Because GDP is a critical measure of economic growth in the United States, I like to start every term discussing GDP with my students. Gross Domestic Product, or GDP, has many limitations. It doesn’t tell us about unemployment or productivity, or whether economic growth will be sustainable over time. However, it tells us about consumer spending, private business investment, government spending, and net trade. Therefore, GDP is an important measure of economic performance and one of several economic indicators driv
I am skeptical about the 5.7% increase of the GDP in the fourth quarter of 2009. I do not think it is sustainable because, from what I have read and researched, the number is misleading. According to Jason Simpkins of NuWire Investor, “roughly two thirds of the growth came from businesses restocking their inventories”. That means about 3.4% of the 5.7% went to new products that have not been sold yet. So in reality, the GDP growth of the fourth quarter was only about 2.2%.
I do not think that the GDP will increase by much in the coming quarters. Household purchases made by consumers have dropped because of the recession. So many people lost their jobs throughout the year last year and unemployment is still an issue in the United States. I think that people feel threatened by the unemployment rate so they are not spending as much because they are preparing for the worst.
The rise of GDP in the fourth quarter indicates sustainable economic growth. The commerce department announced that the GPD had risen by 5.7 percent, the New York Times indicated that this is the fastest pace that the economy has grown in over six years. In the third quarter of 2009 the GDP rose 2.2 percent after being in the negative percent for a year, I think that this switch to the positive shows that the economic growth is something substantial. The New York Times says biggest factor in the increase is from businesses letting their stockpiles deplete at a slower rate than they have been previously and not because consumers buying more. The large increase of the GDP shows signs of economic growth and I expect that the GDP to stay high, showing the improvement of the economy.
I do not think that a GDP growth of 5.7% in the fourth quarter of 2009 is sustainable because the growth was based on businesses stocking up on low inventory. According to Kimberly Amadeo, “It could drop a point or two by next month, when the second estimate comes out”. Kimberly also states “Real estate and consumer spending actually slowed in Q4. These are needed to sustain any lasting recovery”. With the growth based mainly on business restocking doesn’t mean GDP will continue to grow next quarter. Also with the decline of real estate and consumer spending slowing means that this growth will drop for the first Q1 of 2010. For a sustainable economic growth we need more consumers spending, more investments into business and begin to export more.
The increase of GDP in the fourth quarter of 2009 to 5.7% is due to the contribution of its components like: Private inventory investor, exports and personal consumption expenditures. According to the BEA during that quarter the price index of gross domestic purchases which measures prices paid by us citizens increased to 2.1 % in the fourth quarter compared to 1.3% in the third quarter. During the fourth quarter the percentage of exportation increased also from 18.1% compared to 17.8% in the third quarter. On the other side, private inventories added 3.39% on the GDP during the fourth quarter compared to 0.69% in the third quarter. With all the economic problems faced by this country during the past years I think that to come from -5.4% in the fourth quarter of 2008 to +5.7% in the fourth quarter of 2009 is an example of sustainability.
Dating back from the first quarter in 2008 till the second quarter in 2009, we have been negative for the growth of GDP. Until the third quarter of 2009 with 2.22% and last quarter with 5.7% based on GDP growth rate (recent history). The acceleration in real GDP in the fourth quarter primarily reflected an acceleration in private
inventory investment, a deceleration in imports, and an upturn in nonresidential fixed investment that
were partly offset by decelerations in federal government spending and in PCE, according to the Bureau of Economic Analysis. Having GDP increase positively these past two quarters show a turn around in the economy and in my opinion will continue to grow if things continue the way they are.
THIS BLOG WILL NOT RECEIVE CREDIT, PART OF THE TEXT WAS PLAGIARIZED FROM THE GDP REPORT. NO SOURCES WERE CITED AND NO QUOTATION MARKS USED. Ms. Rondon
While the last two quarters have produced positive GDP growth ; something that hasn’t happened since the 3rd and 4th quarters of 2007, it is premature to assume this is sustainable. Inventories contributed to 3.4 of the 5.7 growth , but this was more a result of business’ keeping smaller inventory for fear they wouldn’t sell their products (Moody’s). Consumer Spending ; which normally accounts for 70% of GDP rose just 2% , compared to 3rd quarter in which it rose 2.8%(New York Times). This tells me consumers are still cautious about spending their money , as 4th quarter is known for high consumer spending due to the holiday season. Also , automobile purchases plummeted 20% due to the Cash For Clunkers incentive program coming to an end (Chicago Tribune). With this knowledge and data I feel the economy is still fragile and continued growth is uncertain.
