Tuesday, November 25, 2008

Even GDP Numbers Are Now Showing A Widening World Recession

The U.S. economic recession which began in the summer of 2007 is starting to manifest itself in published GDP growth data.

The Financial Times and the Wall Street Journal report that GDP fell .5% in the third quarter. Since inventory investment added almost one percent to GDP growth, final sales must have fallen at close to a 1.5 % annual rate. Read details in the press release on the BEA website.

Import prices rose almost sixteen percent. For a country importing close to two trillion dollars of goods and services, that is equivalent to America's losing rough $300 billion in purchasing power. Talk about negative stimulus to aggregate demand!

Norma Cohen, FT's Economics Correspondent, reports the Organization for Economic Co-operation and Development (OECD) "is now forecasting four consecutive quarters of contraction for the US, countries using the euro, and OECD nations as a whole."

3 comments:

Rafe A. Schaefer said...

The US/Eurozone/UK recession data and forecast provides quite the bleak picture for the next four quarters before growth moves back into the positive direction. This is being seen quite apparently in other areas of the economy as well. As I've been applying to graduate school, many admissions committees note that they expect the number of applicants for the class beginning in Fall of 2009 to be quite larger than anything ever before.

The number of applicants applying for graduate programs moves somewhat inversely to the way the economy moves. If the economy is booming and high paying jobs are readily available, individuals are more likely to enter the workforce immediately. However, as job conditions look bleak, grad. school becomes a very enticing offer for individuals looking to raise their stock while riding out the recession.

T. Rowland said...

It's good to know we can admit we are in a recession and try and dig ourselves out but the rise in import prices is disturbing. Especially when you look at the purchasing power lost. However, it shows how the current crunch is affecting prices across the board including imports. I do agree we will be in recession for the projected four quarters and beyond. It doesn't seem like anyone has a good idea how to get us out of it, so this one could be painful.

Gentz said...

Well it is now out that we have been in a recession since December 2007. It is somewhat crazy that the White House and every important economic person in the government has been telling us that the economy is in great condition. I hope that we (The American people) will receive an apology for their lies while on national TV. Hopefully one day we can put a little trust in our government.