Economy Needs Less Spending
As A Per Cent of GDP

News Release: GDP by State

E–mail inquiries: gdpbystate@bea.gov

ECONOMIC SLOWDOWN WIDESPREAD AMONG STATES IN 2008

New statistics released today by the U.S. Bureau of Economic Analysis show that economic growth slowed in most states and regions of the U.S. in 2008 as economic growth overall slowed. Real GDP growth slowed in 38 states, with downturns in construction, manufacturing, and finance and insurance restraining growth in many states.1 Growth in real U.S. GDP by state slowed from 2.0 percent in 2007 to 0.7 percent in 2008.2

Real economic growth slowed in all eight BEA regions. The Southwest region experienced the largest deceleration, with real GDP growth slowing from 3.6 percent in 2007 to 1.7 percent in 2008. A decline in nondurable goods manufacturing slowed growth in the Southwest. The Southeast region slowed from little growth in 2007 to no growth in 2008. Real GDP in the Great Lakes region, which was the slowest growing region in 2007, contracted in 2008. Declines in construction, manufacturing, and finance and insurance caused the slowdown in the Southeast and the contraction in the Great Lakes.Percent change in states with contracting real GDP in 2008

Twelve states experienced declines in real GDP in 2008. Alaska had the largest decline in real GDP (–2.0 percent), caused mainly by a decline in petroleum extraction. In Delaware, the contraction was due to a significant decline in finance and insurance. Michigan, Ohio, and Indiana contracted with declines in durable goods manufacturing. In Rhode Island, Georgia, and Connecticut, the contraction was mainly due to declines in manufacturing and construction, with other industries such as finance and insurance also contributing to the decline.

Several states that benefited from a strong housing market earlier this decade were adversely affected by its recent weakness. Arizona, Florida, and Nevada experienced faster real growth than average in 2004, 2005, and 2006, but their economies slowed in 2007 and declined in 2008. Contributing to the economic slowdown in these three states were declines in the construction and finance and insurance industries. California's economy, which also previously benefited from a strong housing market, grew slowly in 2008 as declines in construction and finance and insurance were slightly more than offset by growth in information and in professional and technical services.

In contrast, states in the central part of the country tended to grow faster than the nation due to increases in agriculture, forestry, fishing, and hunting and in mining. North Dakota had the fastest economic growth in 2008 (7.3 percent), growing twice as fast as all other states, except Wyoming. The largest contributor to growth in North Dakota was the agriculture, forestry, fishing and hunting industry. In 2008, real GDP growth accelerated in nine states and the District of Columbia. Wyoming had the largest acceleration in real growth, rising from 0.7 percent in 2007 to 4.4 percent in 2008. In Wyoming, the largest contributor to growth in 2008 was mining.

Per capita real GDP by state in 2008. Delaware's per capita real GDP of $56,401 was the highest in the nation, 49 percent above the national average. Mississippi's per capita real GDP of $24,403 was the lowest in the nation, 36 percent below the national average. All of the top and bottom ten states remained in their quintile in 2007 and 2008. Refer to Table 3 for more detail on the results of per capita real GDP by state.

Tables 1–4 show these results in more detail; complete detail is available on BEA's Web site at www.bea.gov.

Advance Statistics of GDP by State for 2008 by NAICS Sector

The advance statistics of GDP by state for 2008 are based on a more limited set of source data and an abbreviated estimation methodology compared to the standard set of data and the estimation methodology used to prepare the revised statistics for 2005–2007. The advance GDP–by–state statistics are based primarily on preliminary earnings by industry data from BEA's regional economic accounts, released March 24, 2009, and on advance GDP–by–industry data from BEA's annual industry accounts, released April 28, 2009. Preliminary farm sector cash receipts data from the U.S. Department of Agriculture are incorporated in the agriculture, forestry, fishing, and hunting sector. Preliminary value of production and price data from the U.S. Department of the Interior and the U.S. Department of Energy are incorporated in the mining sector.

More information on the methodology used to produce the advance 2008 statistics, on the regular (revised) GDP–by–state statistics for 2005–2007, and on revisions to the GDP–by–state statistics will appear in an article in the June 2009 issue of the Survey of Current Business, BEA's monthly journal.Explanatory Notes

Definitions. GDP by state is the state counterpart of the Nation's gross domestic product (GDP), the Bureau's featured and most comprehensive measure of U.S. economic activity. GDP by state is derived as the sum of the GDP originating in all the industries in a state.

The statistics of real GDP by state are prepared in chained (2000) dollars. Real GDP by state is an inflation–adjusted measure of each state's gross product that is based on national prices for the goods and services produced within that state. The statistics of real GDP by state and of quantity indexes with a base year of 2000 were derived by applying national implicit price deflators to the current–dollar GDP–by–state values for the 64 detailed NAICS–based industries for 1997 forward and for the 63 detailed SIC–based industries for 1977–1997.

The chain–type index formula that is used in the national accounts is then used to calculate the values of total real GDP by state and of real GDP by state at more aggregated industry levels. Real GDP by state may reflect a substantial volume of output that is sold to other states and countries. To the extent that a state's output is produced and sold in national markets at relatively uniform prices (or sold locally at national prices), real GDP by state captures the differences across states that reflect the relative differences in the mix of goods and services that the states produce. However, real GDP by state does not capture geographic differences in the prices of goods and services that are produced and sold locally.

BEA is working toward a long–term goal of replacing the national implicit price deflators used to deflate state–level current–dollar GDP by industry with state–specific prices. A paper posted on BEA's Web site, "Estimates of State and Metropolitan Price Levels for Consumption Goods and Services in the United States, 2005," by Bettina H. Aten [PDF] presents estimates of spatial price deflators that may be used for adjusting price level differences across geographic areas. The work is based on micro–level price data from the consumer price index of the U.S. Bureau of Labor Statistics and the American Community Survey of the U.S. Census Bureau. It represents an important first step in deriving producer–type price indexes—which are the basis for the national implicit price deflators used in BEA's GDP–by–state accounts—at the state level. BEA plans to continue research into developing state–level prices and to explore estimating GDP by state on an expenditures basis.

Relation of GDP by state to U.S. Gross Domestic Product (GDP). An industry's GDP by state, or its value added, in practice, is calculated as the sum of incomes earned by labor and capital and the costs incurred in the production of goods and services. That is, it includes the wages and salaries that workers earn, the income earned by individual or joint entrepreneurs as well as by corporations, and business taxes such as sales, property, and Federal excise taxes—that count as a business expense.

GDP is calculated as the sum of what consumers, businesses, and government spend on final goods and services, plus investment and net foreign trade. In theory, incomes earned should equal what is spent, but due to different data sources, income earned, usually referred to as gross domestic income (GDI), does not always equal what is spent (GDP). The difference is referred to as the "statistical discrepancy."

Starting with the 2004 comprehensive revision, BEA's annual industry accounts and its GDP–by–state accounts allocate the statistical discrepancy across all private–sector industries. Therefore, GDP–by–state statistics are now conceptually more similar to the GDP statistics in the national accounts than they had been in the past.

U.S. real GDP by state for the advance year, 2008, may differ from the Annual Industry Accounts' GDP by industry and, hence NIPA (National Income and Product Account) GDP, because of differences in source data used to estimate GDP by state and the expenditures measure of NIPA GDP. For the revised years of 2005–2007, U.S. GDP by state is nearly identical to GDP by industry except for small differences resulting from the GDP–by–state accounts' exclusion of overseas Federal military and civilian activity (because it cannot be attributed to a particular state). The GDP–by–industry statistics are identical to those from the 2008 annual revision of the NIPAs, released in July 2008. However, because of revisions since July 2008, GDP in the NIPAs may differ from U.S. GDP by state.

BEA's national, international, regional, and industry statistics; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e–mail summaries of BEA releases and announcements.Footnotes

1. Real GDP by state is an inflation-adjusted measure of each state's production, wherever sold. For a further description, see the "Explanatory Notes" section in this release.

2. U.S. real GDP by state for the advance year differs from the corresponding national income and product account (NIPA) value because of differences in source data and methodologies used to estimate the related statistics, and because of revisions to the NIPA values since the previous annual NIPA revision. In addition, U.S. GDP–by–state values differ from the corresponding NIPA values because the U.S. GDP–by–state values exclude Federal military and civilian activity located overseas, which cannot be attributed to a particular state.

Yahoo News!

Jeannine Aversa, AP Economics Writer

On Wednesday April 29, 2009, 11:20 am EDT

Full article Yahoo News!