The rise of GDP in the fourth quarter does not indicate sustainable economic growth. According to the BEA (Bureau of Economic Analysis), private investments, exports and PCE’s were the big contributors to the little increase that GDP had. Not to mention everyone went Christmas shopping and are now recieving their credit card bills. No ones going out to eat this weekend or next weekend in my book. The information I read doesnt convince me that the rise in GDP is indicating sustainable growth.
In the fourth quarter of last year American GDP grew by 5.7%. It is not as good news as it seems. As I learn from my Macroeconomics class. GDP equals consumption plus investment plus government purchase plus net exports (exports minus imports). As I understand it, If we have small upticks in consumption, investment and net exports, but most of GDP increase is from government purchasing (which will have to be paid for and interest will be a drag on growth in the future) then it’s not as good news as it seems. Also, don’t forget we are still having high unemployment. According to Nigel Gault, chief United States economist for IHS Global Insight from New York Time, stated: “If we see more hiring, that means we may see more consumer spending, too.”
While the spike in the GDP was a good sign of economic growth it is still unknown how it will sustain itself going into the new year. The GDP rose 5.7%, the highest increase since the third quarter of the 2003 year however John Ryding, chief economist of RDQ Economics states “It was an excellent report, but it’s not clear how sustainable this pace of growth is.” Although the improvement in the GDP, employers are still hesitant to hire. President Obama felt it was a great opportunity to push for his new plan the give employers a $5,000 tax cut for each new hire and a credit on the social security payroll tax. The New York Times reports that another factor for the increase is not that consumers are buying more but that the companies cut production and are using the already available inventory. Hopefully the spike will turn things around and employers will feel confident enough to hire and restock inventory as before but in my opinion only time will tell.
The economy, while appearing to come out of a recession due to a 5.7% increase in GDP, is not on a sustainable upward drive. This increase was a yearly rate based solely on the last 2 quarters of 2009. This means that if the economy were to continue to increase at the same rate it has in the past 3 months for the next year, it would only see a gain of 5.7% … over the next year. However, the only reason that this surge in spending happened was because of fresh money from stimulus funds and businesses not drawing from their own inventory. As these pass and unemployment continues to stay high, The Wall Street Journal predicts that this “…pace of recovery is unlikely to continue.” Even though it may appear on paper as though the economy has started to improve, employers are still hesitant about hiring and consumers are still keeping their wallets shut. Thus, employment won’t improve, people won’t be spending money, and businesses -who have been spending instead of using their inventory- will now switch back to their stockpiles, creating a drop in GDP in the start of 2010. It’s my belief that it’s mostly just hopeful thinking that things are improving already and the use of smoke and mirrors in order to try and create a greater sense of comfort in consumers. Unfortunately, businesses aren’t so naive.
According to my macroeconomics book by Hubbard and O’Brien, the definition of GDP is the market value of all final goods and services produced in a country during a period of time, typically one year. From this, I can comprehend that GDP is indeed not sustainable. It fluctuates year after year depending on consumer spending, government spending, and economic growth. In other words, GDP is the sum of consumption, plus investment, plus government spending, plus net export (exports minus imports.) The Commerce Department notes that GDP has risen 5.7% since the third quarter of 2009. Is this high? Yes. Is it sustainable? No! According to The New York Times, “Productivity often rises at the end of recessions as companies ramp up output before hiring new workers. Rising productivity can raise living standards in the long run. But it can also make it easier for companies to postpone new hiring.” Having said this, the government’s spending will increase trying to make new jobs, which is a key part of the calculation of GDP. Due to this the GDP for this quarter or quarters to come, may decrease. We will have to wait in order to find out.
