The economy shrank by 0.1% in the last quarter of 2012. Is this bad news? A sign of bad things to come? An indication of Washington's fire drill approach to the fiscal cliff? Not really.
While the Gross Domestic Product (GDP) - the broadest measurement we have of what's produced and consumed in our nation - is down by 0.1% there's actually a silver lining. What forced the downturn were reductions in defense spending (winding down Iraq has benefits), a contraction in corporate inventories (it was the Christmas season), and continued reductions in government spending (Keynes still lives). Here, check it out.
There's another potential silver lining here. First reads on GDP are usually revised as more information pours in. Put another way, the small downturn could turn into a period of growth (or drop more).
All of this helps explain why research firm Capital Economics commented that this may be "the best looking contraction in U.S. GDP you'll ever see."
- Mark
While the Gross Domestic Product (GDP) - the broadest measurement we have of what's produced and consumed in our nation - is down by 0.1% there's actually a silver lining. What forced the downturn were reductions in defense spending (winding down Iraq has benefits), a contraction in corporate inventories (it was the Christmas season), and continued reductions in government spending (Keynes still lives). Here, check it out.
There's another potential silver lining here. First reads on GDP are usually revised as more information pours in. Put another way, the small downturn could turn into a period of growth (or drop more).
All of this helps explain why research firm Capital Economics commented that this may be "the best looking contraction in U.S. GDP you'll ever see."
- Mark
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