As can be seen in the ranking of GDP of the 196 nations that we publish, the United States is the world’s top economy in terms of GDP. The United States’ GDP increased in absolute terms.
What happened to the Gross Domestic Product in 2011?
The Bureau of Economic Analysis released data today showing that gross domestic productthe broadest measure of the nation’s economic activitygrew at an annualized rate of 2.8 percent in the fourth quarter of 2011, up from 1.8 percent the previous quarter and the highest quarterly rate of growth since the second quarter of 2010.* While 2.8 percent growth would put slight downward pressure on the unemployment rate if sustained over a year, it’s uncertain if the GDP growth trend is even as strong as this quarter’s report shows; growth in 2011 was just 1.7 percent, and the average of Blue Chip estimates for 2012 is 2.4 percent.
While a sharp reduction in federal defense spending (which reduced the quarter’s growth rate by 0.7 percentage point) dragged down the quarter’s growth rate, it was buoyed by a large positive contribution from changes in private inventories (which added 1.9 percentage points to the quarter’s growth rate). Defense spending and changes in private inventories are both highly volatile aspects of the economy, so examining the quarter’s performance without them is arguably the best method to gauge the economy’s “real” health.
This is a terrible state of health. Domestic demand (final demand that includes imports but subtracts exportsa measure of how much U.S.-based families, corporations, and governments demand) rose at only 0.9 percent in the quarter, while final demand (GDP minus the impact of inventory changes) grew at only 0.8 percent. Even removing the negative impact of defense spending, these metrics would only rise to 1.5 percent and 1.6 percent, respectively.
Personal consumption expenditures increased by only 2% in the third quarter, and non-residential fixed investment in every category slowed from the previous quarter. Following six months of fast expansion, investment in non-residential structures actually decreased by 7.2 percent in the third quarter. In the fourth quarter of 2011, investment in equipment and software, which had averaged 12.9 percent annualized growth rates in the previous nine quarters, slowed to 5.2 percent.
After contributing to growth for the previous six months, net exports detracted 0.1 percentage point from the quarter’s growth.
The federal non-defense sector contributed 0.1 percentage point to the quarter’s growth rate, while state and local government expenditure dragged growth by 0.3 percentage point, making this the ninth quarter in a row that the state and local sector has slowed growth.
The fact that disposable personal income climbed at only 0.8 percent after inflation is perhaps the most concerning aspect of this data. This means that even the modest increase in consumption spending in the quarter (of 2%), was financed in part by a drop in the personal savings rate, which fell to 3.7 percent of disposable personal income, marking the fifth consecutive quarter of decline and the lowest savings rate since the fourth quarter of 2007.
The “market-based” deflator for personal consumption expenditures excluding food and energy (a frequently regarded indicator of “core” price inflation) rose only 1.8 percent compared to the same quarter a year ago.
Why did the GDP fall in 2009?
The economy shrank by 6.1 percent, owing in part to lower inventories. This was the third consecutive quarter of decline, and the fourth since the recession began in the fourth quarter of 2007. The slowdown in the first quarter was only slightly less than the 6.3 percent dip in the fourth quarter of 2008.
Why did the economy contract in 2009?
The credit crunch (2007-08), in which the global banking system ran out of funds, caused a drop in confidence and bank lending, was the fundamental cause of the Great Recession. The causes of the credit crunch were complex, but here’s a quick rundown.
- Sub-prime mortgage loans increased dramatically in the United States between 2000 and 2007. These mortgages were extremely hazardous, but there was a lot of ‘irrational exuberance’ and the expectation that housing values would continue to rise.
- These ‘risky mortgage bundles’ were sold to banks all around the world by US mortgage businesses. (Despite the fact that they were extremely dangerous, credit rating agencies gave them AAA ratings.)
- Interest rates in the United States began to rise about 2005, and homeowners in the United States began to fail on these riskier mortgages.
