The Commerce Department recently reported annual U.S. economic growth for 2011 was 1.7%, down from 3% in 2010.
Excluding inventory growth, this figure was a paltry 0.8%.
Since the inception of the 2008 financial crisis, I have suggested the following:
1. Functional, sustainable economic growth may take a decade or more to achieve.
2. Anemic economic growth will persist for several years.
The reason:
The financial crisis is a manifestation of poor public policy and capitalistic excesses spanning several decades.
This sentiment seems anathema to the 79 respected economists recently surveyed by Bloomberg News.
Their 2011 projections for economic growth were extraordinarily inaccurate:
Economic growth (2011) Percentage Error
Lowest projection………………….2.4%.....................76%
Highest projection…………………4.5%....................165%
Median value of projections.……3.0%......................43%
Actual……………………….…….….1.7%.......................0%
According to the International Monetary Fund, global and U.S. economic growth is expected to be anemic next year as well:
1. US……………………………..1.8%
2. Japan………………………….1.7%
3. Euro Area (17 nations)………(0.5%): a contraction of ½ of 1%
Moreover, additional data for the U.S. in 2011 include:
1. U.S. home building contracted for the sixth consecutive year, falling 1.4%.
2. Real disposable income fell 0.1% (after tax, adjusted for inflation).
3. Savings rate declined to 3.7 percent, the lowest level in 4 years.
This data suggest the U.S. remains in a precarious economic state for some time to come.
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