The US Economy grew 4.8% in Q1

US GDP grew at 4.8% in Q1, clocking the second-highest growth in any quarter in the last 5 years.  This also made up for the weak growth in Q4 2005, and has ensured that the US economy remains on a trajectory of robust growth.

    

What is noteworthy is that this high growth has continued despite high oil prices (where were in the $60s per barrel in Q1), and despite the high trade deficit.  In the late 1990s, despite inexpensive oil and a much smaller trade deficit, GDP growth rates were not much higher than what we have seen over the last 3 years.  This shows of structurally sound the US economy is at the moment, and how it is growing at a rate much, much higher than the EU.  The so-called 'oil-crisis' is a media circus, nothing more. 

Related : The World Economy Grew 4.3% in 2005.

Comments

[usnjay]

The false oil ‘crisis’ shows yet again how antithetical American Media has become to American prosperity. The oil scare was due to the competition for ratings, so even those news organizations that are less liberal took part. Combined with the media’s rigid domination by the one political ideology (socialism) which is at odds with the American ideal of individual freedom, it has become a force which can be justly labeled as destructive to human happiness.

The fact that most Americans are fooled by the Democrat dominated media into believing that a long period of economic growth is a 'bad economy' is another example. If people are so easily fooled into thinking a period of prosperity is bad, how will they feel during the next real recession?
usnjay

[Jake]

Yes, the good news is that big business profits continue to do reasonably well and top earners see their boats lifted higher.

The bad news is, day to day Americans are continuing to see a decline in real wages.

Real wages dropped .9%, as part of a continuing and ongoing decline.

[GK]

usnjay,

You are right. Modern-day socialism is little more than juvenile envy of those who are optimistic, productive, and hard-working. Your observation that it is destructive to human happiness is correct, and is the reason most "liberals" are so tortured and agonized when the world is moving in a direction opposite to what they would like.

In case you didn't catch this article before, the defeat of socialism is the biggest event of the last 15 years.

Jake,

Well, consumer confidence is at a 5-year high, and the unemployment rate is just 4.7%, while 4 million jobs were created in the past 2 years. Why would real wages be declining even as jobs are being created? Because healthcare costs are consuming money that businesses could otherwise have passed onto employees. Nothing more.

[usnjay]

Jake:
I agree real wages dropped for the period described in the article. A longer term view shows they've risen, but admittedly not much. GK's argument that it is due to rising health care is a good one, but if you stare at just the take-home salary you're missing the forest for the trees.

Capitalism (which is just another word for freedom, it's what people do when they're free economically) is allowing technology to surge, more opportunity to select a higher paying job (due to job growth), and more you can buy with the money you have.

So a given job's pay hasn't increased, but more and more people quit the lower paying job and move up to a higher paying one. See this short article.

Again, the poor-get-poorer mantra in the face of a rapidly rising economy is proof of media bias (as evidenced in the NY Times article referenced above), not real science.
usnjay

[Jake]

"Well, consumer confidence is at a 5-year high"

That's not saying much when you look at the state of the economy over the last 5 years. Other poll-based indicators of economic health paint a more dismal picture: 67% of Americans rate the economy as bad, very bad, or terrible.

"the unemployment rate is just 4.7%, while 4 million jobs were created in the past 2 years"

Job creation, fortunately, is starting to move in the right direction again: even if the quality of those jobs is in decline, I think, a more likely explanation for the real wage decline.

I also find the unemployment rate dubious: I think this has more to do with the relatively new way (and generally seen as an inferior way by most economists) the unemployment rate is determined.

"Because healthcare costs are consuming money that businesses could otherwise have passed onto employees."

Do the reasons for the facts change the facts?

"(which is just another word for freedom, it's what people do when they're free economically)"

Nonsense. This old Milton Friedman myth is just that: a myth. Check out the book "Not So Free to Choose" for a much more eloquent explanation that I can provide in a quick blog response. I'm a left leaning capitalist (translate: I want capitalism with strict rules, safety nets, and protections - a balance of government and corporate power), but let's not pretend you can't be "free" in alternative market systems.

"Again, the poor-get-poorer mantra in the face of a rapidly rising economy is proof of media bias (as evidenced in the NY Times article referenced above), not real science."

The facts don't support your hypothesis. Top earners are seeing their incomes rise: the majority of earners beneath that tier are seeing a decline in real wages. This indicates that, by very definition, the rich are getting richer, and the poor are getting poorer.

[usnjay]

Jake:
Job creation has been positive for two years, and the poor have been getting richer the whole time.

This is because new jobs means new opportunity, so people can move to a higher paying job. Yes, their old job still pays the same, but their no longer in it, someone younger and less experienced is.

Capitalism is, by definition, what people do when they're free. Not free from reality, but free from instigation of force by other citizens OR their gov't. Most books that try to claim freedom is really slavery take the view that having to eat is a form of slavery. "Not So Free to Choose" is famous for being a perfect example of a straw man argument. It describes capitalism as something it's not (a forced system) and then shows how countries that converted from very socialist systems to less socialist systems are examples of capitalism failures.

There has never been a country even approaching the capitalist ideal. But when you compare different countries there is a clear direct, causal relationship between prosperity and freedom.

[GK]

Usnjay is absolutely right.

A lot of socialists like to state that 71% of the wealth in the US is controlled by 10% of the households, and that the bottom 90% control only 29% of the wealth.

This is true. But it is not the whole story.

It is also true that people above age 50 control 70% of the wealth in the US. People below age 30 control just 2%.

That puts things into perspective. People start out without much, work and accumulate during their lives, and by age 50, usually have 20-100 times the wealth they had at age 25.

People with no net worth at age 23 are NOT part of some perenially oppressed underclass. They are just at the early stages of accumulating wealth.