The latest report from Bureau of Economic Analysis is out and it was a shocker. I don’t think anybody except BizzyBlog saw a 2.9% decline. I was curious how fast the economy was growing on an annualized basis. Some folks expect the economy to grow at a robust 3% rate in the second half of the year. The Federal Reserve is slightly less optimistic and recently cut their estimates for 2014 to between 2.1 percent and 2.3 percent. Considering how big a hole the first quarter GDP decline put us in, it looks like we need three quarters of a 3.8% of compounded growth to get to the low end of their estimates. Based on recent history that looks difficult to achieve. Based on this same history I am in the 1.5% annual growth camp. When I look at the economy, it looks like more of the same to me. If my calculations are correct then three quarters of 3% compounded growth will overcome the first quarter and get us a positive 1.5% growth for the year and match last year’s growth rate. The nightmare scenario for the Administration and Democratic candidates is if we do not see 3% growth for the remaining three quarters of 2014. That rarely happens during an election year but you never know. This economy has been anything but predictable.
| Table 1.1.3. Real Gross Domestic Product, Quantity Indexes | ||||||
| [Index numbers, 2009=100] Seasonally adjusted | ||||||
| Bureau of Economic Analysis | ||||||
| Last Revised on: June 25, 2014 – Next Release Date July 30, 2014 | ||||||
| Line | 2012 | 2013 | 2014 | 2014 vs 2013 | 2014 vs 2012 | |
| I | I | I | ||||
| 1 | Gross domestic product | 106.683 | 108.087 | 109.753 | 1.5% | 1.4% |
| 2 | Personal consumption expenditures | 106.145 | 108.138 | 110.324 | 2.0% | 1.9% |
| 3 | Goods | 109.298 | 112.928 | 115.923 | 2.7% | 3.0% |
| 4 | Durable goods | 119.195 | 127.379 | 133.093 | 4.5% | 5.7% |
| 5 | Nondurable goods | 104.988 | 106.762 | 108.661 | 1.8% | 1.7% |
| 6 | Services | 104.616 | 105.818 | 107.618 | 1.7% | 1.4% |
| 7 | Gross private domestic investment | 129.269 | 131.521 | 136.421 | 3.7% | 2.7% |
| 8 | Fixed investment | 114.569 | 119.467 | 123.408 | 3.3% | 3.8% |
| 9 | Nonresidential | 116.551 | 119.318 | 123.458 | 3.5% | 2.9% |
| 10 | Structures | 93.345 | 93.09 | 97.601 | 4.8% | 2.3% |
| 11 | Equipment | 139.204 | 143.175 | 147.134 | 2.8% | 2.8% |
| 12 | Intellectual property products | 108.83 | 112.648 | 116.698 | 3.6% | 3.6% |
| 13 | Residential | 106.359 | 120.123 | 123.35 | 2.7% | 7.7% |
| 14 | Change in private inventories | — | — | — | ||
| 15 | Net exports of goods and services | — | — | — | ||
| 16 | Exports | 122.576 | 123.781 | 127.308 | 2.8% | 1.9% |
| 17 | Goods | 125.88 | 126.126 | 130.47 | 3.4% | 1.8% |
| 18 | Services | 115.719 | 118.961 | 120.767 | 1.5% | 2.2% |
| 19 | Imports | 120.475 | 120.584 | 124.361 | 3.1% | 1.6% |
| 20 | Goods | 123.394 | 123.098 | 127.109 | 3.3% | 1.5% |
| 21 | Services | 108.248 | 110.197 | 112.96 | 2.5% | 2.2% |
| 22 | Government consumption expenditures and gross investment | 95.863 | 94.117 | 92.682 | -1.5% | -1.7% |
| 23 | Federal | 100.115 | 96.315 | 92.523 | -3.9% | -3.9% |
| 24 | National defense | 97.769 | 91.731 | 87.434 | -4.7% | -5.4% |
| 25 | Nondefense | 104.409 | 104.74 | 101.873 | -2.7% | -1.2% |
| 26 | State and local | 93.096 | 92.672 | 92.766 | 0.1% | -0.2% |