Excerpts:

WASHINGTON (AP) -- The economy shrank at a worse-than-expected 6.1 percent pace at the start of this year as sharp cutbacks by businesses and the biggest drop in U.S. exports in 40 years overwhelmed a rebound in consumer spending.

The Commerce Department's report, released Wednesday, dashed hopes that the recession's grip on the country loosened in the first quarter. Economists surveyed by Thomson Reuters expected a 5 percent annualized decline.

Instead, the economy ended up performing nearly as bad as it had in the final three months of last year when it logged the worst slide in a quarter-century, contracting at a 6.3 percent pace. Nervous consumers played a prominent role in that dismal showing as they ratcheted back spending in the face of rising unemployment, falling home values and shrinking nest eggs.

Full article Yahoo News!

THE WEEKLY STANDARD

This Is No Time to Panic

Our economy has recovered before and can do so again.

by John Stossel

02/02/2009, Volume 014, Issue 19

Full article John Stossel THE WEEKLY STANDARD

Excerpts:

Politicians are in agreement: Government must spend, spend, spend to solve the economic "crisis." The words "economic crisis" are accepted as fact. Why? Why is America in "crisis"?

Treasury secretary Hank Paulson wrote in the New York Times, "We are going through a financial crisis more severe and unpredictable than any in our lifetimes." Is he right? Okay, the Dow Jones Industrial Average fell more than 5,700 points, but bubbles have to pop. In the summer of '82, the Dow was at 776. At 8,228, as of this writing, stocks have risen 1,047 percent in 25 years. America is still way ahead of the game.

But people are losing their jobs! President Obama frets that "the unemployment rate could reach double digits." Yes, that would be bad, but in the recession of '82, it reached 10.8 percent. Yet no one even remembers the "crisis" of '82. Today's 7.2 percent unemployment rate is higher than we've grown used to, but we've experienced that rate 16 times over the past 35 years. And it pales in comparison to the 25 percent rate of the Depression era.

SMART MONEY

Ahead of the Curve by Donald Luskin

When Will This Recession Finally End?

There's really just one question that matters this new year. When will the recession end?

Full article Donald Luskin SMART MONEY

Excerpts:

OK, I lied. There's another question that matters even more. Will the recession ever end?

I have a lot of institutional clients who take very seriously the idea that this recession could be permanent. In their minds, it could turn out to be more like a depression. Even when we pull out of the worst of it, we'll be stuck with year after year of slow growth.

Pretty much no one thinks this recession could possibly already be over. And only a few brave souls dare to consider that it might only take another quarter or so to hit bottom. So it's just a matter of, how bad is it really?

Call me crazy, but I actually think we could all end up being pretty pleasantly surprised. I admit I was one of the last people on earth to agree we were in recession in the first place. So let me make up for that mistake: I'll be the first person to say it's over.

REAL CLEAR POLITICS

Markets, Not Economists, Will Help the Economy

By George Will

December 04, 2008

Full article George Will REAL CLEAR POLITICS

Excerpts:

WASHINGTON -- Three days after the president-elect announced in a radio address that he had directed his "economic team" to devise a plan "that will mean 2.5 million more jobs by January of 2011," he told a news conference that he favored measures "that will help save or create 2.5 million jobs." To the extent that his ambition is clear, it is notably modest.

It is, however, unclear. How will anyone calculate the number of jobs "saved"? In what sense saved? Saved from what? Saved by what? By government action, such as agriculture subsidies or other corporate welfare? What about jobs lost because of those irrational uses of finite economic resources? Should jobs "saved" by, say, protectionist policies that interfere with free trade be balanced against jobs lost when export markets are lost to retaliatory protectionism?

In recent years, in normal conditions, the economy has "lost" tens of millions of jobs through capitalism's "creative destruction" (Joseph Schumpeter's phrase). It also has created a few million more than that, which is why the destruction is creative. Investor's Business Daily reports:

GROSS DOMESTIC PRODUCT: THIRD QUARTER 2008 (PRELIMINARY)CORPORATE PROFITS: THIRD QUARTER 2008 (PRELIMINARY)

Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- decreased at an annual rate of 0.5 percent in the third quarter of 2008,(that is, from the second quarter to the third quarter), according to preliminary estimates released by theBureau of Economic Analysis. In the second quarter, real GDP increased 2.8 percent.

The GDP estimates released today are based on more complete source data than were available forthe advance estimates issued last month. In the advance estimates, the decrease in real GDP was 0.3percent (see "Revisions" on page 3).

The decrease in real GDP in the third quarter primarily reflected negative contributions frompersonal consumption expenditures (PCE), residential fixed investment, and equipment and softwarethat were partly offset by positive contributions from federal government spending, private inventoryinvestment, exports, nonresidential structures, and state and local government spending. Imports, whichare a subtraction in the calculation of GDP, decreased.

Most of the major components contributed to the downturn in real GDP growth in the thirdquarter. The largest contributors were a sharp downturn in PCE, a deceleration in exports, a smallerdecrease in imports, and decelerations in nonresidential structures and in state and local governmentspending. Notable offsets were an upturn in inventory investment and an acceleration in federalgovernment spending.

----------------------------------FOOTNOTE.--Quarterly estimates are expressed at seasonally adjusted annualrates, unless otherwise specified. Quarter-to-quarter dollar changes aredifferences between these published estimates. Percent changes are calculatedfrom unrounded data and are annualized. “Real” estimates are in chained(2000) dollars. Price indexes are chain-type measures.

This news release is available on BEA’s Web site along with the Technical Note and Highlightsrelated to this release.----------------------------------

Final sales of computers added 0.03 percentage point to the third-quarter change in real GDP afteradding 0.17 percentage point to the second-quarter change. Motor vehicle output added 0.20 percentagepoint to the third-quarter change in real GDP after subtracting 1.01 percentage points from the second-quarter change.

The price index for gross domestic purchases, which measures prices paid by U.S. residents,increased 4.7 percent in the third quarter, 0.1 percentage point less than in the advance estimate; thisindex increased 4.2 percent in the second quarter. Excluding food and energy prices, the price index forgross domestic purchases increased 3.0 percent in the third quarter, compared with an increase of 2.2percent in the second.

Real personal consumption expenditures decreased 3.7 percent in the third quarter, in contrast toan increase of 1.2 percent in the second. Real nonresidential fixed investment decreased 1.5 percent, incontrast to an increase of 2.5 percent. Nonresidential structures increased 6.6 percent, compared with anincrease of 18.5 percent. Equipment and software decreased 5.7 percent, compared with a decrease of5.0 percent. Real residential fixed investment decreased 17.6 percent, compared with a decrease of 13.3percent.

Real exports of goods and services increased 3.4 percent in the third quarter, compared with anincrease of 12.3 percent in the second. Real imports of goods and services decreased 3.2 percent,compared with a decrease of 7.3 percent.

Real federal government consumption expenditures and gross investment increased 13.6 percentin the third quarter, compared with an increase of 6.6 percent in the second. National defense increased18.0 percent, compared with an increase of 7.3 percent. Nondefense increased 4.5 percent, comparedwith an increase of 5.0 percent. Real state and local government consumption expenditures and grossinvestment increased 0.8 percent, compared with an increase of 2.5 percent.

The real change in private inventories added 0.89 percentage point to the third-quarter change inreal GDP, after subtracting 1.50 percentage points from the second-quarter change. Private businessesdecreased inventories $29.1 billion in the third quarter, following a decrease of $50.6 billion in thesecond quarter and a decrease of $10.2 billion in the first.

Real final sales of domestic product -- GDP less change in private inventories -- decreased 1.4percent in the third quarter, in contrast to an increase of 4.4 percent in the second.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services whereverproduced -- decreased 1.5 percent in the third quarter, compared with a decrease of 0.1 percent in thesecond.

Gross national product

Real gross national product -- the goods and services produced by the labor and property suppliedby U.S. residents -- decreased 0.4 percent in the third quarter, in contrast to an increase of 2.1 percent inthe second. GNP includes, and GDP excludes, net receipts of income from the rest of the world, whichincreased $2.4 billion in the third quarter after decreasing $20.2 billion in the second; in the thirdquarter, receipts decreased $21.3 billion, and payments decreased $23.6 billion.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased3.6 percent, or $126.0 billion, in the third quarter to a level of $14,420.5 billion. In the second quarter,current-dollar GDP increased 4.1 percent, or $143.7 billion.

