Economic Growth?

The other day I was inspired by the news that the gross domestic product (GDP) showed positive growth...


The real U.S. GDP (gross domestic product), which represents the output of goods and services produced by labor and property located in the U.S., picked up the pace of positive growth that began in Q3 2009 by expanding 5.7% in Q4 2009, according to the first estimate from the Bureau of Economic Analysis.

By growing for two consecutive quarters, the GDP appears to be clearly reversing the course it had taken in the previous three financial quarters with decreases of 0.7% in Q2 2009, 6.1% in Q1 2009 and 6.3% in Q4 2008.

As you can see the media is all agog as was I initially, but then I was inspired to dig a little deeper. I vaguely remember from high school what the GDP's definition was and it's parameters, so I checked it out. Here's what I found....



GDP = private consumption + gross investment + government spending + (exports − imports)
(Wikipedia)

Note the third factor in the equation, government spending. It would be tough to top the 800 billion dollar increase by the Bush administration in 2008 but this administration has far exceeded that milestone. The expansion of government alone in 2009 should have pushed the GDP through the roof.US News and World Report has noted 10's of thousands will be hired to administrate the government side of this spending alone (again skewing the unemployment numbers). And then there is the discretionary spending.....

The president signed an Omnibus spending bill that raised discretionary spending by 8%, contained 9,287 pork projects costing $13 billion, and spent $123 billion on programs for which government auditors can find no evidence of success.

So are these GPD numbers inflated by government nonsense? To borrow a phrase from Sarah Palin; "You Betcha!". How bad is the rest of the economy to only show a 5% increase overall? A better question is why are we being misled to believe this is real? Where is the fourth arm of the government, the media? It's their job to unravel this propaganda and keep us informed. The whole process is tainted!

God Bless
Capt. Bill