Recent U.S. Economic Growth - United States …

[Pages:15]Recent U.S. Economic Growth

In Charts

MAY 2012

1 GROWTH SINCE 2009 The Growth Story Since 2009

Despite the worst financial crisis since the Great Depression and a series of shocks in its aftermath, the economy has gradually strengthened since mid-2009, though more work remains.

Real quarterly GDP growth

2009 Q3 1.7%

2009 Q4 3.8%

2010 Q1 3.9%

2010 Q2 3.8%

2010 Q3 2.5%

2010 Q4 2.3%

2011 Q1 0.4%

2011 Q2 1.3%

2011 Q3 1.8%

2011 Q4 3.0%

2012 Q1 2.2%

2009 Q2 -0.7%

Japanese earthquake/tsunami

Apr. 15, 2011 Government shutdown

narrowly averted

Debt limit

Aug. 2, 2011 Debt limit deal reached

2009 Q1 -6.7%

2008 Q4 -8.9%

2008/09 financial crisis

Source: Bureau of Economic Analysis, Wall Street Journal.

Feb. 2011 Egyptian President steps down

Libyan conflict begins President Obama ratchets up sanctions on Libya

Oil prices pass $90/barrel

High oil prices

Aug. 2011 Oil prices fall below $90/barrel

Early May 2010 Cost of borrowing spikes across Europe Euro falls to four-year low against the dollar

Oct. 2010 Greece, Ireland Portugal

bond spreads widen

European debt crisis

Jul. 2011 Greek, Irish, and Portuguese

spreads spike

High oil prices

Oct. 2011 Oil prices pass $90/barrel

Oct. 28, 2011 Italian 10y bond yields close above 6 percent, remain near or above that level through late Jan. 2012

U.S. DEPARTMENT OF THE TREASURY

2 GROWTH SINCE 2009 The Components of Growth Since 2009 U.S. economic growth has been led by consumption, private sector investment, and exports. Percentage point contribution to real quarterly GDP growth, by component

+10

+5

0

-5

-10

-15

Q1

Q2

Q3

2008

Source: Bureau of Economic Analysis.

Q4

Q1

Q2

2009

Personal consumption expenditures

Gross private domestic investment

Exports

Imports

Government consumption and gross investment Total GDP growth

Cumulative contributions to growth since 2009 Q2, by component

+8

+6 +4

+4.3 +3.8 +2.9

Total +6.8

+2

-0.7

0

-2

-4 -6

-3.5

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2010

2011

2012

U.S. DEPARTMENT OF THE TREASURY

3 GROWTH SINCE 2009 International Growth Growth in the U.S. has outpaced that of other advanced economies affected by the global financial crisis. Real GDP, 2008 Q1 = 100

104

102

U.S.

Germany

100

98

Euro area

Japan

96

U.K.

94

92

90

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2008

2009

2010

2011

2012

Source: Regional sources (see Notes section).

U.S. DEPARTMENT OF THE TREASURY

4 UNWINDING THE CRISIS Wealth, Savings, and Private Demand Despite challenges, growth in private demand has outpaced GDP growth since late 2010.

Household net worth, inflation-adjusted (constant 2011 dollars)

$8800 trillion 70

recession

60

Year-on-year percent change in real GDP and final sales to private domestic purchasers

4%

Growth in real GDP

50

-$19.3 trillion

2%

40

2007 Q2 - 2009 Q1

30

20

Household

10

wealth

1

Household wealth has begun to

0%

come back from a sharp decline

in 2007-08, but has not fully

returned...

0

-2%

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

3

Household debt and savings as a percent of disposable income

Despite these drags

150% 140% 130% 120% 110%

recession

Household debt-to-income

(left axis)

8% -4%

7%

6%

5% 4% -6% 2 ...and families are 3%

on spending, private demand has begun to show stronger growth as the overhang of the financial crisis fades.

100% 90%

Household savings rate

saving more than before the crisis.

2%

1% -8%

(right axis)

2006

'07

'08

80%

0%

Q1

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Growth in final sales to private

domestic purchasers

recession

'09

'10

'11

'12

Source: Federal Reserve Flow of Funds, Bureau of Economic Analysis.

U.S. DEPARTMENT OF THE TREASURY

5 UNWINDING THE CRISIS Fiscal Drag

State and local governments have been forced to cut deeply and shed jobs in response to fiscal challenges...

Change in quarterly state and local employment, end-of-period (line, left axis)

State and local government contribution to real GDP growth, percentage points (bars, right axis)

+100 thousand

Change in state

0.25

and local

+50

0.16

0.16

employment (left axis) 0.12

0.02

0.01

0

-0.08 -0.01

-0.08

-50

-0.19

0.05 -0.06

State and local government

contribution to real GDP growth

(right axis)

-0.19

+0.30%

+0.15%

0% -0.14

-0.15%

-0.26

-100

-0.34

...while private sector growth has continued.

-150

Quarterly private sector changes in employment and contributions to real GDP growth

-0.37 -0.49

-0.33

-0.34

-0.41

-0.30% -0.45%

-200 +1,000

+5%

0

0%

-250

-1,000 -2,000 -3,000

Private sector job growth

(Thousands, left axis)

Private contribution to real GDP growth1

(right axis)

-5% -10% -15%

'07

'08

'09

'10

'11

'12

-0.60% -0.75%

-300

-0.90%

2007

'08

'09

'10

'11

'12

Q1

Source: BLS, BEA.

U.S. DEPARTMENT OF THE TREASURY

6 MISCONCEPTIONS Three Misconceptions About Recent Economic Growth

Some analysts have asserted that the following factors have been impediments to growth: 1. Regulations. Have increased regulations or

regulatory uncertainty been a major factor in holding back growth? 2. Taxes. Is a high tax burden ? or fears of future tax burdens ? impeding growth? 3. Government. Is government so large that it is getting in the way of private sector-led growth? But the facts do not support these assertions.

U.S. DEPARTMENT OF THE TREASURY

7 MISCONCEPTIONS Are Regulations Holding Back Growth? Regulations are not impeding business lending or investment.

Commercial and industrial loans outstanding, constant 2011 dollars (log scale)

$1,700 billion

Percent change in real investment in equipment and software 11 quarters after NBER trough

Commercial and industrial

loans

1981-82 Cycle 2007-09 Cycle

38%

+34%

1,500

Jul. 15, 2010

Wall Street reform enacted

1990-91 Cycle

28%

1973-75 Cycle

28%

1,300

1960-61 Cycle

Average (excl. 2007-09)

1969-70 Cycle

26% 21% 21%

+12%

($144b)

Since Oct. 2010

2001 Cycle 1957-58 Cycle

19% 8%

1,100

Jan

'09

'10

'11

'12

1980 Cycle 2%

2008

Source: Federal Reserve, BEA.

U.S. DEPARTMENT OF THE TREASURY

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