Posted on 07/30/2018 10:14:00 AM PDT by SeekAndFind
For the most part, reporting on 2nd quarter growth has been pretty decent. But I haven’t seen clear explanations of why one quarter’s growth tells us so little about longer-term growth prospects. I’m sure that reporters get it; maybe they assume that readers already know (a very bad assumption), or maybe they’re afraid of sounding too technical. But anyway, it seems as if there’s a gap worth filling; so here it comes.
The key point when you look at real GDP is that the economy’s actual output depends both on its capacity – the amount it is capable of producing on a sustained basis – and the rate at which it is using that capacity. That is,
Output = capacity * capacity utilization
CBO actually produces an estimate of capacity – “potential GDP” – which you can argue with, but is a useful benchmark. And you can look at the ratio of actual GDP to potential, which is an indication of how hot the economy is running:
Why does capacity utilization fluctuate? Mainly because the economy sometimes suffers from periods of inadequate demand, as it did after the 2008 financial crisis. Sometimes, also, the economy overheats, reaching levels of capacity utilization that will lead to rising inflation. The Fed thinks we’re in or near to that state now, although many economists disagree. Whoever’s right, the point is that there’s some limit to how hot the economy can run.
Now, suppose that for whatever reason capacity utilization rises. This will generate a period of rapid growth. To take a not at all arbitrary example, suppose that capacity is growing at a 2 percent annual rate, and capacity utilization rises 0.5 percent over the course of a quarter. Then growth in that quarter will be at an annual rate of 4 percent
(Excerpt) Read more at nytimes.com ...
Paul Krugman: Why I’m so Stupid
Krugman. That great prognosticator who said the stock market would never recover after Trump’s election.
“If the question is when markets will recover, a first-pass answer is never.”
Paul Krugman = Dumb, Dumber & Dumbest!!!
Who you gonna believe? Me, or your lying eyes?
That’s a pretty nifty essay coming from a guy who was 100% wrong about everything he predicted since Trump got elected.
This is what Treasury predicts for the FULL YEAR and after:
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Treasury Secretary Steve Mnuchin offers his prediction on the future growth of the American economy.
In an interview today Mnuchin said the U.S. is on the path to 3% annual growth for several years.
More here: http://www.oann.com/mnuchin-u-s-economy-on-the-patch-to-3-annual-growth-for-4-to-5-years/
RE: “GDP Won’t Grow by 3%”
Paul Krugman, March 1st, 2017
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I don’t think he is so dumb that he is referring to just one quarter.
Never listen to a guy who has a face like a baboon’s a$$! Give him a banana and you’ll get the picture!
Your comment is particularly appropriate for this most amazing of all morons.
The Democrats desperately hope the economy tanks between now and November. They’re not even trying to hide it anymore.
This idiot said Trump would destroy the economy so how did Trump get 4.1:-)
Thanks to kaehurowing for posting the above reality!
Increased economic activity increases corporate profits and spurs investment to increase capacity leading to new paradigms of growth. The positive cycle of prosperity that miserable people like Kruger deny is possible. They feed on misery.
Krugman. Another “expert” who predicted Trump’s election would result in a recession in 2017.
And he calls himself an “Economist”
Anyone that biased can’t be scientific about anything
Get lost, loser
he is correct- but its not just one good quarter of GDP, its every economic indicator which tells us President Trump is succeeding while keynesians like obama and krugman are complete failures...
"They are never coming"??? What the hell is he talking about? Business investment SURGED. If businesses are investing at 7.3% with a current economic growth rate of 4.1%, then businesses are obviously planning for additional expansion of the economy. They are not going to make capital investments with the expectation that the economy is flat-lining or going to plunge.
This freaking idiot would rather we return to the horrible Obama years.
The hidden gem in those Q2 performance numbers is that FedGov expenditure growth rate is BELOW all the other numbers! It's too bad the FedGov number isn't negative, but at least that's a start. Maybe it's driven by increased defense outlays for modernization and expansion -- I would be very happy with that.
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