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U.S. Economy Weakening, though Population is Increasing

Recent surveys, sales and production indicators and economic pointers continue to point to a slow, weak and/or contracting U.S. economy.

Previous posts here, here and here, all predicted this unfolding situation. Initial 2015 GDP predictions by the major pundits were in the 3-4% growth range. Now, however, the analysts are revising their predictions:

Wall Street analysts are now marking down estimates for second-quarter growth, and many expect the first quarter to get revised down into negative territory. J.P. Morgan economists see a growth rate of just 0.5% for the first half. -WSJ, May 15, 2015 6:32 p.m. ET

Keep in mind the reporting of quarterly GDP is somewhat misleading. Publicized GDP growth rates are annualized, meaning if the GDP growth rate for the first three months of the year (the first quarter) was an actual .75%, the press reported number would be 3.0% (.75 X 4 quarters for an annualized number). But to highlight the natural bias of economists, if the GDP was a negative for the quarter (as the first quarter of 2015 will eventually show), that percentage contraction will NOT be annualized, but will be reported as for that quarter only.

Though weather, port strikes and a myriad of other items do impact the economy to some degree, they cannot mask the fact that anemic growth, combined with periods of contractions, are now part of the American economy.

The amateur economistLastly, GDP economic growth directly tied to natural population growth should be considered a fair baseline and judge of economic performance. If the U.S. is growing in population at .75% per year – all things being generally equal, one would expect the GDP to increase at least .75% as well. Below that number would indicate a U.S. population that is losing wealth. A GDP growth number over population growth would indicate wealth creation (on some level).

Using this very rudimentary calculation, the current U.S. economy is not keeping up with its own population growth. Not a good sign or signal for the near future – despite what the economic pundits may say.

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