Throughout my my understanding of what is going on with our society’s GDP if it keeps going the way it’s going its not going to go up much because of our current situation that is going on with the amount of people collecting unemployement. There is a high rate of unemployement, according to the Daily Finance “the nation’s unemployment rate fell slightly to 10%” Thats a big number of people collecting money which eventually causes a down fall in our economy because all the money that could be used to help out our nation hast to go to people whom have lost their jobs . According to Bureau of Economic Analysis the defenition of GDP is “the market value of goods and services produced by labor and property in the United States, regardless of nationality; GDP replaced gross national product (GNP) as the primary measure of U.S. production in 1991″. Basically whats going on with our society is that our GDP is going up at the same time the number of unemployed people is going up to, and the cost of living expenses is going up to.
According to hank smith, chief investment officer of Haverford Investments, GDP growth rates and estimates have been ratcheted up and we expect the trend to continue. Smith said productivity increases have been “tremendous,” and the lower dollar is resulting in an improved trade balance. In the third quarter of 2009 GDP grew to 2.2% and with last quarters increase to 5.7% this is something you can not ignore. New York times showed that this increase is the fastest in six years. in my opinion this trend of spending amongst u.s citizens will continue.
The rise in America’s GDP in the fourth quarter of last year was impresive and the best quarterly performance since 2003, but I believe that everyone is right in not celebrating yet. According to an article from The Economist online, it says the expansion was driven by growth in private inventories and an increase in exports, which is all positive, but there are week fundamentals that will “prevent the American economy from sustaining that fast pace of growth.” It’s also very difficult to sustain growth when employment is not rising. The GDP report says that “personal consumption remains extremely weak”, and there is no saying where new demand may arise, but it needs to arise somewhere. It is a good thought that we may be out of a recesion, but if new demands don’t present themselves, then this increase in GDP will not last.
America’s Gross Domestic Product has risen 5.7% in the fourth quarter but this does not necessarily mean sustainable economic growth. GDP incorporates four things main subcategories: Consumption, Investment, Government Spending, and Net Exports. The New York Times reports that the growth rate was not due to increased purchasing by consumers, but was due to business allowing their inventories to decrease by buying less. This is not enough to sustain the economic growth. Government spending has gone down slightly, but Obama plans to increase it soon. This will increase GDP in the short run but over time will increase taxes and cut down on consumption, as will a rising unemployment rate. Obama’s plan to increase exports will help bring in money, but overall we can only be hopeful. One quarter of strong growth does not signify the end to all our economic woes.
I think that the rise of GDP to 5.7% in the fourth quarter does not indicate the economic growth because people still don’t have jobs. In the article from New York Times Jharonne Martis, director of consumer research for Thomson Reuters says that still at this point everyone has a friend or family member who still does not have a job. Even though companies like Gap, Macys, and Abercrombie & Fitch reported that they have raised their earnings for the month January but the reason behind that are gift card redemptions. Gifts for Christmas, Back-to-school shopping and Gift cards are the reason for the money stores have earned and these cannot be compared to the other months of the year due to the fact that there are lots of people unemployed. Even though GDP has increased for the fourth quarter but this does not show any economic growth due to the fact people are not earning enough money to spend.
I do not believe that the 5.7% GDP growth for the 4th quarter of 2009 indicates a significant sustainable growth. According to Market Watch, even though the US saw the 5.7% increase in the final three months of 2009, overall GDP dropped 2.4% for the year. Despite the large gain in the 4th quarter, 2009 saw the largest drop in the economy since 1946, when GDP dropped 10.9%. The only way the 5.7% increase in the end of 2009 can translate into a sustainable growth is if 2010 starts off with an increase as well. So, sustainable growth? Due to the overall loss for 2009, the answer as of right now has to be no.
A hike in GDP does not necessarily indicacte a growing economy. The state’s economy shrank at a 0.2% annual rate in the final three months of the year. Part of the increase may have something to do with consumer spending from the holiday season, although it was weaker than usual because shoppers were spending cautiously as unemployment spiked. Exports & technology product sales are rising, the pace of layoffs is slowing & employers are cautiously hiring yet 300,000 residents remain unemployed (boston globe). The new york times states that the biggest factor in the strong growth rate was businesses letting their stockpiles shrink at a lower rate than they had been before so the change in inventories added 3.4% points to the growth rate in the final quarter. With that being said, its too early to determine whether the economic growth is sustainable.