Revisions

The preliminary estimate of the third-quarter decrease in real GDP is 0.2 percentage point, or $7.7billion, lower than the advance estimate issued last month. The downward revision to the percentchange in real GDP primarily reflected downward revisions to personal consumption expenditures andto exports that were partly offset by an upward revision to private nonfarm inventory investment and adownward revision to imports.

Advance Preliminary (Percent change from preceding quarter)

Real GDP.......................................... -0.3 -0.5Current-dollar GDP................................ 3.8 3.6Gross domestic purchases price index.............. 4.8 4.7

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capitalconsumption adjustments) decreased $14.6 billion in the third quarter, compared with a decrease of$60.2 billion in the second quarter. Current-production cash flow (net cash flow with inventoryvaluation and capital consumption adjustments) -- the internal funds available to corporations forinvestment -- increased $43.5 billion in the third quarter, in contrast to a decrease of $60.5 billion in thesecond.

Third quarter profits from current production were reduced by $46.2 billion because of HurricaneIke, reflecting the net benefits paid by domestic insurance companies and uninsured losses of corporateproperty.

Taxes on corporate income decreased $9.9 billion in the third quarter, in contrast to an increase of$3.9 billion in the second. Profits after tax with inventory valuation and capital consumptionadjustments decreased $4.7 billion in the third quarter, compared with a decrease of $64.1 billion in thesecond. Dividends decreased $5.0 billion in contrast to an increase of $13.9 billion; current-productionundistributed profits increased $0.4 billion, in contrast to a decrease of $78.1 billion.

Domestic profits of financial corporations decreased $61.6 billion in the third quarter, comparedwith a decrease of $31.0 billion in the second. Domestic profits of nonfinancial corporations increased$47.9 billion in the third quarter, in contrast to a decrease of $4.2 billion in the second. In the thirdquarter, real gross value added of nonfinancial corporations increased, and profits per unit of real valueadded increased. The increase in unit profits reflected an increase in unit prices that was partly offset byan increase in unit nonlabor costs; unit labor costs were unchanged.

The rest-of-the-world component of profits decreased $0.9 billion in the third quarter, comparedwith a decrease of $25.0 billion in the second. This measure is calculated as (1) receipts by U.S.residents of earnings from their foreign affiliates plus dividends received by U.S. residents fromunaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreignparents plus dividends paid by U.S. corporations to unaffiliated foreign residents. The third-quarterdecrease was accounted for by a larger decrease in receipts than in payments.

Profits before tax decreased $50.7 billion in the third quarter, compared with a decrease of $0.9billion in the second. The before-tax measure of profits does not reflect, as does profits from currentproduction, the capital consumption and inventory valuation adjustments. These adjustments convertdepreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis tothe current-cost measures used in the national income and product accounts. The capital consumptionadjustment decreased $25.5 billion in the third quarter (from -$62.7 billion to -$88.2 billion), comparedwith a decrease of $14.7 billion in the second. The inventory valuation adjustment increased $61.6billion (from -$154.0 billion to -$92.4 billion), in contrast to a decrease of $44.6 billion.

* * *

The Australian

November 24, 2008

Governments must avoid overreaction in regulation.

Full article The Australian

Excerpts:

IT'S become the lot of outgoing US President George W. Bush, in the waning days of his final term, to warn against excessive market reregulation now a political mantra has set in that deregulation has gone too far since the 1980s, especially in the US. But Mr Bush's message, it appears, did not fit the mood of some leaders at the annual Asia-Pacific Economic Co-operation summit in Lima at the weekend.

China's President Hu Jintao, who is understandably frustrated that recession in the West is undermining his country's growth after it has lent so much to the US, wants a global push for reregulation.

But Mr Hu, like another reregulation supporter at APEC, Kevin Rudd, needs to keep in mind Mr Bush's core argument - that our relatively free markets have encouraged and allowed vastly more genius in wealth and job creation than they have fostered error and dross.

The US leader has a sullied management record to defend, but he correctly observed: "The greater threat to prosperity is not too little government involvement in the market, it is too much."

For Mr Hu's benefit, among others, Mr Bush pointed out that in the era of deregulation the proportion of people in poverty in East Asia had fallen from 80 per cent to 18 per cent in a single generation.

Such an advance, indeed the advances in human welfare due to market economies since the 19th century, must not be discounted. Fortunately there is a middle way between the two presidents, as Mr Hu's call for "fair, just, inclusive and orderly" regulations on a co-ordinated global scale allows, in practice, for moderation just as easily as it does excessive meddling in economies.

Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- increased at an annual rate of 3.3 percent in the second quarter of 2008,(that is, from the first quarter to the second quarter), according to preliminary estimates released by theBureau of Economic Analysis. In the first quarter, real GDP increased 0.9 percent.

The GDP estimates released today are based on more complete source data than were available forthe advance estimates issued last month. In the advance estimates, the increase in real GDP was 1.9percent (see "Revisions" on page 3).

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The acceleration in real GDP growth in the second quarter primarily reflected a larger decrease inimports, an acceleration in exports, an acceleration in PCE, a smaller decrease in residential fixedinvestment, and an upturn in state and local government spending that were partly offset by a largerdecrease in inventory investment.

---------------------------FOOTNOTE.--Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwisespecified. Quarter-to-quarter dollar changes are differences between these published estimates.Percent changes are calculated from unrounded data and are annualized. "Real" estimates are inchained (2000) dollars. Price indexes are chain-type measures.

This news release is available on BEA's Web site (www.bea.gov) along with the Technical Note and Highlightsrelated to this release.

The price index for gross domestic purchases, which measures prices paid by U.S. residents,increased 4.2 percent in the second quarter, the same as in the advance estimate; this index increased 3.5percent in the first quarter. Excluding food and energy prices, the price index for gross domesticpurchases increased 2.2 percent in the second quarter, the same increase as in the first quarter.

Real personal consumption expenditures increased 1.7 percent in the second quarter, comparedwith an increase of 0.9 percent in the first. Real nonresidential fixed investment increased 2.2 percent,compared with an increase of 2.4 percent. Nonresidential structures increased 13.7 percent, comparedwith an increase of 8.6 percent. Equipment and software decreased 3.2 percent, compared with adecrease of 0.6 percent. Real residential fixed investment decreased 15.7 percent, compared with adecrease of 25.1 percent.

Real exports of goods and services increased 13.2 percent in the second quarter, compared with anincrease of 5.1 percent in the first. Real imports of goods and services decreased 7.6 percent, comparedwith a decrease of 0.8 percent.

Real federal government consumption expenditures and gross investment increased 6.8 percent inthe second quarter, compared with an increase of 5.8 percent in the first. National defense increased 7.4percent, compared with an increase of 7.3 percent. Nondefense increased 5.5 percent, compared with anincrease of 2.9 percent. Real state and local government consumption expenditures and grossinvestment increased 2.2 percent, in contrast to a decrease of 0.3 percent.

The real change in private inventories subtracted 1.44 percentage points from the second-quarterchange in real GDP, after subtracting 0.02 percentage point from the first-quarter change. Privatebusinesses decreased inventories $49.4 billion in the second quarter, following a decrease of $10.2billion in the first quarter and a decrease of $8.1 billion in the fourth.

Real final sales of domestic product -- GDP less change in private inventories -- increased 4.8percent in the second quarter, compared with an increase of 0.9 percent in the first.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services whereverproduced -- increased 0.2 percent in the second quarter, compared with an increase of 0.1 percent in thefirst.

Gross national product

Real gross national product -- the goods and services produced by the labor and property suppliedby U.S. residents -- increased 2.6 percent in the second quarter, compared with an increase of 0.1percent in the first. GNP includes, and GDP excludes, net receipts of income from the rest of the world,which decreased $19.4 billion in the second quarter after decreasing $22.5 billion in the first; in thesecond quarter, receipts decreased $21.6 billion, and payments decreased $2.2 billion.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased4.6 percent, or $161.7 billion, in the second quarter to a level of $14,312.5 billion. In the first quarter,current-dollar GDP increased 3.5 percent, or $119.6 billion.

Revisions

The preliminary estimate of the second-quarter increase in real GDP is 1.4 percentage points, or$39.7 billion, more than the advance estimate issued last month. The upward revision to the percentagechange in real GDP primarily reflected upward revisions to exports and to private inventory investmentand a downward revision to imports.

Advance Preliminary (Percent change from preceding quarter)

Real GDP....................................... 1.9 3.3Current-dollar GDP............................. 3.0 4.6Gross domestic purchases price index........... 4.2 4.2

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capitalconsumption adjustments) decreased $37.8 billion in the second quarter, compared with a decrease of$17.6 billion in the first quarter. Current-production cash flow (net cash flow with inventory valuationand capital consumption adjustments) -- the internal funds available to corporations for investment --decreased $41.3 billion in the second quarter, in contrast to an increase of $10.1 billion in the first.