- Banks in the United States lost money, but banks all around the world later discovered that the’safe’ mortgage packages they purchased were actually worthless. Many banks around the world saw their liquidity and asset values plummet.
- Financial instability has caused a drop in consumer and business confidence.
- Because of overvalued exchange rates and high bond yields in Europe, the single currency has generated extra challenges.
- Great restraint. From 2000 to 2007, the economy grew rapidly, inflation was low, and unemployment was low. Central banks seemed to be effective in achieving their goals of low inflation and economic stability. However, beneath the surface of macroeconomic stability, credit and financial markets were becoming increasingly unstable.
- There is a housing bubble. House prices in many countries have risen rapidly. House prices increased faster than inflation and salaries. A rise in bank lending and a strong level of confidence aided the housing bubble. Several countries, including Ireland and Spain, saw a surge in home construction.
- Loans that aren’t good. Banks became increasingly aggressive and willing to take risks in lending in the run-up to the credit crunch. Banks and mortgage businesses, particularly in the United States, relaxed their lending restrictions. Many homeowners received big mortgages with few checks on their ability to pay them back. People, on the other hand, were stuck with mortgages they couldn’t afford during the economic collapse.
- Repackaged and resold bad loans These “bad” mortgage loans were sold to financial institutions all around the world. Many UK and European banks, for example, bought these mortgage bundles (CDOs) from the US and were so exposed to any possible losses in the US housing market.
- The real estate bubble burst. The housing market bubble in the United States crashed in 2006. House prices began to decline, and mortgage defaults increased. Banks began to realize that the US mortgage defaults had cost them a large amount of money.
- Banks are cash-strapped. The size of bank losses began to grow, making it more difficult for banks to borrow money on the money markets. As a result, banks cut back on lending and mortgages. Because banks were losing money, obtaining credit and liquidity became difficult. Some banks lost so much money that they ran out of cash. The government had to bail out large banks in various nations, including the United Kingdom, Ireland, and the United States. However, the realization that banks were cash-strapped undermined consumer and investor trust. Lower spending and investment were the result of the drop in confidence.
- Oil prices have risen. Oil prices also reached a high point in 2008. This made things more problematic because it resulted in cost-push inflation. Central banks were more hesitant to decrease interest rates as a result of this cost-push inflation. Increased oil costs also reduced discretionary income, resulting in lower spending. Oil prices usually fall during a recession. However, rising oil prices were seen as a result of rising demand in China and India, even as Europe and the United States slid into recession. Another factor lowering demand was high energy and commodity prices.
The impact of the credit crunch and recession
- In 2008, the real GDP of all major economies fell precipitously. Normal bank lending was substantially hampered by the banking crisis. As a result, investment and consumer expenditure fell, resulting in a substantial reduction in real GDP.
- Another aspect that contributed to the recession was the drop in property values. Higher consumer spending was fueled by growing property prices (and wealth) during the boom years. When house values fell, many homeowners found themselves in a negative equity situation. As a result, they reduced their spending and were no longer able to rely on re-mortgaging to obtain equity withdrawal.
- Because of the worldwide scope of the crisis, there was a decline in global trade. As a result of the global crisis, countries suffered a reduction in exports.
- Debt owed by the government. The recession caused a significant increase in government debt. Many European governments sought to cut spending as a result of this, ushering in a period of ‘austerity.’
- The European Union is experiencing a crisis. Bond rates in the Eurozone rose in 2010-12, partially due to the recession and partly due to the lack of a Central Bank prepared to assist.
Response to the great recession
- Banks are being rescued. To begin with, governments felt compelled to engage in the banking sector in order to prevent banks and financial organizations from failing. However, bailing out individuals who were blamed for the crisis was met with some skepticism. In 2008, the United States opted to let Lehman Brothers fail. This resulted in a significant loss of confidence. Following the fear that ensued, governments realized they could not allow this to happen again. In the United Kingdom, the government intervened to save big banks like Northern Rock and Lloyds TSB.