The rise of GDP in the fourth quarter does not indicate a sustainable economic growth. According to the B.E.A, most contributions to GDP came from private inventory investment, exports, and personal consumption expenditures. Personal consumption expenditures only increased 2.0 percent as opposed to 2.8 percent in the third quarter. Basically this means that the percentage of the GDP rise is due solely to big businesses selling excess stocks and exports. The economy was boosted in the last quarter because of our Christmas shopping, but the fourth quarter statistics do not convince me that our economy will be on the steady up rise anytime soon.
Even though the GDP increased 5.7% for the fourth quarter of 2009, but still isn’t enough to recover from the terrible start to the year, says the New York Times. “It was an excellent report, but it’s not clear how sustainable this pace of growth is,” said John Ryding, chief economist of RDQ Economics. Economists believe that the reason for such a high increase in the GDP’s 4th quarter was because business lessened the amount of supplies in their warehouses. The New York Times explains this by,” The single biggest factor in the strong growth rate last quarter was not consumers buying more, but businesses letting their stockpiles shrink at a slower rate than they had been previously.” I believe that small business and corporations alike are still worried about hiring more workers because the economy is still in the wake of the “second great depression.” But it could also convince many people that the economy and stock market with continue to rise and be back to the way things used to be
The percentage of 5.7% for the fourth quarter of 2009 for GDP that was announced by the Commerce Department as of right now appears to be a sustainable economic growth. I believe that with the percentage having gone up that things are getting better. I believe this because I have looked at charts on the New York Times website that look promising. According to the New York Times, productivity is going up even with fewer employees and businesses are being smart in how they have their products in warehouses gradually decrease due to consumers buying less. They also pointed out that compared to the third quarter this rise is significant and the GDP is bound to increase more.
The rise of percentage of GDP by 5.7% in the fourth quarter of 2009 to me doesn’t indicate sustainable economic growth because 3.4% was due to the replenishment of inventories. This makes economists cautious. Also, according to dailyfinance, comparing 2008 with 2009, the economy expanded just 0.1%. It goes on to say investments in homes and equipment surged but investment in structures plunged 15.4%. The economy needs in jobs and income to sustain an increase.
According to The New Times, The United States economy grew at its fastest pace in more than six years at the end of 2009, even as businesses resisted hiring and continued to do more with less. “It was an excellent report, but it’s not clear how sustainable this pace of growth is,” said John Ryding, chief economist of RDQ Economics. I personally do believe it is a sustainable growth because we did more with less hiring of people if we hire more people then the economy will get better and then that will keep a sustainable growth. The single biggest factor in the strong growth rate last quarter was not consumers buying more, but businesses letting their stockpiles shrink at a slower rate than they had been previously, according to The New York Times. Because of the way the government calculates growth, this business moderation translates into an increase in output. The change in inventories added 3.4 percentage points to the growth rate in the final quarter of 2009, according to The New York Times.
According to the AP Economics Writers, from the Boston Globe, two-thirds of the quarter’s growth came from increased manufacturing as businesses drew down their stockpiles of goods at a slower rate. But companies will eventually let those inventories fall again unless consumers — who account for about 70 percent of the economy — spend more. I believe the 5.7 increase in Americans GDP does not indicate sustainable economic growth. The GDP is never a solid continuance due to its increases or decreases. Because the GDP is never consistent, we would have to wait till 1st quarter of 2010 to see if the number continues to increase. That would give us a reason to believe it has a sustainable economic growth.
Although GDP growth was 5.7% and higher than most economist expected, once the number is broken down and compared, it does not indicate sustainable growth. According to the Commerce Dept. two 2/3 of the growth or 3.4% was attributed to investments in inventories compared to 1.4% by consumer spending. The 1.4% can be connected to two factors, the “cash for clunkers” program as well as the holiday spending season. According to John Silva, Chief Economist for Wells Fargo Securites, “…after stripping inventories, finals sales were only 2.2%… after the ‘75 and ‘82 recessions, growth averaged 5%…We obviously are loking pretty week.” 2.2% is still growth, but considering the time of year and the incentives that were available, im curious to see what the 1st quarter numbers will be for 2010.