Taxes on corporate income increased $7.4 billion in the second quarter, in contrast to a decreaseof $30.6 billion in the first. Profits after tax with inventory valuation and capital consumptionadjustments decreased $45.2 billion in the second quarter, in contrast to an increase of $13.0 billion inthe first. Dividends increased $14.0 billion compared with an increase of $16.1 billion; current-production undistributed profits decreased $59.2 billion, compared with a decrease of $3.1 billion.

Domestic profits of financial corporations increased $24.7 billion in the second quarter, comparedwith an increase of $37.3 billion in the first. Domestic profits of nonfinancial corporations decreased$46.9 billion in the second quarter, compared with a decrease of $32.1 billion in the first. In the secondquarter, real gross corporate value added increased, and profits per unit of real value added decreased.The decrease in unit profits reflected a decrease in unit prices and an increase in unit nonlabor costs thatwere partly offset by a decrease in unit labor costs.

The rest-of-the-world component of profits decreased $15.6 billion in the second quarter,compared with a decrease of $22.8 billion in the first. This measure is calculated as (1) receipts by U.S.residents of earnings from their foreign affiliates plus dividends received by U.S. residents fromunaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreignparents plus dividends paid by U.S. corporations to unaffiliated foreign residents. The second-quarterdecrease was accounted for by a smaller increase in receipts than in payments.

Profits before tax increased $20.4 billion in the second quarter, in contrast to a decrease of $143.4billion in the first. The before-tax measure of profits does not reflect, as does profits from currentproduction, the capital consumption and inventory valuation adjustments. These adjustments convertdepreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis tothe current-cost measures used in the national income and product accounts. The capital consumptionadjustment decreased $15.0 billion in the second quarter (from -$48.0 billion to -$63.0 billion), incontrast to an increase of $161.2 billion in the first. The inventory valuation adjustment decreased $43.2billion (from -$109.4 billion to -$152.6 billion), compared with a decrease of $35.3 billion.

Consumer Price Index +1.1% June 2008 Unemployment Rate 5.7% July 2008 Payroll Employment -51,000(p) July 2008 Average Hourly Earnings +$0.06(p) July 2008

REVISED ESTIMATES: 2005 THROUGH FIRST QUARTER 2008

Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- increased at an annual rate of 1.9 percent in the second quarter of 2008(that is, from the first quarter to the second quarter), according to advance estimates released by theBureau of Economic Analysis. In the first quarter, real GDP increased 0.9 percent.

The Sunday Times

July 20, 2008

Don’t panic: the economy is still growing

American Account

Irwin Stelzer

Full article Irwin Stelzer The Sunday Times

Excerpts:

“THESE are the times that try men’s souls,” wrote Tom Paine in the harsh winter of 1776 in an effort to persuade his countrymen to persist in their war to throw off the British yoke. “Tis surprising to see how rapidly a panic will sometimes run through a country,” added the English-born Paine.

Some 232 years later the chairman of the Federal Reserve Board and the secretary of Treasury find themselves fighting a different sort of panic, while ordinary investors find themselves in soul-trying straits as their net worth declines for the first time in decades.

Fed chairman Ben Bernanke pulled no punches when he gave his semi-annual report to Congress. “Sizeable losses at financial institutions . . . financial headwinds . . . inflation has remained elevated . . . declining house prices, a softening labour market . . . deteriorating performance of sub-prime mortgages . . . turbulence . . . Decline in the . . . value of the dollar.” There’s more, but you get the idea — a Fed chairman who has deployed every weapon at his command and manufactured new ones in his fight to right the economy, and is not certain he has succeeded.

The Official Blog of National Taxpayers Union NTU Supports Double Taxation Elimination Act

Posted by Andrew Moylan - July 15, 2008

We wrote this letter to Representative Wally Herger today in support of his bill to eliminate capital gains and dividends taxes.

With all the talk about economic stimulus plans, most of which rely on more government spending or redistribution of already-collected taxes, this is one bill that would actually stimulate the economy by eliminating double-taxation and providing an influx of capital into the market.

*************************July 15, 2008

The Honorable Wally Herger

United States House of Representatives

2268 Rayburn House Office Building

Washington, DC 20515

Dear Representative Herger:

On behalf of the 362,000 members of the National Taxpayers Union, I write in strong support of your “Double Taxation Elimination Act,” H.R. 5908. This bill would permanently repeal capital gains and dividends taxes for both individuals and businesses. In doing so, it would reduce burdens on investors and help spur our economy in this difficult time.

In one sweeping action, this bill would solve the problems caused by the Tax Code’s current treatment of capital gains and dividends. Even at the reduced rate of 15 percent, current capital gains and dividends tax policy punishes investments by imposing double-taxation. Because dollars that are invested had to first be earned, they have already been subject to taxation at the higher personal income tax rates. Taxing these dollars again if and when capital gains are realized only serves to deter productive, calculated risk-taking and reduce much-needed investment in our economy.

The “Double Taxation Elimination Act” would also have the effect of negating the less-publicized but equally damaging “inflation tax” built into capital gains treatment. Current policy taxes a capital gain from its basis without regard to the impact of inflation.

For example, an individual who purchased an asset in 1957 for $100 and sold it in 2007 for $700 would generally pay up to 15 percent in taxes on the $600 “gain.” However, inflation actually rendered that investment a $55 loss. H.R. 5908 would prevent another $90 worth of salt being poured into that wound. Sound policy should not tax a “gain” which gives the taxpayer or the U.S. economy no additional economic benefit.

Capital gains and dividends taxation are not simply issues for the mega-rich. Over half of all Americans own stock, most of whom are solidly middle class. Roughly 80 percent of those claiming capital gains or dividends report earnings of less than $100,000 and 47 percent have incomes less than $50,000.

We applaud your efforts to eliminate harmful double-taxation and look forward to working with you to pass this important piece of legislation. Any roll call votes on H.R. 5908 will be heavily weighted in our annual Rating of Congress.

Sincerely,

Andrew Moylan

Government Affairs Manager

REAL CLEAR POLITICS

July 13, 2008

France's Broken Social Model

By Jurgen Reinhoudt

Full article Real Clear Politics Jurgen Reinhoudt

Excerpts:

France's President Nicolas Sarkozy is doing what he can to reform France's economy, with mixed results so far. Seeking to weaken resistance by special-interest groups and militant labor unions, the self-proclaimed reformer is attempting to break through a reform logjam by introducing numerous economic reforms at once, so as to catch his opposition off-guard.

Sarkozy's "all-at-once" tactics may yet work, and the French President is to be commended for emphasizing, in a country where intellectuals often blame outside forces for the economic and cultural predicament of their nation, that France's economy needs fundamental economic reforms.

Yet there are signs that Sarkozy--and his even more reformist party, the UMP--are unwilling to point out the elephant in the room. In fact, not even in his candid political manifesto Testimony does Sarkozy dare point to the core root of France's troubles. The main problem facing France is its misguided "social model" and the nebulous concept of "solidarity" that continues to undergird it. No economic reforms will be effective in healing France's social divide until this misguided model is reformed.

Producer Price Index +1.4% May 2008

Employment Cost Index +0.7% 1st Qtr 2008

Productivity +2.6% 1st Qtr 2008

Consumer Price Index +0.6% May 2008

Unemployment Rate 5.5% June 2008

Payroll Employment -62,000 June 2008

Average Hourly Earnings +$0.06 June 2008

GROSS DOMESTIC PRODUCT: FIRST QUARTER 2008 (FINAL)CORPORATE PROFITS: FIRST QUARTER 2008

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.0 percent in the first quarter of 2008 (that is, from the fourth quarter to the first quarter), according to final estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.6 percent.

The GDP estimates released today are based on more complete source data than were available for the preliminary estimates issued last month. In the preliminary estimates, the increase in real GDP was 0.9 percent (see "Revisions" on page 3).

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE) for services, exports of goods and services, and federal government spending that were partly offset by negative contributions from residential fixed investment and PCE for durable goods.

State Personal Income: First Quarter 2008

U.S. personal income grew 1.1 percent in the first quarter of 2008, after growing 1.2 percent in the last quarter of 2007, according to estimates released today by the U.S. Bureau of Economic Analysis. Across states, personal income growth ranged from 7.6 percent in North Dakota to -1.9 percent in Arkansas.

