Still Not a Recession -- Q1 2008 GDP Remains at .6%
The BEA reported that the advance U.S. GDP growth for Q1 2008 remains at .6%, unchanged from the Q4 2007 report .
Economic growth plummeted from 4.9% in Q3, and 3.9% in Q2 2007. The total GDP for 2007 was 2.2%, down from the 2006 growth rate of 2.9%. The decline in growth has been due to the housing market slowdown and related weak consumer spending. (Source: GDP News Release)
Coincidentally, it is the exact same number as GDP growth in Q1 2007. The last time GDP was this low was in Q1 2003, the tail-end of the last recession. A healthy growth rate is about 2-3%. For a review of the most recent GDP reports, see GDP Current Statistics.
What It Means to You
It is actually good news that the GDP is not worse. If it had turned negative, then the economy might be in danger of a recession, which is two quarters of negative GDP growth. Second quarter growth may also not turn negative, since this month taxpayers will begin receiving checks from the Economic Stimulus Package. Stay tuned until Friday, when the Employment Report is released. This is the first economic indicator of Q2, and will provide a glimpse into whether GDP will turn negative.
Comments
While the mainstream press may rely on GDP as an official yardstick of recession, the measure itself tends to lag serious economic downturns. Of greater personal interest to most consumers is the combined unemployment and underemployment rate and the rate of inflation. By any common-sense measure of the economy’s health, the U.S. is and has been in a significant economic downturn for several months, notwithstanding the reported GDP numbers.
I agree that we are in a downturn. Many of my readers are concerned about a long-term recession that could lead to a Depression. Just wanted to reassure them that we aren’t there yet!