I don’t necessarily think this number means sustainable economic growth but it is definitely a good sign for the economy; it is the strongest growth in 6 years and last year we were down about 6%. It might have a little to do with all the stimulus packages. The unemployment rate is still down and unless that improves then stable growth will be hard. “The data shows that the necessary transition from government stimulus to private sector spending is under way, which is essential to sustain the economic expansion,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. This basically means that the government stimulus is about to stop and that consumer spending is on the rise; this along with lower unemployment rate is necessary for sustained growth.
I think that the GDP going up is a good sign, however I don’t think that it is sustainable. 9onsidering that Christmas recently passed of course the GDP went up. According to the Chicago Tribune it is a positive thing and that consumer spending is the cause of the rise. Also taxes are coming back so spending will go up in the next few months.But it is a vicious cycle. This quarter is usually slow but this number gives us all some hope but I don’t see it turning around anytime soon.
The increase of GDP in the fourth quarter of 2009 it has increase at a rate of 5.7 percent. According to the New York timers this rate is not sustainable because in the year 2003 in the third quarter the economy grew at rate of 6.9 percent this rate is more preferable than the 2009. Also the rate of 2009 it was increase with less workers, they had found ways to substitute employees. If we want the rate of 2010 to increase more and stay sustainable their should be more employment. If their is more employment may be it gives a reason that this rate would be more sustainable.
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The GDP going up is in consideration with the help of private company’s as well as with the government spending (which has increased). According to Kim Amadeo, the fourth quarter of 2009 is questionable, because the growth was based on businesses stocking up on low inventory. People aren’t purchasing goods as they used to, but rather company’s are stocking up( as if they predict an upward climb for the GDP). It was not as much as the people consuming the products that made the GDP go up( excluding x-mas of course) but it’s growth can be contributed to private company’s. Also, I know that the statistics show that more people are unemployed then what the unemployment chart says. Therefore i would conclude that the GDP will go down again and that these private company’s will take a serious hit in their wallets due to left over product in warehouses over time. I believe that the GDP will be lower in the First quarter of 2010 then it was at the end of 2009.
The increase of GDP in the fourth quarter of 2009 it has increase at a rate of 5.7 percent. According to the New York timers this rate is not sustainable because in the year 2003 in the third quarter the economy grew at rate of 6.9 percent this rate is more preferable than the 2009. Also the rate of 2009 it was increase with less workers, they had found ways to substitute employees. If we want the rate of 2010 to increase more and stay sustainable their should be more employment. Obama is offering more taxes to employers to employee more people and I think is a great idea.
I don’t know too much about GDP but I think that the GDP for the fourth quarter of 2009 does not indicate a sustainable economic growth. According to the New York Times, this is the fastest growth since 2003. However, the economy seems to be getting worse and job cuts are becoming more frequent. People aren’t making as much money so their spending has decreased. This results in businesses not doing as well as they normally would. I agree with other bloggers that it is a good idea for Obama to offer more taxes to provide more jobs.
The GDP being up 5.7% in the fourth quarter of 2009 is a good sign for potential economic growth, but it does not show us that it will be sustainable over time. Some components of the GDP increase are; that overall 3.4% was due to the replenishment of inventories, business investment rose 2.9%, foreign trade increased at the rate of 28.1%, investment in equipment went up 13.3%, and investment in homes grew by 5.7%. All these are positive signs of economic growth but the unemployment rate still needs to decrease dramatically for there to truly be sustainable economic growth. Joseph Lazzaro in “Economic Surge Caps 2009″ on dailyfinance.com, says that “U.S. GDP fell 2.4% in 2009 — the worst calendar year GDP performance since 1946, with more than 7.6 million job lay-offs. Comparing the fourth quarter of 2008 to the fourth quarter of 2009, the economy expanded just 0.1%.” It will be interesting to see if the GDP increases even more in the first quarter of 2010.