- Interest rate reductions. Central banks reduced interest rates to historic lows in the second part of 2008 and early 2009. The Bank of England dropped interest rates from 5% to 0.5 percent in the United Kingdom. A significant reduction in interest rates would usually make borrowing less expensive and boost consumption and investment. (For example, when the UK lowered interest rates in 1992, the economy soon recovered.) Cuts in interest rates, on the other hand, were less successful during this time.
- Fiscal policy that is expansionary. Because government tax income vanished during the harsh recession, budget deficits skyrocketed. This was especially obvious in countries that rely on stamp duty and finance-related taxes. However, budgetary expansion was moderate in the United Kingdom and the United States. VAT was temporarily reduced in the United Kingdom. There was also a moderate fiscal boost in the United States.
- It’s worth mentioning that, in contrast to the Great Depression of the 1930s, the Great Recession avoided two things.
- A large number of bank failures were avoided (In the 1930s, in the US over 500 commercial banks went bankrupt)
- There was no significant trade war. In the 1930s, governments fought to defend domestic industries by waging a tariff war.
What are the world’s top ten economies?
What are the world’s largest economies? According to the International Monetary Fund, the following countries have the greatest nominal GDP in the world:
In 2025, what would India’s GDP be?
(ANI): New Delhi, Feb. 1 (ANI): According to Chief Economic Advisor V Anantha Nageswaran, India would have a $5 trillion economy by the financial year 2025-26 or 2026-27 if GDP continues to expand at approximately 8%.
“If we continue on our current path of 8% real GDP growth, it will translate into even 8% dollar GDP growth.” “If we extrapolate that, we should be a $5 trillion economy in nominal GDP in the Financial Year 2025-26 or the Financial Year 2026-27,” Nageswaran said at a press conference following the Budget.
By the Financial Year 2024-25, Prime Minister Narendra Modi aimed to make India a $5 trillion economy.
In the current fiscal year, the Indian economy is expected to develop at a rate of 9.2%.
What was the 2016 GDP growth rate?
In 2016, real GDP increased by 1.6 percent (from the 2015 annual level to the 2016 annual level), compared to 2.6 percent in 2015. (table 1).
Is the Philippines poor in 2021?
The poverty incidence among the population in the first semester of 2021 was expected to be 23.7 percent, or the proportion of poor Filipinos whose per capita income is insufficient to cover their basic food and non-food needs. In the first semester of 2021, this amounts to 26.14 million Filipinos living below the poverty line, which is predicted to be PhP 12,082 per month on average for a household of five. In the first semester of 2021, however, the subsistence incidence among Filipinos, or the proportion of Filipinos whose income is insufficient to cover even basic food demands, was recorded at 9.9%, or around 10.94 million people. For the same period, the average monthly food threshold for a family of five was estimated to be PhP 8,393. (See Figure 1 as well as Tables 2 and 4).
The poverty rate among families was expected to be 18.0 percent in the first semester of 2021, equating to about 4.74 million poor families. Meanwhile, in the first semester of 2021, the subsistence incidence among families was reported to be 7.1 percent, or roughly 1.87 million food insecure families. (See Tables 1 and 3 for more information.)
What impact does GDP have on the economy?
GDP is significant because it provides information on the size and performance of an economy. The pace of increase in real GDP is frequently used as a gauge of the economy’s overall health. An increase in real GDP is viewed as a sign that the economy is performing well in general.
What happened to GDP since 2008?
According to new numbers released today by the United States Bureau of Economic Analysis, economic growth declined in most states and regions of the United States in 2008, while overall growth dropped. In 38 states, real GDP growth slowed, with contractions in construction, manufacturing, and finance and insurance stifling growth in several. 1 State-by-state growth in real GDP dropped from 2.0 percent in 2007 to 0.7 percent in 2008. 2