By Robert Romano — The economy slowed down in 2011 to “a tepid snail’s pace,” says Americans for Limited Government President, according to new data released by the Bureau of Economic Analysis (BEA).
In 2010, the Gross Domestic Product (GDP) had grown at 3 percent in 2011, but only at 1.7 percent in 2011. The Bureau said the slowdown was on account of “a downturn in federal government spending, an acceleration in imports, and a larger decrease in state and local government spending.”
Wilson noted that spending at the federal level had actually increased last year. The slowdown, he said, proved “the ‘stimulus’ of 2009 and 2010 merely created some artificial demand for goods and services, which, once it ran out, did not create a virtuous cycle of growth as promised.”
He added, “The only thing that was apparently accomplished is that now the debt is nearly larger than the economy.” While the economy dithers, the national debt is growing at about 10 percent annually.
Currently, the national debt stands at $15.236 trillion, while the GDP stood at $15.294 trillion as of Jan. 1. But the real-dollar GDP number may be revised downward, just as the Q3 GDP numbers were, first from 2.5 percent to 2 percent, and then down to 1.8 percent, resulting in the total number decreasing.
In response to the Bureau’s previous revisions, Wilson had said, “the economy in the third quarter has once again fallen way short of the government’s rosy projections. The Bureau initially exaggerated the actual growth number by 38 percent.” Did that happen again?
If the Q4 GDP number of 2.8 percent growth is revised downward, it will affect the 1.7 percent annual number significantly. It could also mean that the national debt is already larger than the entire economy.
More will be revealed with the Bureau’s first revision of the Q4 data, scheduled on Feb. 29, according to the release, which warned, “the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency”.
Either way, Wilson said four years after the recession began, “the economy is still very weak, unemployment remains unacceptably high, consumer inflation is still rising, and the cost of doing business in America remains among the highest in the developed world. Have we really turned the corner?”
Even though the Obama Administration said that if the “stimulus” was “timely, targeted, and temporary,” it would improve the economic outlook, Wilson said that Obama had failed.
“Because the underlying government-created problems in housing, the financial and monetary system, the burdensome regulatory environment, the restrictions on capital creation, and the highest corporate tax rate in the developed world remain unaddressed, all the spending, borrowing and printing produced was a temporary sugar high,” he said.
The situation is now bordering on the 1930’s, he added, “when, no matter how much borrowing, spending, and printing the government did, the economic doldrums persisted through the decade, and meanwhile, government became considerably larger.”
Wilson concluded, “It is time for a new way forward that will address the supply side of the equation and reduce the cost of doing business stateside, which is the only long-term solution to sustainably grow the economy and create new jobs. We need real growth, not more debt.”
Robert Romano is the Senior Editor of Americans for Limited Government.