The unusually wide range of state growth rates is largely a consequence of rising grain prices. Corn prices jumped 22 percent in the first quarter, while wheat prices rose 18 percent and soybean prices 17 percent. This added 6.4 percentage points to personal income growth in North Dakota where the farm sector is predominantly crop production. At the same time, the higher grain prices, which raised expenses for livestock growers, reduced personal income by 1.0 percentage point in Arkansas where the farm sector is predominantly poultry.

Nonfarm growth. Nonfarm personal income growth rates ranged from 2.5 percent in New York to 0.9 percent in Arkansas. Performance bonuses for 2007 (paid in 2008Q1) in the finance industry accounted for New York's strong personal income growth, more than double national nonfarm growth. Because many of the recipients of the bonuses live in Connecticut and New Jersey, personal income of those states was boosted slightly as well.

The first quarter decline in Arkansas's nonfarm personal income is primarily because of bonuses paid in 2007Q4 in the information industry, an industry encompassing activities such as software publishing, telecommunications, and data processing. Earnings in that industry fell 46 percent (or $2.1 billion) in 2008Q1 after growing 141 percent ($2.7 billion) in 2007Q4. This subtracted 2.4 percentage points from the state's personal income growth. Similar, but smaller, fourth quarter bonuses and exercises of stock options in the information industry in Nebraska and Washington State reduced first quarter personal income growth in those states by 0.5 and 0.4 percentage points respectively.

Earnings growth in mining, 5.4 percent nationally, was stronger than in any of the other 23 industries BEA tracks on a quarterly basis. Yet because of its relatively small size-less than one million jobs-mining contributed little to national personal income growth. In contrast, mining contributed more to Texas's first quarter personal income growth than any other industry, 0.4 percentage point, and made Texas one of the fastest growing states in the nation. Mining contributed even more to personal income growth in Wyoming (0.8 percentage point) and in Oklahoma (0.5 percentage point).

Nonlabor income. Property income grew 0.5 percent in 2008Q1, down from 1.5 percent growth in 2007Q4. The deceleration reflects a combination of lower interest rates and a tapering off in federal subsidies for reconstruction related to Hurricane Katrina in Louisiana and Mississippi.

State unemployment insurance benefits grew 6.9 percent nationally in 2008Q1, following a 2.1 percent increase in 2007Q4. Geographically the picture is mixed: unemployment insurance benefits fell 0.2 percent in the New England Region and rose 18 percent in the Rocky Mountain Region. Two states, Florida and Nevada, stand out from the rest. Unemployment benefits rose 25 percent in Florida and 23 percent in Nevada in 2008Q1 and have now reached a nominal level comparable to that which prevailed in those states during 2002-03 when the U.S. was recovering from the last recession.

NOTE.–Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified. Quarter-to-quarter dollar changes are differences between published estimates. Quarter-to-quarter percent changes are calculated from unrounded data and are not annualized.

Definitions

Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and personal current transfer receipts. Net earnings is earnings by place of work (the sum of wage and salary disbursements (payrolls), supplements to wages and salaries, and proprietors' income) less contributions for government social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes).

The estimate of personal income in the United States is derived as the sum of the state estimates; it differs from the estimate of personal income in the national income and product accounts (NIPAs) because of differences in coverage, in the methodologies used to prepare the estimates, and in the timing of the availability of source data.

BEA groups all 50 states and the District of Columbia into eight distinct regions for purposes of data collecting and analyses: New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont); Mideast (Delaware, District of Columbia, Maryland, New Jersey, New York, and Pennsylvania); Great Lakes (Illinois, Indiana, Michigan, Ohio, and Wisconsin); Plains (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota); Southeast (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia); Southwest (Arizona, New Mexico, Oklahoma, and Texas); Rocky Mountain (Colorado, Idaho, Montana, Utah, and Wyoming); and Far West (Alaska, California, Hawaii, Nevada, Oregon, and Washington).

BEA's national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e–mail summaries of BEA releases and announcements.

Consumer Price Index +0.6% May 2008

Unemployment Rate 5.5% May 2008

Payroll Employment -49,000(p) May 2008

Average Hourly Earnings +$0.05(p) May 2008

Change We Can Believe In Is All Around Us

WALL STREET JOURNAL

Brian Wesbury

Full article Brian Wesbury

Excerpts:

This technology has created massive amounts of change. Like the Industrial Revolution before it, the current transformation is anything but pain-free. It's what Joseph Schumpeter called creative destruction. Google, Craigslist and Microsoft have been prospering. General Motors, United Airlines and the New York Times have not. In the midst of layoffs in the newsroom, it's hard to see anything good happening in the rest of the economy.

Yes, there are serious problems in the housing market, and yes, oil prices are at all-time highs, even after adjusting for inflation. As a result, it feels like things are getting worse rapidly. But the subprime mess will end up costing much less in real terms than the savings-and-loan crisis. Americans are spending about 7% of their total budget on energy, roughly the same as in 1970 and well below the peak of 9% in 1981. Once the Fed starts to lift rates again, oil prices should drop.

Americans have had it so good, for so long, that they seem to have forgotten what government's heavy hand does to living standards and economic growth. But the same technological innovation that is causing all this dislocation and anxiety has also created an information network that is as near to real-time as the world has ever experienced.

REAL CLEAR POLITICS

May 31, 2008

The Economy: A Reality Check

By Michael Barone

Full article Michael Barone

Excerpts:

"It's the economy, stupid," James Carville famously said during the 1992 campaign, when a young Bill Clinton was running against the other President Bush. The same could be said during this presidential campaign.

The headlines are full of economic bad news -- mortgage foreclosures, the collapse of an investment bank, higher gas and food prices and lower home prices. Voters routinely list the economy as their chief concern, and consumer confidence has sunk to low levels.

Yet at the same time, the economic numbers are not so bad. A recession is defined as two quarters of contraction. But we haven't had one yet.

The gross domestic product has grown, albeit only by 0.6 percent, in the last two quarters. As my U.S. News colleague James Pethokoukis blogged after the most recent numbers came in, "Dude, where's my recession?"

By any historic standard, our economic numbers are good, though possibly headed in a negative direction. April's unemployment was 5 percent -- a figure that once upon a time was considered full employment. The Consumer Price Index was up 3.9 percent, largely due to price rises in energy and food. "Core inflation" was 2.3 percent. Productivity was up 2.2 percent.

PERSONAL INCOME AND OUTLAYS

April 2008

Personal income increased $20.1 billion, or 0.2 percent, and disposable personal income (DPI)increased $23.4 billion, or 0.2 percent, in April, according to the Bureau of Economic Analysis.Personal consumption expenditures (PCE) increased $21.4 billion, or 0.2 percent. In March, personalincome increased $44.7 billion, or 0.4 percent, DPI increased $35.4 billion, or 0.3 percent, and PCEincreased $41.7 billion, or 0.4 percent, based on revised estimates.

Real disposable personal income decreased less than 0.1 percent in April, in contrast to an increaseof less than 0.1 percent in March. Real PCE decreased less than 0.1 percent, in contrast to an increaseof 0.1 percent.

GROSS DOMESTIC PRODUCT: FIRST QUARTER 2008 (PRELIMINARY)CORPORATE PROFITS: FIRST QUARTER 2008 (PRELIMINARY)

Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- increased at an annual rate of 0.9 percent in the first quarter of 2008,according to preliminary estimates released by the Bureau of Economic Analysis. In the fourth quarter,real GDP increased 0.6 percent.

The GDP estimates released today are based on more complete source data than were available forthe advance estimates issued last month. In the advance estimates, the increase in real GDP was 0.6percent (see "Revisions" on page 3).

The increase in real GDP in the first quarter primarily reflected positive contributions frompersonal consumption expenditures (PCE) for services, exports of goods and services, federalgovernment spending, and private inventory investment that were partly offset by negative contributionsfrom residential fixed investment and PCE for durable goods. Imports, which are a subtraction in thecalculation of GDP, decreased.

The small acceleration in real GDP primarily reflected an upturn in inventory investment that waspartly offset by a deceleration in PCE.

Final sales of computers contributed 0.06 percentage point to the first-quarter growth in real GDPafter contributing 0.16 percentage point to the fourth-quarter growth. Motor vehicle output subtracted0.35 percentage point from the first-quarter growth in real GDP after subtracting 0.86 percentage pointfrom the fourth-quarter growth.

WALL STREET JOURNAL

Home Sales Rise in Hard-Hit Areas

Buyers Snatch Up

By JAMES R. HAGERTY

May 27, 2008; Page A3

Full article James R. Hagerty WSJ

Excerpts

Home sales are rising in some U.S. metropolitan areas where lenders have slashed prices on foreclosed properties.

