We’ve mentioned previously that as the stimulus fades — once the pig is through the python — the economy will settle into a more normalized growth rate. That process is now well under way:
The graphic above shows that the Frankenstein thesis — a massive dose of stimulus in a post bubble/ excess-capacity era — has generated an anemic recovery. Compare this to Ronald Reagan’s full blown, chock full of new non-farm payrolls, self sustaining expansion.
Here is an excerpt of this official WSJ chatter:
U.S. economic growth decelerated to a slower-than-expected pace in the second quarter as consumer spending fell to its weakest rate in three years.
Gross domestic product, the total output of goods and services, increased at a 3% annual rate from April to June, the Commerce Department reported, compared with a revised 4.5% pace in the first quarter. The report showed gauges measuring prices rose slightly. Economists had expected a growth rate of 3.6% this spring, according to a survey by Dow Jones Newswires and CNBC.
One last issue, the government revised the benchmark used to calculate GDP since the Q1 2001. The recalculation calls into question the dating of the latest recession. We’ll have more on this issue — and the strong political overtones — later.
U.S. Economic Growth Slows As Consumers Curb Spending
WALL STREET JOURNAL, July 30, 2004 11:16 a.m.