First-Quarter U.S. Growth – At A Glance

Matt Rourke/Associated Press
Winter of Discontent First-quarter GDP growth frequently looks soft, a possible by-product of measurement issues. The Bureau of Economic Analysis has tried to correct the problem with seasonal adjustments but some economists believe it remains, understating growth in the first quarter and overstating it later in the year. The underlying trend, though, has been undisturbed through the latest expansion: annual growth around 2%. Compared to the same period one year earlier, GDP advanced 1.9%. Consumer Caution Consumer confidence soared following Donald Trump’s election, but spending hasn’t matched sentiment. Personal consumption expenditures advanced a measly 0.3% in the first quarter, the slowest pace since the end of 2009. Consumers contributed 0.23 percentage point to the headline GDP number. The pullback may be temporary as warm weather damped demand for home heating–service spending advanced at the slowest pace in four years. Much of the weakness, however, Continue reading "First-Quarter U.S. Growth – At A Glance"

Why the GDP Report Could Make U.S. Growth Look Rosier Than It Is

On Friday the government will release data that’s widely expected to show slow growth in U.S. output in the first quarter. Now—even before its release—there’s evidence output growth was even slower than this estimate will convey. The Commerce Department’s Bureau of Economic Analysis won’t incorporate into its growth estimates recently revised U.S. retail sales data that were made public Wednesday. Instead, these revisions will be incorporated next month, when the BEA updates its first-quarter estimates of gross domestic product, the government’s broadest measure of the economy’s output. The downward revisions to the retail-sales data suggest consumer spending was weaker in the first quarter than previously estimated. But the revisions didn’t come through soon enough to incorporate into the upcoming report. Using the new figures could subtract two-tenths of a percentage point from the “headline” figure in Friday’s GDP report, said Ben Herzon, economist with the private forecasting Continue reading "Why the GDP Report Could Make U.S. Growth Look Rosier Than It Is"

Startups Remain Stuck: Job Creation From New Establishments Lags

The U.S. startup scene is languishing. Beneath headlines generated by Snap Inc.’s multibillion-dollar IPO or the latest Silicon Valley darling, new companies simply aren’t the same economic engine they were in decades past. During the latest expansion, new establishments have accounted for a little more than 11% of all new private-sector jobs created in the U.S. During the 1990s, the figure was 15%, according to Labor Department data released Wednesday. That may seem a small shift, but those few percentage points add up to nearly 300,000 jobs a quarter. The startup slowdown also suggests a loss of dynamism across the broader U.S. economy, with Americans either less willing or less able to launch a new venture, and a decline in the kind of churn that leads to greater opportunity for workers and rising productivity. “The evidence suggests that the decline in dynamism is reason for concern Continue reading "Startups Remain Stuck: Job Creation From New Establishments Lags"

Is Chinese Growth Overstated?

Is Chinese Growth Overstated? Hunter Clark, Maxim Pinkovskiy, and Xavier Sala-i-Martin Liberty Street Economics, April 19, 2017     For analysts of the Chinese economy, questions about the accuracy of the country’s official GDP data are a frequent source of angst, leading many to seek guidance from alternative indicators. These nonofficial gauges often suggest Beijing’s… Read More The post Is Chinese Growth Overstated? appeared first on The Big Picture.

Q&A: Economist Tyler Cowen Thinks Americans Are Too Complacent

Tyler Cowen, a professor of economics at George Mason University and co-host of the popular Marginal Revolution blog, thinks Americans have gone soft. In his new book, “The Complacent Class,” he details a populace that has drawn inward rather than finding and facing new challenges. The result, borne out in a host of economic and social measures, is fairly bleak. “The American economy is less productive and dynamic, Americans challenge fundamental ideas less, we move around less and change our lives less, and we are all the more determined to hold on to what we have, dig in, and hope (in vain) that, in this growing stagnation, nothing possibly can disturb our sense of calm,” he writes. Mr. Cowen spoke to The Wall Street Journal about his diagnosis of the American economy and psyche. The following transcript is edited for length and clarity. Q: The U.S. Continue reading "Q&A: Economist Tyler Cowen Thinks Americans Are Too Complacent"