GDP is the monetary value of all the finished good and services produced with a country’s borders in a specific time period through GDP is usually calculated or annual basis. It does not tell us about unemployment or productivity, or whether economic growth with sustainable over time. It tells us about consumer spending, private business investment, government spending and net trade.
My opinion for this question is that, it is good to see an increasing of our GDP. To increase the number there are so many way to help and grow our country so our market. It’s from secondery market, people start to spend their money and paying of their needs. That’s help smaller business and so retail. By help those people could help other students and other business to open up their position for more and more help and need from those who need the job. private investment getting little better. The bank start giving higher interest for CD, MMS and other product, and that develope the primary market to run their investment. Real estate are getting alot better than 2008 years. Things slowely starting to run and market beginning to move up and government starting to improve their benefit and income also with their investment.
Considering that the GDP was in the negatives percentage at the beginning of this year, 5.7% is quite an improvement. However, since it is mainly do to the fact that this increase was from companies improving on their inventory last month–says an Article on TradingEconomics–this increase may not bring stability, through the next months or so.
An example would from the happenings of Piercing Pagoda at Liberty Tree Mall, where I work. During the month of January, Piercing Pagoda had been readjusting our inventory by having several items being recalled and only a few items being shipped in. As this was in process, are sales each day had been at 100% from our set goals. Unfortunately, near the end of the month, sales had gone down and we missed our goal for the entire month by a few hundreds of dollars. Now with the start of a new month, the piercing pagoda kiosk at the Liberty Mall–not too mention other stores in the mall–has been loosing sales rather than gaining like we did the month before. In conclusion, I would say it’s still too soon for the GDP to be stabled for long.
People seem to spent more than 2 years or a year ago. Retail and small business seem to also increase, more job opening and everyone seem to be more realiable with their living. our country export a lot out to other country such as car, product…etc! government spent more money on walfare. private consumption is growing well.
According to New York Times, 5-7 % GDP is very good; the problem is that’s its misleading.”The worrying thing here is that so much of the growth represents inventory shifts”. The rebound was not a newfound economic dynamism, but was however the slowing pace of inventory liquidation. I feel that this temporary boost will not last because of the amount of dept Americas is in and the unanswered question of how to raise employment. Overall this increase in GDP is a sign of temporary hope, unfortunately it probably won’t stay.
The lastest report from the commerce dept announced that the GDP for the forth quarter was up at 5.7% . This may have been due to that consumer spending was up because of the holiday season. The retailers felt a need to stock up inventories due to consumer demand and increased spending. this number does not indicate sustainable economic growth for the united states as jobs and spending may still be cut back during this recession. spending may have only been up due to promotions and seasonal need.
the Us economy grew faster last quarter 2009, because the GDP reached 5.7 % higher since 2003. This situation is good first for the government who see a kind of relief and take it like a tool to convince employers to hire more workers. The rate of unemployement is still growing, which isn’t a good sign for the politics. In other side, employers are happy to produce more goods with less labor. This growth of GDP is not the result of the raise of buyers of final products. Buyers consume much when jobs opportunities are offered. Last, international trade also increased; exports went up twice as fast as imports
This week the US government announced the US gross domestic product (GDP) expanded at 5.7 annual rate in the 4th quarter. This exceeds most estimates, but many economists see this growth unsustainable and I think these numbers are misleading. Finical Guide Money Morning reported when you strip out inventories you see real final sales worth 2.2 this is not a fantastic number (said tom porcelli, senior economist at RBC Capital Market) I think, that businesses that ran down inventories during the recession have restocked themselves and its unrealistic to think they can continue the same growth over the next year.
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In my opinion, i believe that the GDP will sustain steady growth in the year 2010. According to the Bureau of Economic Analysis of the Department of Commerce(BEA), “The increase in real GDP in the fourth quarter primarily reflected positive contributions from private inventory investment, exports, and personal consumption expenditures (PCE)” which in simpler terms means that, because of private businesses, exports, investments and the latest PCE report, the GDP has improved. The reason i believe this 5.7 increase in GDP means a steady growth is because, now with consumers buying more than ever as well as the government spending continues, these factors will only continue to increase therefore improving the economy.