Written By:
Ingo Winzer, President
Ingo Winzer, President
Local Market Monitor
The
Gross Domestic Product is no longer a highly reliable measure of what's going
on with the national economy. In the fourth
quarter of 2014 it was up 2.2
percent - but in the third quarter it was up 5.0 percent and in
the first quarter it was down 2.1
percent. So, is the economy doing better or worse? At another level,
though, GDP can show us how things are different
now than they used to be - which can help us foresee future trends.
Ten years ago, in 2004, some parts of GDP looked
very much like they do right now. Personal spending contributed 2.7 percent to
GDP - versus 3.0 percent in the fourth quarter of 2014, and net imports then
were a minus .59 percent - versus a minus 1.03 percent now. The big differences
are in government spending, which
contributed .37 percent then - against a minus .35 percent now, and in private investment, which contributed
2.0 percent to GDP then but has averaged only .85 percent over the last three
years. Between the two of them, government spending and private investment consistently contribute almost 2 percent less to GDP then they used
to.
The
number of jobs in March was up 2.3
percent from last year, while unemployment stayed at 5.5 percent. Jobs were
up 5 percent in construction - not yet a big deal but a dawning hope that the
sector can be resurrected, 1.6 percent in manufacturing, 2.1 percent in retail,
3.5 percent in business services, 2.7 percent in healthcare, and 4.0 percent at
restaurants. As is now the new normal, job growth in government was flat.
The
GDP data show that healthcare spending
was up sharply in the fourth quarter - combined with the recent growth in
healthcare jobs this looks like a consequence of the expansion of healthcare
insurance. Whether this is a permanent boost to the economy or just a temporary
surge remains to be seen.
