Lombardi Publishing Corporation’s Michael Lombardi Reports: GDP Increase Based on Government Spending, Not Real Growth

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Profit Confidential, an e-letter of Lombardi Publishing Corporation, a 26-year-old consumer publisher that has served over one million customers in 141 countries, reports that data from the Bureau of Economic Analysis (BEA) reveal that the U.S. economy grew at an annualized rate of two percent in the third quarter, while gross domestic product (GDP) in the second quarter of 2012 was only 1.3%. Financial expert Michael Lombardi, lead editor for Profit Confidential, points out that the U.S. GDP in dollar value is on track to increase to $15.8 trillion this year.

Lombardi Publishing Corporation’s Michael Lombardi Reports: GDP Increase Based on Government Spending, Not Real Growth

Lombardi Publishing Corporation’s Michael Lombardi Reports: GDP Increase Based on Government Spending, Not Real Growth

Factories in the U.S. economy are still far from running at full speed

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Profit Confidential, an e-letter of Lombardi Publishing Corporation, a 26-year-old consumer publisher that has served over one million customers in 141 countries, reports that data from the Bureau of Economic Analysis (BEA) reveal that the U.S. economy grew at an annualized rate of two percent in the third quarter, while gross domestic product (GDP) in the second quarter of 2012 was only 1.3%. Financial expert Michael Lombardi, lead editor for Profit Confidential, points out that the U.S. GDP in dollar value is on track to increase to $15.8 trillion this year. (Source: Bureau of Economic Analysis, October 26, 2012.) Lombardi notes that while the U.S. economic outlook in 2013 is for GDP in dollar value to increase, the overall outlook is still weak and a large part of the growth is due to government spending.

“In calculating third-quarter GDP, there was an increase of 9.6% in government spending and investments—in the previous quarter, there was a decrease of 0.2% in government spending and investments,” reports Lombardi. “National defense spending increased by 13.0% in the U.S. economy in the third quarter of 2012, compared to a 0.2% decrease in the second quarter.”

In the article “How Government Spending Really Fuelled Third-quarter U.S. GDP,” Lombardi points out that personal consumption in the U.S. economy increased in the third quarter by a mere two percent.

“Factories in the U.S. economy are still far from running at full speed,” says Lombardi. “In August, industrial production in the U.S. fell 1.4 % from a rise of 0.7% in July. In September, it increased only 0.4% from the decline in August.” (Source: Federal Reserve, October 16, 2012.)

Lombardi reasons that these data suggest that the increase in third-quarter GDP was stretched by government spending. The Profit Confidential expert claims that if we took the increase in government spending out, the GDP wouldn’t look as rosy as it does.

“The U.S. economy is weak; there have been no structural changes to the economy,” states Lombardi. “Since 2010, [U.S] GDP has seen growth of 10.6%—excellent growth, some would suggest. But national debt in the same period has grown more than 30.5%.” (Source: United States Department of the Treasury, October 26, 2012.)

Lombardi believes that the U.S. economic outlook in 2013 can’t be strong if growth is solely being fuelled by debt. He concludes that in the long run, raising GDP by increasing government spending is not sustainable.

Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, and to get its popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com/. Or visit http://www.lombardipublishing.com/customer-service.html.

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