US Bureau of Economic Analysis and GDP

When we think about GDP, it is important to determine the country’s output. When I say the country’s total output I mean everything produced by the people of the country, as well as all the companies within the country. Today I will be discussing to you all the recent history and expected future conditions of the American economy.

The United States is the leading economy across the globe and experienced several tribulations in the recent past following the 2008 global recession. Despite these recent challenges, there are expectations among policymakers and financial experts that the country will experience solid economic growth. Actually, financial analysts have stated that the U.S. economy will be characterized by increased consumer spending, increased investments by businesses, reduced rate of unemployment, and reduction in government cut. Some analysts have also stated that the country’s economy will strengthen in 2014 with an average of 2.7 percent or more. However, these predictions can only be understood through an analysis of the current macroeconomic

As the newly appointed President of the local Chamber of Commerce, I will make a presentation of the trends, statistics and forecasts of the U.S Gross Domestic Product to give the business leaders an idea of what is the outlook of our economy. Based on the economic statistics from the Bureau of Economic Analysis (BEA) among other sources, I will provide a detailed up-to-date image of the United States economy.

From December 2007 to June 2009 the United States economy was confronted with its greatest challenge since the Great Depression. The financial crisis was so great that it was coined the term the Great Recession. Many factors contributed to the collapse of the U.S economy; such as, the financial crisis (2007–08), U.S. subprime mortgage crisis (2007–09), a shrinking Gross Domestic Product (GDP) growth rate and unpresented unemployment rates. A recent (2016) article in the Wall Street Journal entitled “Post-Recession Rethink: Growth Potential Dimmed Before Downturn” examines the economic aftermath of the Great Recession.

Ever since World War II the United States has experienced many recessions. There have been many terrible recessions that have hit this great country hard. What is a recession people may wonder? A recession is a significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country 's gross domestic product (GDP). Although, the recession of 2001 wasn’t a dramatic and horrible recession, it was the end of the longest expansion our country had seen since WWII. The expansion following the recession of 1991 was 10 years up until this recession of 2001. Furthermore, this recession was difficult and was hard to deal with and overcome, because during the time of this recession our country experienced 9/11.

In December 2007, the United States experienced a time of rising unemployment and declining GDP (gross domestic product) that lasted until 2009. This period was dubbed the Great Recession due to the severity of the negative impacts. The U.S. National Bureau of Economic Research defines a recession as a “period of at least two consecutive quarters of declining levels of economic activity” (Krabbenhoft), and during the time span between 2007 and 2009 GDP decreased by 3.5 percent and unemployment rate increased more than 5 percent. The gross domestic product indicates the total value of goods and services produced over a period of time, so production and consumer spending decreased drastically. The government attempted to alleviate the unemployment rate and increase economic growth by creating what’s known as a multiplier effect. The multiplier effect occurs when there is an increase in final income from the increase in spending from the initial stimulus. Consumer expenditures make up 70 percent of GDP, and

The Great Recession has been one of the largest fiscal crises of the current generation and the economic downturn that resulted has been recorded as the longest and most severe since the Great Depression ("The Impact of the Recovery Act on Economic Growth"). Although the economy has reached a stage of recovery, the effects of the recession to real GDP can be seen in business cycle figures for the period. Shown in Table1, the change to real GDP was measured at -3.9% for the recessionary period. This step into recovery was brought about by an aggressive stimulus package based on the principles of Keynesian economic theory

Gross domestic product, the largest evaluate of products or services created in the U.S., increased at an yearly rate of 4.6 percent in the second quarter, that changed past 4.2 percent reading and equaled the strongest quarter of the five-year-old recovery, related the final three months of 2011. Consumers are stepping up spending only slightly, as a increase in job development this year has yet to convert into considerably higher salaries. Temporarily, a lenient global economy remains to weigh on the U.S. as dropping growth in Europe and Asia restrains American exports.

This result again supports both assertions that the 2008 recession follows the same manner of change as the preceding recession, and supports the assertion that the change in 2008 was of a much larger magnitude compared to the change that occurred during the 2001 recession, with the total change during the 2008 recession being equal to -7.26% compared to a -2.84% change for the 2001

Reduction in real exports (real imports, which are a subtracted in the GDP calculation declined as well), accounted for a significant portion of the economic decline, followed by a decrease in inventory investments, non residential fixed investments, residential investments and a cutback in state and local government spending. The GDP 's only supporter so far this year came in the form of increased real personal consumer expenditures, which grew from 2.1 percent from the previous estimate of 2.0 percent, mainly reflecting sharp increases in services and slight increases in other areas. The BEA states, "The downturn in the percent change in real GDP, primarily reflected a downturn in exports, a larger decrease in private inventory investment, and downturns in nonresidential fixed investment and in state and local government spending that were partly offset by an upturn in federal government spending" (2014). The table below, prepared by the BEA, shows precisely which components of GDP rose and tumbled in Q1 2014.

GDP growth returned in the third quarter of 2009, expanding at a 1.6% pace, followed by a 5.0% increase in the fourth quarter.[65] Growth continued in 2010, posting an increase of 3.7% in the first quarter, with lesser gains throughout the rest of the year.[65] Overall, the economy expanded at a rate of 2.9% in 2010.[66] The country's GDP consistently grew by about 2% in 2011, 2012, 2013, and 2014.[67] However, median household income (adjusted for inflation) fell to $53,600 in 2014, down from an inflation-adjusted $57,400 in 2007, just before the start of the Great Recession.[67] The poverty rate peaked at 15.1% in 2010 but declined to 13.5% in 2015, which is still higher than the 12.5% pre-recession figure of 2007.[68] The relatively small GDP growth rates in the United States and other developed countries following the Great Recession left economists and others wondering whether U.S. growth rates would ever return to the levels seen in the second half of the twentieth century.[69][70]

Our study for U.S GDP covers the period of time from 2000 until 2015. During this time, the U.S economy has been in several economic recessions, a significant drop in the U.S. stock market, increasing in the national debt, and low Unemployment rate. In addition, household saving dropped by more than $10 trillion during the recession . (Figure 2-1). This trends affected the U.S economy’s productivity, slow the consumers’ spending, and reduced the U.S. export. However, since 2013, the economy growth has been in continues improvement despite the fact that the national debt is in increase. The strong raise of the economy brought so many jobs to the market, increase the consumer spending which positively affect the auto industry.

The current rate of GDP growth, according to the Bureau of Economic Analysis, is 2.7% (for Q3), and it was 1.3% in Q2 of this year. This rate reflects relatively slow growth, with challenges remaining in the domestic market and with sluggishness in Europe suppressing exports to that region. The rate of GDP growth is predicted to slow to a decline of 0.5% between Q4 2012 and Q4 2013, the US re-entering recession, according to the Congressional Budget Office's projections. These projections are based on the provisions of the Budget Control Act being enacted, though any observers are doubtful that this will occur.

The economic climate in the U.S. today suggests a robust labor market despite sharply declining industrial output. In fact, many have speculated that the government is underestimating economic growth, as suggested by the growth in wholesale inventories. “With the stock market at an all-time high, with unemployment at 5.8 percent, last quarter economic growth at 5 percent, relative mild consumer price-inflation, and the bonanza of cheap gas, there is increased optimism about the U.S. economy” (Chafuen).

Consumption and government spending both increased from the previous year. The big weaknesses for Real GDP growth came from business investment and exports decreasing from the previous period.