U.S. GDP Grew By 5.7% In The 4th Quarter:.. Really?

U.S. GDP Grew By 5.7% In The 4th Quarter

The U.S. Department of Commerce released its preliminary 4th Quarter GDP calculation today. It looks pretty good. GDP grew by a whopping 5.7% annualized pace during the quarter, the fastest growth the U.S. has seen since 2003. That's the second quarter of positive income growth, and significantly better than the 3rd quarter's 2.2% growth.

Let's look at this for a second:

From Wikipedia, the free encyclopedia

The gross domestic product (GDP) or gross domestic income (GDI) is a basic measure of a country's overall economic output. It is the market value of all final goods and services made within the borders of a country in a year. It is often positively correlated with the standard of living,[1] though its use as a stand-in for measuring the standard of living has come under increasing criticism and many countries are actively exploring alternative measures to GDP for that purpose.[2] GDP can be determined in three ways, all of which should in principle give the same result. They are the product (or output) approach, the income approach, and the expenditure approach. The most direct of the three is the product approach, which sums the outputs of every class of enterprise to arrive at the total. The expenditure approach works on the principle that all of the product must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers," colloquially) must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes.[3]

Example: the expenditure method:

GDP = private consumption + gross investment + government spending + (exports − imports), or

GDP = C + Inv + G + \left ( eX - iM \right )

One more Time: GDP = private consumption + gross investment + government spending + (exports − imports)

let's look at the parts now:

Private Consumption: A lot of us are un-employed, the rest are scared Private Consumption is way down.

Gross Investment: After the bath that investors took in the last 18 months, investmenst are way down.

Government Spending: (I'll get back to this portion)

(Exports - Imports): Well our Trade Balance is usually a negative here in the GDP equation so there isn't much change here.

So it looks like the only portion of the GDP Pie that is growing is the Government Spending !! None of the "Good" parts of the GDP are growing. isn't this just swell ???

So Please folks, don't look at this "Growth in the GDP" as a good sign... it sure as hell aint!