We Are About To See A Great, Big Debt-Fueled GDP Number For The 2nd Quarter, But There Is A Catch…”we are already on a path to national suicide.”
By Michael Snyder
TheEconomicCollapseBlog.com
July 29, 2018
What kind of number for GDP growth in the 2nd quarter will we get on Friday? The market consensus is somewhere around 4 percent, but there are many out there that are expecting a number above 5 percent. The last time we witnessed such a number was during the third quarter of 2014 when the U.S. economy grew by 5.2 percent. If Friday’s GDP figure is better than that, it will be the best report that we have had since 2003. But let’s keep things in perspective. In seven of the last 10 years, GDP growth was much lower than anticipated in the first quarter and much higher than anticipated in the second quarter. It looks like that pattern may play out again in 2018, and analysts are already warning us to expect a much lower number for the third quarter.
And even though we have seen good quarters before, we still have not had a full year of 3 percent growth since the middle of the Bush administration.
Last year the U.S. economy grew by only 2.3 percent, which would be a horrible figure even if the government was using honest numbers. According to John Williams of shadowstats.com, GDP growth for 2017 would have actually been negative if honest numbers were being used.
So let’s not get too excited over one quarter. According to the official government numbers, the U.S. economy has not grown by at least 3 percent on an annual basis in 14 years. That is the longest stretch in all of U.S. history by a wide margin, and it is going to take a really good second half to break that string this year.
But that isn’t stopping people from hyping tomorrow’s number. According to White House economic adviser Larry Kudlow, we should see a number “in the 4 to 5 percent zone”…
“You’re going to get a GDP number on Friday that’s going to be a very impressive number. Some people are in the 4 to 5 percent zone,” Larry Kudlow, the White House economic adviser, told CBS This Morning.
And he is probably right.
In fact, we might see a number that is even better than that.
As CBS News has noted, the second quarter came after the new tax cuts were implemented but before the trade war started…
The second-quarter figure will be widely seen as a referendum on the GOP tax cuts of late 2017. This quarter benefits from a timing sweet spot, coming after the deficit-busting cuts trickled through the economy, but before the effects of the White House’s protectionist trade policies are fully felt.
If we get a really good number, it may actually be bad news for investors.
As Marketwatch has deftly observed, a high GDP growth number may affirm the Federal Reserve’s narrative that they need to keep raising rates in order to keep the economy from “overheating”…
Ultimately, a reading that comes in too hot could fuel expectations that the Federal Reserve may need to ramp up its pace of rate increases, with the possibility of a further two rate increases in September and December likely to tamp down too-hot growth. That could knock bond prices lower, conversely pushing rates up and pressuring equity markets lower as investors worry about rising borrowing costs.
Ultimately, most of the analysis that you are going to hear about this GDP number is a load of nonsense.
The only reason why the U.S. economy is showing a little bit of growth is because we are on the greatest debt binge in our history.
When Donald Trump entered the White House the U.S. government was 19.9 trillion dollars in debt, and now that figure has ballooned to 21.2 trillion dollars in debt.
If we had not added 1.3 trillion dollars to the national debt over the past year and a half, there is no way that the economy would be growing right now.
And to be honest, it wouldn’t be too difficult to ramp up GDP growth to 10 percent. All we would have to do would be to borrow and spend enough money.
So why don’t we do that?
Well, it is because we are already on a path to national suicide. It is being projected that our national debt will hit 30 trillion dollars by 2028, and neither the Republicans nor the Democrats seem concerned about doing anything to alter this trajectory.
If we do get to 30 trillion dollars in debt and interest rates return to their long-term averages, we will be paying more than 1.5 trillion dollars a year just in interest on the national debt and our nation will be financially destroyed.
The Rest…HERE
