Groth Rates

What are the annual growth rates for the U. S. economy over the last 5 – 10 years? Has GDP been growing or declining over this time-frame? Explain what factors might have caused GDP to increase or decrease over this time-frame. Annual Rates: 2001: 1. 1, 2002: 1. 8, 2003: 2. 5, 2004: 3. 6, 2005: 3. 1, 2006: 2. 7, 2007: 1. 9, 2008: 0. 0, 2009: -2. 6, 2010: 2. 9. The 2. 7 increase in 2006 slowly declined to a -2. 6% change in 2009 and 2. 9% increase in 2010. Up until 2009 the rates seemed to slowly decline and in 2010 they began to rise again.

Some factors in causing the GDP to decline could be the war in Afghanistan and Iraq, gas prices soaring in 2008. Then with the economic situation in 2009 more people, that is the ones that have jobs were holding onto their money instead of spending it. Next, what are the quarterly growth rates (annualized) for the U. S. economy for the last six quarters? What trends do you notice in these numbers? Does anything surprise you? Comment on GDP growth for the different components of GDP (C, I, G, and Xn) over this time frame?

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Quarterly Growth Rates:2009 III: 1. 6, 2009 IV: 5. 0, 2010 I: 3. 7, 2010 II: 1. 7, 2010 III: 2. 6, 2010 IV: 3. 1. The quarterly rates for the last 6 quarters start at a 1. 6% percent increase from the previous quarter and slowly increasing every year at a small percentage. On average, based on these figures, it seems the percent change will increase for two quarters then the amount of increase will decline over the next two quarters. Then they repeat. Not really surprised by theses numbers. The fourth quarter is high due to the holidays.

Then with the first quarter consumers using their gift card to purchase items. While using their gift cards we are taking advantage of the sales the retailers are offering and making other purchases as well. Consumption (C): The numbers vary from a high of 2. 0 to a low of 0. 9. During this time frame, good and nondurable were having the biggest impact. Investment (I): The numbers from 2009 Q3 through 2010 Q1 indicate growth from 11. 8 to 29. 1. The figures for 2010 Q2 – Q4 showed a severe decline from 26. 2 to -18. indicating our unstable market. Government Purchases (G): During the entire period in question, these numbers vary from a low of -1. 6 to a high of 3. 9. I think the changes on defence spending goes along with the troop surge in Afghanistan and with the withdraw of troops in Iraq. It also shows where the states were making cuts due to the economy. Is GDP a good measure of economic well-being? Why, why not? What are its limitations? What are some factors that would lead to higher GDP in the U. S. but do not improve well-being?

I do think the GDP is a good measure of economic well-being because it let’s you know that consumers have more confidence in the economy and are spending money. It limitation are that it tells us that we are spending more or less money but not at who’s expense? The GDP doesn’t tell us about our health or well being or if we are happy or sad. Only tells us if we are spending money. Lets say you got a divorce like me and so many other Americans and you pay your lawyer it helps the GDP then but it doesn’t indicate if your happy or sad about the divorce.


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