Generally, home sales remain weak. The National Association of Realtors reported last week that sales of previously occupied homes in April were down about 18% from the already depressed year-earlier level.

But sales are up sharply in some of the areas hit hardest by foreclosures and falling prices. They include: Las Vegas; Sacramento, Calif.; Fort Myers, Fla.; and inner-city Detroit.

Though Americans remain wary of further drops in housing prices, the data from these areas show that some buyers are trolling for bargains. Sellers "have moved into the acceptance mode" and are pricing homes more realistically, says Thomas Lawler, a housing economist in Leesburg, Va. "I think it is the first stage of good news for the market."

Consumer Price Index +0.3% Mar 2008

Unemployment Rate 5.0%

Apr 2008 Payroll Employment -20,000(p)

Apr 2008 Average Hourly Earnings +$0.01(p) Apr 2008

THE HERITAGE FOUNDATION

May 2, 2008

Free Trade Agreements: Promoting Prosperity in 2008

by Daniella Markheim

Full article Daniella Markheim Heritage Foundation

Excerpts:

Despite more than five decades of evidence that freer trade promotes opportunity and prosperity, the impact of open markets on the U.S. economy and its workers remains a hot political issue. Current market turmoil in the United States only adds fuel to the anti– free trade fire, as a general mistrust of globalization is exacerbated by uncertainty over the health of the domestic economy.

Democratic presidential hopefuls are taking full advantage of America's current economic slowdown, painting the situation as proof that the policies of the past eight years—especially those advancing freer trade—have failed.

With the anti–free trade campaign rhetoric flying and a hostile majority in Congress, the Bush Administration faces an uphill battle in its fight to win some last victories for a free trade agenda that has gone far to promote the economic and strategic benefits that open markets bring to the U.S. economy.

Bureau of Economic Analysis (BEA) U.S. Dept. of Commerce

Disposable personal income: Chained (2000) dollars.............. +12.1 %

The Commerce Dept. data shows that inflation adjusted disposable personal income DPI (chained dollars) is up 12.1% since 2000. That's $3700 for every man woman and child or $15,000 average for a family of four.

Hillary Clinton and Barack Obama keep talking about workers having less money than previously.

Where are these Clinton and Obama figures coming from?

To see the percentage increase in chained dollars (adjusted for inflation), go to the (BEA) Bureau of Economic Analysis report, BEA is an arm of the Commerce Department.

The report was released on May 1, 2008, covering through March 2008.

Bureau of Economic Analysis

PERSONAL INCOME AND OUTLAYS

March 2008

Personal income increased $38.8 billion, or 0.3 percent, and disposable personal income (DPI)increased $29.6 billion, or 0.3 percent, in March, according to the Bureau of Economic Analysis.Personal consumption expenditures (PCE) increased $42.9 billion, or 0.4 percent. In February, personalincome increased $58.2 billion, or 0.5 percent, DPI increased $50.3 billion, or 0.5 percent, and PCEincreased $11.0 billion, or 0.1 percent, based on revised estimates.

April 24, 2008 11:13 AM

Hungry Like the Ethanol Wolf

By the Editors

Full article NRO

Excerpts:

The federal government can do something right now to provide relief to Americans facing higher food prices: Repeal the ethanol mandate. The diversion of one-third of the American corn crop into ethanol production is a direct result of the 2005 law that required gasoline makers to buy 7.5 billion gallons of ethanol — a mandate that the 2007 energy bill President Bush signed in December increases to 36 billion gallons by 2022.

We realize that a repeal is highly unlikely, given that the machinery of government is currently calibrated to move in the opposite direction on biofuels, but as food prices keep going up, pro-ethanol politicians will find it increasingly difficult to justify their position. Food riots in developing countries are becoming more frequent. Wal-Mart’s Sam’s Club has started limiting sales of rice because immigrants are buying all the rice they can and sending it to relatives in countries suffering from food shortages. In the U.S., the Labor Department reported this month that the price of bread is up 14.7 percent from last year. Milk prices are up 13.3 percent.

The production of ethanol is not the only factor driving food prices up. Demand for food is growing in China and India as more people in those countries move into the middle class. Fuel prices are up, making it more expensive to cultivate food crops and transport them to market. A drought in Australia, a major wheat exporter, has sent bread prices soaring.

CLUB FOR GROWTH

Club For Growth

Great Idea!

Andrew Roth

I just got this email from Rep. John Campbell (R-CA-48).

Rep. Campbell Seeks Original Co-sponsors for the Put Your Money Where Your Mouth Is Act

There are many liberals who espouse the virtues of big government and say that they would be willing to pay more taxes. I feel they should have the ability to put their money where their mouth is.

That is why I am introducing the Put Your Money Where Your Mouth Is Act, which would amend the Tax Code to allow individuals to make voluntary donations to the federal government above and beyond their normal tax liability. The bill would even place a line on the IRS tax form to make it easier for them to do so.

Leaders should be willing to do things before they would ask others to do them. Let’s give them a chance to do the honorable thing and pay extra taxes before asking others to do the same.

On the first day of trading in the fourth quarter the Dow Jones Industrial Average climbed 391 points to 12654. The Nasdaq shot up 84 to 2363, and the S&P 500 picked up 47 at 1370.

What’s good for America is bad for Democrats.

Democrats want Americans dependent on government. The greater the number, the better it is for Democrats.

Democrats care only about the power which government gives them. So the more discontent they can create, the more hangers on it brings. Since those hangers on will never persist to get whatever share of the American Dream, that hard work and developed skills will yield them, they foolishly look to government to redistribute to them the labor of others.

Through year 2005---$55,900

U.S. Treasury WSJ 12-17-2007

The charlatans convincing the hangers on that they've been victimized are smooth talking. Talking artfully is what they do for a living, they get to practice and perfect the skill of smooth talking and perfecting what George Orwell called "newspeak" in his book, 1984, which featured such slogans as "War Is Peace","Freedom is Slavery", "Ignorance is Strength"

Hillary Clinton's "Excellent Adventure in Bosnia" has given us a new word that is perfect for the Newspeak Library. Hillary had a "misspoke", present tense "misspeak."

So while the nanny-state's incessant drumbeat of negativity is always with us because of the cooperation of the Mainstream Media's devotion to it, let's examine some facts to see if this economy is as bad as the daily drumbeat that tells us it is.

Not a single gain or positive of the last 6 years ever gets even a murmur.

Do Americans even know how much more their after tax income is, compared to what it was it 2000?

Per capita is up $3700 for every man woman and child. This means a family of four now has on the average $14,500 more than it did, adjusted for inflation.

Unemployment is so much lower than it was under Bill Clinton, it's not even close, a full percentage point lower and lower than the average of the last 30 years. That means millions more working and being productive, compared to what it would be if the unemployment rate was the same as it was under Bill Clinton.

That rate was actually good under Bill Clinton, an improvement over many previous years. He got and deserved credit for it, but Democrats are doing the opposite because a better performance under a Republican can never deserve as much credit as a lesser performance under a nanny-state leader.

The last two months have seen a small decline in new jobs after 52 months of uninterrupted job growth – the longest period on record. Our economy has added nearly one million jobs over the last 12 months, and more than 8.2 million since August 2003.

Because the nanny-state, leftist policies are almost always harmful, we have higher gas prices, higher health insurance premiums, higher costs of education including college, higher food prices and other costs that are higher because of government interference, regulations, waste, incompetence before even discussing higher taxes always pushed for by Democrats.

As for gas prices, the environmental extremists are almost totally responsible for gas prices and that movement is almost a totally leftist Democrat backing interest group.

Is there ever a day when when Democrats do not decry cruel Republicans for not committing more money to what most of the time turns out to give the country its present nightmare.

The Comptroller General is on a “Fiscal Wake Up Tour” practically pleading with Americans to realize a spending tsunami is at this very moment carrying us toward very negative factors.

Notice, not tax cuts but spending, especially entitlements is what the Comptroller General is touring about.

There will be much more data coming forth on this site on a regular basis regarding the positives of the economy since the 2003 tax cuts and plenty of data to show the news is nowhere near as bad as Democrats are portraying it.

