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| Economy |
| The troubling GDP report: $1 trillion drop in real disposable income, the second-largest percentage drop in real disposable income ever, behind only 1932, worst year ever |
| 2023-01-27 |
| [FoxBusinessNews] Thursday's GDP report shows that real disposable income has fallen off a cliff. The latest numbers from the Bureau of Economic Analysis show that the U.S. economy grew by 2.9 percent in the fourth quarter of last year, and 2.1 percent for 2022. While the White House was quick to take credit for the state of the nation’s economy, they might want to think twice. This latest report should have alarm bells ringing, not trumpets sounding. That’s because economic growth is slowing down. Even the areas which contributed positively to gross domestic product (GDP) are not necessarily signs of prosperity. For example, business investment grew at only 1.4 percent in the fourth quarter, but that was almost entirely inventory growth. Nonresidential investment, a key driver of future economic growth, was up just 0.7 percent. Meanwhile, residential investment fell off a cliff, dropping 26.7 percent as consumers were unable to afford the combination of high home prices, high interest rates and falling real incomes. No wonder homeownership affordability has fallen to the lowest level in that metric’s history. But the growth in inventories, which accounted for half the GDP growth in the fourth quarter, is not a good sign, either. It is the result of businesses being unable to sell off existing inventories at current prices. Liquidating that inventory at discounts will mean lower profits, a further drag on future growth. Q3 GDP data beats estimates. FOX Business' Cheryl Casone with more. video Another positive contributor to the GDP number was net exports, which is simply exports minus imports. But the gain here resulted from a slowdown in international trade — hardly a sign of wealth for Americans. Instead, imports are simply falling faster than exports, which shows up as an increase in GDP. But perhaps most troubling is the precipitous drop in real disposable income, which fell over $1 trillion in 2022. For context, this is the second-largest percentage drop in real disposable income ever, behind only 1932, the worst year of the Great Depression. To keep up with inflation, consumers are depleting their savings and burning through the "stimulus" checks they received during 2020 and 2021. Credit card debt continues growing, while savings plummeted $1.6 trillion last year, falling below 2009 levels. As consumers continue depleting cash reserves and borrowing costs are rising, the growth in consumer spending will keep slowing. Since that accounts for roughly two-thirds of GDP, this doesn’t bode well for the economy. Just how much pain is the consumer feeling? The average family has lost about $6,000 in annual purchasing power under Biden because prices have risen so much faster than wages. Higher interest rates have increased annual borrowing costs by $1,400, so that the average family effectively has $7,400 less in their annual budget. But that’s just the average. Someone trying to buy a median priced home today will have a monthly mortgage payment that is 80 percent higher than when Biden took office. That means spending an extra $9,500 a year for the same house. It’s no wonder people are financially strapped and taking on second or third jobs in this economy. Meanwhile, federal nondefense spending grew 11.2 percent in the fourth quarter, another example of politicians feeding the federal budget while starving the family budget. |
| Posted by:NoMoreBS |
| #5 GDP is likely to increase in Q1 of calendar 2023 but the rest of the year doesn't look good. Inflation gives biz an incentive to build inventory but this tops out eventually. |
| Posted by: lord garth 2023-01-27 13:10 |
| #4 Biden disposed of my income. |
| Posted by: Super Hose 2023-01-27 12:43 |
| #3 The Pelosi-Biden taxes don't help [all taxes are passed on to consumers]. |
| Posted by: Procopius2k 2023-01-27 08:17 |
| #2 Despite, given this sad info, 51% of the US will be "said to have" voted LSD again in 2024. |
| Posted by: NN2N1 2023-01-27 06:19 |
| #1 Real Disposable fell in 2022 compared to 2021 mostly because in 2021, there was Recovery Rebate Checks and/or credits in 2021 but not in 2022. |
| Posted by: lord garth 2023-01-27 00:57 |