2005 GDP increases 3.2%, lower than predicted by the "experts" during 2005.
Today's GDP report revised 4th quarter GDP upward to a 1.6% annualized growth rate.
2005's real GDP increased 3.2% from 2004, according to the BEA. This gives a total increase of approximately $384 billion. Below is an abridged copy of the BEA's statistics.
The raw numbers can be found at the Dept. of Commerce's BEA site at: GDP Report
The big 4th quarter losers were Durable Orders, which changed -16.6% from the 3rd quarter, followed by net exports at -$39 billion, and government investment at -0.7%
Below is the table from Briefing.com showing the components of today's GDP release:
From the BEA chart on the top, 2005's real GDP can be determined from the BEA's 2004 GDP of $11,995 (in 2004 dollars) and multiplying times 2005 stated GDP growth. ( $11,995 x 1.032 = $12.379 trillion.)
According to Bloomberg news, home equity extraction for 2005 was $234 billion. This is over half the $384 billion GDP, and does not account for any multiplier effects. Bloomberg states home equity extraction may decline to $117 billion in 2006, or $126 billion less. This information can be found at Bloomberg News U.S. Economy: New Home Sales Fall
At minimum, this directly subtracts $126 billion from the spending portion of GDP. If this $126 billion had been subtracted this year, GDP growth would have been $384 billion - $126 billion, or $258 billion. This would have reduced our GDP growth from $12.379 trillion to $12.253 trillion, or to a growth rate of only 2.1%. Again, this does not account for any multiplier effects from the spending of the money from home equity extraction.
Using an assumed multiplier of 3, and a marginal propensity to consume of 2/3, this would cause a decline in GDP to $252 billion from our 2005 GDP of $384 billion. If applied to 2005, this would leave an increase of only $132 billion, or only a 1.1% GDP increase. Is this an economy that's "strong, and getting stronger"?
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The economy needs balance between the "means of production" & "means of consumption."