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Last few years were even worse than you thought

By Neil Irwin

News coverage of the second quarter GDP report (including my own) will focus mainly on what it tells us about how the recovery is shaping up in 2010. But this report also included revisions to components of GDP going back to 2007.

So what do we know now about the recent past that we didn't know then?

The upshot is that things were even weaker in the 2006 to 2009 time frame than was previously recognized. In 2008, for example, the Commerce Department had earlier estimated 0.4 percent growth for the year; it now estimates that GDP was unchanged.

While the Great Recession began in 2008, you'll recall, it was a relatively mild downturn in the early months of the year and only turned severe in the fall.

That year, commercial real estate investment, inventories, and imports were bigger drains on economic activity than earlier estimated.

Overall, for the 2006 to 2009 period, GDP decreased at an average annual rate of 0.2 percent, compared to a zero percent average annual change previously estimated.
We already knew that the late years of the last decade were pretty disastrous for the American economy; the revised data put an exclamation point on that conclusion.

By Neil Irwin  |  July 30, 2010; 9:32 AM ET
Categories:  U.S. Economy  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Economic growth slows to 2.4 percent in 2Q
Next: The closer you look at the GDP report, the uglier it gets

Comments

The tarp and the stimulus was a blight on our economy.

Furthermore, regulation without criminalization and incarceration of the politicians, bankers, and corrupt wall street only encourages this to happen again.

If the govt would get out of peoples personal business and allow them to make reasonable choices -none of this would have happened.

Posted by: Anonymous | July 30, 2010 10:06 AM | Report abuse

You do not have to tell some poor bastard who has been without a job for year that.

Thanks to the media, Obama got another pass!

Posted by: Anonymous | July 30, 2010 10:23 AM | Report abuse

Interestingly, this is significantly higher than the 1.55% average during George Bush's term in office. Media bias? You decide.

Posted by: Prosperity2008 | July 30, 2010 11:31 AM | Report abuse

Interestingly this is still higher than the 1.55% average quarterly change during George Bush's term in office. Media bias? You decide...

Posted by: Prosperity2008 | July 30, 2010 11:32 AM | Report abuse

Isn't it past time the Republicans capitulated to reality and started calling it "The Great Bush Depression"?

Posted by: perryneheum | July 30, 2010 1:08 PM | Report abuse

The only way to get the economy started is to increase the money supply. You cannot increase the money supply if the banks are not making loans. Maybe the new generation of bankers do not know how to make loans. Maybe they have never done it.

The only way to get the jobs back from China is to have a weaker dollar. There was a time when Japan and Germany were taking our jobs because they had weak currencies.

The rest of the world will also have to do the same thing to save their economies.

While we are waiting for all of that to happen, we should at least create tent cities and hope the elections do not get too ugly.

Posted by: pffeiffer | July 31, 2010 8:20 AM | Report abuse

The State Bank Option

While states are waiting for the federal government to step in, they could charter their own state-owned banks that issue low-interest credit.There is no Constitutional provision against a state owning a bank that issues ten times its deposit base in loans, using standard fractional reserve principles.

The Bank of North Dakota (BND), the nation's only state-owned bank has done so since 1919 to encourage and promote agriculture, commerce and industry in North Dakota.

Its primary deposit base is the State of North Dakota, and state law requires that all state funds and funds of state institutions be deposited with the bank. The bank's earnings belong to the state, and their use is at the discretion of the state legislature.

As an agent of the state, BND can make subsidized loans to spur economic and agricultural development, and it is more lenient than other banks in pressing foreclosures. Under a program called Ag PACE (Agriculture Partnership in Assisting Community Expansion), the interest on loans made by BND and local lenders may be reduced to as low as 1 percent.

While disruptions in capital markets have hampered loan operations elsewhere, BND continues to operate a robust loan business and is one of the nation's leading banks in the number of new commercial loans issued. North Dakota's fiscal track record is particularly impressive; budget surpluses every year, low unemployment (2-3%.)

Ellen H. Brown, Author, "Web of Debt"

Posted by: Anonymous | August 1, 2010 1:32 PM | Report abuse

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