RightChange: GDP Shrinks to .01% for Q4

“The economy is getting stronger!” “It’s outpaced Reagan’s economy.” “The private sector is doing fine.” These are all statements from President Obama and his team during the campaign trail. The majority of the American public must have believed him as they elected to keep the Obama economy for another four years. Why, we’ll never understand. Take a look at what the first Obama economy looked like. (Information courtesy of the House Committee on Ways and Means).

Despite those tepid numbers, the majority of Americans believed that tax hikes, borrowed money, and Stimulus would be what sealed the deal on a booming economy. On December 12, 2012, Bernanke announced he would continue to print money. On January 2^nd, 2013, the Republican-led House voted to increase taxes on anyone making  $400,000 and over. And On January 3^rd, Obama signed the bill that would increase government spending by $332 billion over ten years. Yes, Obama’s economic equation of tax hikes + government spending + printing money equals a sound economy is what Americans voted for.

Clearly, the GDP report for quarter 4 proves that may not be working:

“The Commerce Department reported GDP fell 0.1 percent in the fourth quarter. Weak conditions abroad and flagging U.S. competitiveness caused exports to contract by $27 billion, and businesses anticipating a further slowdown slashed inventories by $40 billion.

Friday, forecasters expect the Labor Department to report the economy added 160,000 jobs in January; however, employment tends be a lagging indicator and flat or negative GDP growth will cause unemployment to rise sharply in the months ahead.

The tax and spending package implemented January first reduces prospects for improved growth and jobs creation, as the U.S. economy and workers continue to suffer from insufficient demand.”

To put this into perspective, quarter four was during all of the Christmas and retail spending increases. These few months are normally when the economy sees a tick up in growth. Not this time. Welcome to the Obama recovery otherwise known as, the new normal.

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