Consumer Price Index +0.4% Jan 2008

Unemployment Rate 4.8% Feb 2008

Payroll Employment -63,000(p) Feb 2008

Average Hourly Earnings +$0.05(p) Feb 2008

Jan 2008 Productivity +1.9% 4th Qtr 2007

Jan 2008 Unemployment Initial (UI) Claims 351,000 Mar 1 2008

UI Claims 4-Week Average 359,500 Mar 1 2008

Center for Constitutional Government

Sunrise review laws protect entrepreneurs

Jennifer Perkins

Goldwater Institute

February 27, 2008

Full article To Jennifer Perkins Goldwatwer Institute

Excerpts:

As Ronald Reagan famously noted, “Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States.” Why is it, then, that every year we see more proposed government regulations that make it harder for small businesses to open and operate?

Senate Bill 1502 could help address this regulatory creep: It would require the legislature to conduct a “sunrise review” process before erecting new regulatory barriers to entrepreneurship. Sunrise reviews require proponents of a regulation to demonstrate an actual need for it before the legislature may adopt it.

Sunrise requirements in other states have effectively caused lawmakers to scrutinize proposed regulations and reject government overreaching. For example, every state with a sunrise process that has considered regulating interior designers has ended up deciding against it because those seeking the regulations fail to provide evidence that regulation would benefit the public. On the other hand, in states without sunrise requirements, interior design regulations have been adopted with limited legislative scrutiny.

Full article

GROSS DOMESTIC PRODUCT: FOURTH QUARTER 2007 (PRELIMINARY)

Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- increased at an annual rate of 0.6 percent in the fourth quarter of 2007,according to preliminary estimates released by the Bureau of Economic Analysis. In the third quarter,real GDP increased 4.9 percent.

The GDP estimates released today are based on more complete source data than were available forthe advance estimates issued last month. In the advance estimates, the increase in real GDP was also 0.6percent.

The increase in real GDP in the fourth quarter primarily reflected positive contributions frompersonal consumption expenditures (PCE), exports, nonresidential structures, state and local governmentspending, and equipment and software that were largely offset by negative contributions from privateinventory investment and residential fixed investment. Imports, which are a subtraction in thecalculation of GDP, decreased.

The deceleration in real GDP growth in the fourth quarter primarily reflected a downturn ininventory investment and decelerations in exports, in PCE, and in federal government spending thatwere partly offset by a downturn in imports.

Final sales of computers contributed 0.16 percentage point to the fourth-quarter growth in realGDP after contributing 0.28 percentage point to the third-quarter growth. Motor vehicle outputsubtracted 0.85 percentage point from the fourth-quarter growth in real GDP after contributing 0.36percentage point to the third-quarter growth.

FOOTNOTE.--Quarterly estimates are expressed at seasonally adjusted annual rates, unlessotherwise specified. Quarter-to-quarter dollar changes are differences between thesepublished estimates. Percent changes are calculated from unrounded data and are annualized."Real" estimates are in chained (2000) dollars. Price indexes are chain-type measures.

Economy

The price index for gross domestic purchases, which measures prices paid by U.S. residents,increased 3.9 percent in the fourth quarter, 0.1 percentage point more than in the advance estimate; thisindex increased 1.8 percent in the third quarter. Excluding food and energy prices, the price index forgross domestic purchases increased 2.5 percent in the fourth quarter, compared with an increase of 1.9percent in the third.

Real personal consumption expenditures increased 1.9 percent in the fourth quarter, comparedwith an increase of 2.8 percent in the third. Real nonresidential fixed investment increased 6.9 percent,compared with an increase of 9.3 percent. Nonresidential structures increased 14.7 percent, comparedwith an increase of 16.4 percent. Equipment and software increased 3.3 percent, compared with anincrease of 6.2 percent. Real residential fixed investment decreased 25.2 percent, compared with adecrease of 20.5 percent.

Real exports of goods and services increased 4.8 percent in the fourth quarter, compared with anincrease of 19.1 percent in the third. Real imports of goods and services decreased 1.9 percent, incontrast to an increase of 4.4 percent.

Real federal government consumption expenditures and gross investment increased 0.9 percent inthe fourth quarter, compared with an increase of 7.1 percent in the third. National defense decreased 0.3percent, in contrast to an increase of 10.1 percent. Nondefense increased 3.4 percent, compared with anincrease of 1.1 percent. Real state and local government consumption expenditures and grossinvestment increased 3.0 percent, compared with an increase of 1.9 percent.

The real change in private inventories subtracted 1.49 percentage points from the fourth-quarterchange in real GDP, after adding 0.89 percentage point to the third-quarter change. Private businessesdecreased inventories $10.1 billion in the fourth quarter, following increases of $30.6 billion in the thirdquarter and $5.8 billion in the second.

Real final sales of domestic product -- GDP less change in private inventories -- increased 2.1percent in the fourth quarter, compared with an increase of 4.0 percent in the third.

Economy

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services whereverproduced -- decreased 0.3 percent in the fourth quarter, in contrast to an increase of 3.3 percent in thethird.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased3.3 percent, or $113.6 billion, in the fourth quarter to a level of $14,084.1 billion. In the third quarter,current-dollar GDP increased 6.0 percent, or $201.7 billion.

2007 GDP

Real GDP increased 2.2 percent in 2007 (that is, from the 2006 annual level to the 2007 annuallevel), compared with an increase of 2.9 percent in 2006.

The major contributors to the increase in real GDP in 2007 were personal consumptionexpenditures (PCE), exports, nonresidential structures, and state and local government spending. Thesepositive contributions were partly offset by decreases in residential fixed investment and in inventoryinvestment. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP primarily reflected a larger decrease in residential fixed investment,a downturn in private inventory investment, and a deceleration in equipment and software that werepartly offset by a deceleration in imports.

The price index for gross domestic purchases increased 2.7 percent in 2007, compared with anincrease of 3.3 percent in 2006.

Current-dollar GDP increased 4.9 percent, or $649.1 billion, in 2007. Current-dollar GDPincreased 6.1 percent, or $760.8 billion, in 2006.

During 2007 (that is, measured from the fourth quarter of 2006 to the fourth quarter of 2007), realGDP increased 2.5 percent. Real GDP increased 2.6 percent during 2006. The price index for grossdomestic purchases increased 3.3 percent during 2007, compared with an increase of 2.4 percent during2006.

Economy

BEA's national, international, regional, and industry estimates; the Survey of Current Business;and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting thesite, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

* * *

Next release -- March 27, 2008, at 8:30 A.M. EDT for: Gross Domestic Product: Fourth Quarter 2007 (Final) Corporate Profits: Fourth Quarter 2007

###

Right-click to download Real World Economics: For High School Seniors College Students and New Entrants To The Workforce.

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If you want to open the file in your browser window, just click on the link. However, if you want to download the file to view later, then right-click on the link and choose "Save Target As" if you are using Internet Explorer or "Save Link As" if you are using Mozilla. Some Browsers use "Save File as" Then select where you want to save the file on your hard drive.

Once you have saved the file, locate where you saved it, and double click to open.

One of the main features is an outline of a plan for getting 25 to 30 year olds elected to congress.

This is in no way an endorsement of Ron Paul. The importance of it is that running for congress is realistic for any eligible person who has the right message.

Consumer Confidence Plunges While Wholesale Inflation Rises at Fastest Pace in 26 Years

Consumer confidence and home prices saw sharp declines while basics such as food, energy and medicine were areas causing wholesale inflation to rise at the fastest pace since late 1981.

January prices rose 1% due mostly to a rise in the prices of energy, food and prescription drugs. This followed a report last week that consumer prices had risen by a bigger-than-expected 0.4 percent because of price pressures in the same areas.

During the last year wholesale prices rose by 7.4 percent, the largest yearly increase since late 1981.

Unemployment Rate 4.9% Jan 2008

Payroll Employment -17,000(p) Jan 2008

Average Hourly Earnings +$0.04(p) Jan 2008

4th Qtr 2007 Productivity +1.8% Jan 2008

Unemployment Initial (UI) Claims 348,000 Feb 9 2007

Right-click to download Real World Economics: For High School Seniors College Students and New Entrants To The Workforce.

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One of the main features is an outline of a plan for getting 25 to 30 year olds elected to congress.

This is in no way an endorsement of Ron Paul. The importance of it is that running for congress is realistic for any eligible person who has the right message.

UI Claims 4-Week Average

Retail Sales Rebound in January, Up 0.3 Pct. Wednesday, Feb. 13, 2008

The Commerce Department reported on February 13, that retail sales rose by 0.3 percent last month. Sales had fallen by 0.4 percent in December, leading to their worst Christmas shoppingseason in five years for retailers. There was an increase in the demand for new cars and a big jump in sales at gasoline service stations, which reflected higher pump prices.

