How Does the U.S. Economy Grow?

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We got a fresh blast of macro data from the Federal government this morning.  I took a look into the data.

What I learned?  This is pure ‘Muddle Through’ economics.

Data on personal consumption (70% of the economy) show real U.S. spending is growing at a +2.2% annual rate over the last four months.

Here is the history of 2013: 

(Percent change from preceding month)

Disposable personal income

Chained (2005) dollars  

Jan.            Feb.            Mar.            Apr.            May

-5.2             0.8              0.3              0.3              0.4

Personal consumption expenditures

Chained (2005) dollars                

Jan.            Feb.            Mar.            Apr.            May

0.1              0.3              0.3              -0.1              0.2

Note:  Skip over January data on disposable personal income.  It included a huge decline in dividend income in the New Year.  After that decline, our growth in disposable personal income is stable.

My RTI question for you?

The Fed and the Sell-side of Wall Street sees +3.5% growth in GDP in the second half of 2013 and into next year.

In light of this data, how do we get there?

 

 

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