• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • It's Not Getting Better: GDP Grows at a Sluggish 1.7 Percent Rate

    This morning’s update from the Department of Commerce on economic activity in the second quarter shows that the economy grew at an anemic 1.7 percent annual rate. This follows a nearly equally weak first quarter growth rate of 2.0 percent.

    How weak is this? In terms of economic output, the current recovery is the weakest of any since 1945: Total output is only 6.8 percent higher than when the recession ended in 2009, which was about 12 quarters ago. Compare that to the other really big post-war recession: 1981. After 12 quarters, economic output stood 18.5 percent higher than the end of that recession. Even the really slow recovery from the 2001 recession outdoes the current one: By 12 quarters following the end of the 2001 recession, economic output was 8.9 percent higher.

    The weak spots in the current recovery stand out in today’s economic growth report. The Bureau of Economic Analysis traces the sluggish growth rate to slowdowns in the spending of households and businesses and shrinking inventories.

    While the media will highlight the weak household spending numbers, the real focus of concern should be on business investment. When businesses hold back on improving and growing their productive capacity, that inaction directly affects hiring decisions and, thus, household incomes. And that’s what businesses appear to be doing this year: They are sitting this economy out.

    Very few economic actions testify more strongly to the failure of current economic policy—especially the threats of tax increases next year—than what businesses are doing. Well before voters head to the polling booth in November, American business has apparently voted against the near-term prospects of the economy. Imagine the economy today if better economic policy had been the norm over the past several years.

    Ballooning national debt, ineffective fiscal and monetary policies, and a $500 billion tax increase in 2013 alone have combined to do exactly what one would expect: They have made the entrepreneurial spirit of American enterprise dive for cover in what should otherwise be the strongest recovery in decades.

    Instead of morning in America, it’s the veritable swamp of despond.

    Posted in Featured [slideshow_deploy]

    7 Responses to It's Not Getting Better: GDP Grows at a Sluggish 1.7 Percent Rate

    1. Mahuna2 says:

      "it’s the veritable swamp of despond"??

      The swamp normally mentioned is literature is Despair, although there is the very archaic "Slough of Despond" from "Pilgrim's Progress", which I have in the basement someplace.

      There is some minor difference between a genuine slough (as in Saginasky Slough in Illinois) and a swamp.

      • William Beach William Beach says:

        I was tempted to borrow directly fron Bunyan, but I felt the tiny grip of guilt when I typed his phrase. While clumsy, the combination of despondency and a swamp struck a chord in my morning mood, and, I think, captures the awesome weariness of the public.

      • CEW says:

        Um… Mahuna, try reading this again for content.

    2. Stirling says:

      More proof that Kensian Economics is an EPIC FAIL.

    3. Carol, AZ says:

      The "weak spot" is the continued result of carving out _the gaping hole_ in America's Democracy and systematically killing free enterprise. .
      The "weak recovery" is just one moot point, as compared to the coming financial melt down..
      During Paul Ryan's impassioned speech, not missed by me, was his forwarding: "we are running out of time." Along with his many talents for leadership, Sen. Ryan understands economics.
      He knows we are being bankrupt with steadfast Govt duplicity and also referred to, the "debt meter, set-up at the convention center- you discuss in more detail .
      The final divide here in America will be financial Armageddon the press refuses to talk about.

    4. Blair Franconia, NH says:

      Instead of morning in America, it's mourning in Amerika.

    5. how is this possible? completely contradicts what the Dems say. Hmmmm….

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.