The January performance was a pleasant surprise. Analysts were forecasting a 0.3 percent decline for the month. The January rebound may not last it is believed, due to mostly to the slump in housing, to job losses and a severe credit squeeze.

Consumer spending, is being closely watched for signals of whether the country is falling into a recession.

Retailers experienced more evidence of a weakening economy Thursday, as Wal-Mart Stores Inc., among others, reported weak January results, extending a slowdown that has deepened since the holiday shopping season.

Consumers facing high gas and food prices, a slumping housing market, an escalating credit crisis and a weakening job market pulled back further, mostly on necessities.

Among the few winners was Costco Wholesale Corp., whose results beat Wall Street expectations.

Wal-Mart, reported a 0.5 percent gain in same-store sales, or business at stores open at least a year. Analysts had expected a 2.0 percent increase.

But Costco reported a 7 percent gain in same-store sales.

Limited Brands reported an 8 percent drop in same-store sales in January, less than the 6.9 percent forecast.

Pacific Sunwear experienced a 7.4 percent drop in same-store sales; Expectations were for a 1.2 percent rise.

Wet Seal Inc.'s January same-store sales fell 5.7 percent. A 1.5 percent decline had been forecasted by analysts.

© 2008 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

GROSS DOMESTIC PRODUCT: FOURTH QUARTER 2007 (ADVANCE)

Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- increased at an annual rate of 0.6 percent in the fourth quarter of 2007,according to advance estimates released by the Bureau of Economic Analysis. In the third quarter, realGDP increased 4.9 percent.

The Bureau emphasized that the fourth-quarter "advance" estimates are based on source data thatare incomplete or subject to further revision by the source agency (see the box on page 3). The fourth-quarter "preliminary" estimates, based on more comprehensive data, will bereleased on February 28, 2008.

The increase in real GDP in the fourth quarter primarily reflected positive contributions frompersonal consumption expenditures (PCE), nonresidential structures, state and local governmentspending, exports, and equipment and software that were largely offset by negative contributions fromprivate inventory investment and residential fixed investment. Imports, which are a subtraction in thecalculation of GDP, increased slightly.

The deceleration in real GDP growth in the fourth quarter primarily reflected a downturn ininventory investment and decelerations in exports, in PCE, and in federal government spending thatwere partly offset by a deceleration in imports and an acceleration in state and local governmentspending.

Final sales of computers contributed 0.18 percentage point to the fourth-quarter growth in realGDP after contributing 0.28 percentage point to the third-quarter growth. Motor vehicle outputsubtracted 0.90 percentage point from the fourth-quarter growth in real GDP after contributing 0.36percentage point to the third-quarter growth.

FOOTNOTE.--Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified.Quarter-to-quarter dollar changes are differences between these published estimates. Percent changes arecalculated from unrounded data and are annualized. "Real" estimates are in chained (2000) dollars.Price indexes are chain-type measures.

From: Bureau of Economic Analysis (BEA)

GDP and the Economy: Final Estimates for the Third Quarter of 2007Real GDP increased 4.9 percent after increasing 3.8 percent in the second quarter. Exports, consumer spending, and inventory investment all accelerated. Corporate profits turned down.

From: Small Business and Entrepreneurship Council (SBE)

Stimulating the Economy

January 9, 2008

The Entrepreneurial View #466

Economic "Stimulus"?

by Raymond J. Keating

Full article Full Article Describes Real Stimulis Not Nanny-State Nonsense

Excerpts:

With the economic waters getting rougher - and many now expecting a recession in 2008 - there's a good deal of talk about an "economic stimulus" package coming out of our nation's capital.

Can government actually "stimulate" the economy away from or out of recession? Of course not.

Unfortunately, many have been laboring under this misnomer since John Maynard Keynes misled the economics profession regarding government's so-called management of aggregate demand, and President Franklin Delano Roosevelt got it wrong on the political and policy fronts in the 1930s. Keep in mind, while FDR gets credit in some circles for guiding the U.S. out of the Great Depression, in reality, the U.S. economy did not recover until after World War II.

The best government can do is establish the proper policy climate in which entrepreneurs and investors can take risks, grow the economy, and create jobs. It is private sector investment, innovation, invention, efficiency and productivity that spur the economy forward, not government.

Therefore, many of the "economic stimulus" ideas being kicked around right now will either do nothing to boost the economy, or will actually inflict further damage.

PERSONAL INCOME AND OUTLAYS

NOVEMBER 2007

Personal income increased $43.1 billion, or 0.4 percent, and disposable personal income (DPI)increased $32.9 billion, or 0.3 percent, in November, according to the Bureau of Economic Analysis.Personal consumption expenditures (PCE) increased $110.6 billion, or 1.1 percent. In October,personal income increased $24.8 billion, or 0.2 percent, DPI increased $17.0 billion, or 0.2 percent,and PCE increased $39.4 billion, or 0.4 percent, based on revised estimates.

Wages and salaries

Private wage and salary disbursements increased $36.0 billion in November, in contrast to adecrease of $1.3 billion in October. Goods-producing industries' payrolls increased $6.2 billion, incontrast to a decrease of $2.2 billion; manufacturing payrolls increased $2.9 billion, in contrast to adecrease of $1.2 billion. Services-producing industries' payrolls increased $29.8 billion, comparedwith an increase of $1.0 billion. Government wage and salary disbursements increased $4.0 billion,the same increase as in October.

EconomyOther personal income

Supplements to wages and salaries increased $6.0 billion in November, compared with anincrease of $4.4 billion in October.

Proprietors' income increased $7.2 billion in November, compared with an increase of $3.7billion in October. Farm proprietors' income increased $0.5 billion, compared with an increase of$0.6 billion. Nonfarm proprietors' income increased $6.7 billion, compared with an increase of $3.1billion.

Rental income of persons increased $1.9 billion in November, compared with an increase of$2.2 billion in October. Personal income receipts on assets (personal interest income plus personaldividend income) increased $2.5 billion, compared with an increase of $2.4 billion. Personal currenttransfer receipts decreased $9.5 billion, in contrast to an increase of $9.6 billion. The Novemberchange reflects a decrease in Medicare part D prescription drug benefit payments; the reductionreflects the annual reconciliation of estimated and actual prescription drug costs.

Contributions for government social insurance -- a subtraction in calculating personal income --increased $5.1 billion in November, compared with an increase of $0.2 billion in October.

Personal current taxes and disposable personal income

Personal current taxes increased $10.3 billion in November, compared with an increase of $7.8billion in October. Disposable personal income (DPI) -- personal income less personal current taxes-- increased $32.9 billion, or 0.3 percent, in November, compared with an increase of $17.0 billion,or 0.2 percent, in October.

Personal outlays and personal saving

Personal outlays -- PCE, personal interest payments, and personal current transfer paymentsincreased $111.9 billion in November, compared with an increase of $41.0 billion in October. PCEincreased $110.6 billion, compared with an increase of $39.4 billion.

Personal saving -- DPI less personal outlays -- was a negative $48.4 billion in November, incontrast to a positive $30.7 billion in October. Personal saving as a percentage of disposablepersonal income was a negative 0.5 percent in November, in contrast to a positive 0.3 percent inOctober. Negative personal saving reflects personal outlays that exceed disposable personal income.Saving from current income may be near zero or negative when outlays are financed by borrowing(including borrowing financed through credit cards or home equity loans), by selling investments orother assets, or by using savings from previous periods. For more information, see the FAQs on"Personal Saving" on BEA's Web site.

Real DPI and real PCE

Real DPI -- DPI adjusted to remove price changes -- decreased 0.3 percent in November,compared with a decrease of 0.2 percent in October.

Real PCE -- PCE adjusted to remove price changes -- increased 0.5 percent in November,compared with an increase of 0.1 percent in October. Purchases of durable goods increased 0.6percent, in contrast to a decrease of 0.1 percent. Purchases of nondurable goods increased 0.6percent, compared with an increase of 0.3 percent. Purchases of services increased 0.5 percent,compared with an increase of less than 0.1 percent.

The price index for PCE increased 0.6 percent in November, compared with an increase of 0.3percent in October; most of the November increase was accounted for by increases in energy prices.The PCE price index, excluding food and energy, increased 0.2 percent, the same increase as inOctober.

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.9 percent in the third quarter of 2007, according to preliminary estimates released by the Bureau of Economic Analysis.

In the second quarter, real GDP increased 3.8 percent.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 5.9 percent, or $198.5 billion, in the third quarter to a level of $13,967.3 billion.

In the second quarter, current-dollar GDP increased 6.6 percent, or $216.9 billion.