US dollar quickly. They BORROW to spend in excess. Now the interest on debt is biggest item in budget.
The Ukraine war is funding our economy.
(if they LET him win).
If I were him I'd pull a High Plains Drifter and ride out of Lago Hell and into the sunset.
It's too evil/corrupt...will take divine intervention at this point.
The Federal Reserve went into the red 9-28-2022 & as of 6-19-2024, they were down $176 BILLION in LOSSES.
WHAT DOES THE FED RESERVE DO THAT COULD ACCOUNT FOR SUCH LOSSES IN ONLY 2 MONTHS???
thread 4247038
If Kamala “wins” she will double down on obama’s plan.
If they allow Trump to win, they will pull the plug and wreck the economy and blame him on the deep depression.
McCain stupidly suspended his campaign in October 2008 to rush back to DC to work on the financial crisis, while Obama stayed on the campaign trail and won the election. The Democrats are going to sabotage the economy and then blame it on Trump. Then they campaign on it to reclaim Congress in the 2026 mid-terms.
-PJ
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