gdp insights - economic trends

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GDP Insights Evaluating Economic Trends That May Effect Your Business and Wealth Preservation

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Where are we headed?Looking at the causes and effects of the Debt to GDP ratio and de-leveraging trends.

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Page 1: GDP Insights - Economic Trends

GDP Insights

Evaluating Economic Trends That May Effect Your Business

and Wealth Preservation

Page 2: GDP Insights - Economic Trends

Basic Economic Equation for Growth in the EconomyC + I + G + (E - I) = GDP

Consumption + Investment + Government Spending +            

(Exports - Imports)                                        = Gross Domestic Product

Page 3: GDP Insights - Economic Trends

GDP Since 1973Despite Other Recessions, the only Major Contraction

was Evident During The Great Recession of 2008/2009

Page 4: GDP Insights - Economic Trends

GDP THEN AND NOW - 38Yr Span

1973 - 1974

GDP was $1.4 Trillion

Consumption $876.5  - 61%Investment   $257.6  - 18%Government  $288.8  - 20%Net Exports $    9.0   -   1%

2010 - 2011

GDP is now $14.7 Trillion

Consumption $10,417  - 71%Investment   $  1,818  - 12%Government  $  3,020 - 20%Net Exports ($   560) - (3%)

Government expenditures have generally been at a consistent 19-20% level throughout the 37-years, but fell to 17.5% during the Clinton's GDP Surplus years.

Page 5: GDP Insights - Economic Trends

Components of GDP At-A-Glance

Percent of Total GDP

Page 6: GDP Insights - Economic Trends

Reasons For Change

• The U.S. has become a Debtor Nation and has consumed more than we earn, accounting for the 10 point increase.

• Private Investment rises and falls with GDP, but lost 6 points as compared to 1973/74 Recession.

• Imports have consistently been higher than Exports because of our thirst for cheaper goods.

• U.S. Jobs have contracted simply because Business sought cheap labor overseas to earn record profits for investors.

Page 7: GDP Insights - Economic Trends

The Booming Rise of Corporate Profits

Recessions Clearly Affect Business Results and are a Leading Indicator for the Next Recession

Page 8: GDP Insights - Economic Trends

LIMITED IMPACT ON GDPBusiness Continues to Earn Profits Despite Negative

Trends

• Consumers are restricting their spending and savings have increased dramatically since The Great Recession.

• Consumer and Business Confidence Levels in the Economy have been at the lowest levels in their history, although now slowly improving.

• Businesses are finding ways to do more with less, and are hiring Temporary workers to meet any increase in demand, rather than create permanent jobs.

• Unemployment continues to remain at high levels during the slow economic recovery

Page 9: GDP Insights - Economic Trends

What is the Task Ahead for U.S.

The Tough Climb Back to Full Employment

Page 10: GDP Insights - Economic Trends

The U.S. Dilemma - More DebtBush Years - Two Wars        

   & Tax ReductionsObama Years - Health Care & Financial Bail-

Outs

WHAT PARTY IS AT FAULT?

Page 11: GDP Insights - Economic Trends

Cause and Effect• Banks Sub-Prime Loans

& Relaxed Lending Stds

• Bursting of the Housing Bubble, Bank Insolvency

• Central Banks flood Money Supply/Bailouts

•  Repeal of Glass-Steagall Act caused Financial Institutions' Price Wars 

* Consumers upgrade Housing and Refinance Mortgages

* Damaged Invest Confidence & impact on Global Markets

* Debt to GDP Ratios rise dramatically worldwide

 * Sale of High Risk, Complex Mtg-related Products under relaxed credit standards

Page 12: GDP Insights - Economic Trends

Golden Years - The Last Government Surplus

Clinton Years - The Beginning of the Rise Then Slowdown

Page 13: GDP Insights - Economic Trends

Getting Back to a Balanced Budget

• It is not about Government Cutbacks Everywhere

• It is about eliminating Government Waste 

• Tax Reductions are at an all-time low; fair tax is needed

• Incentives are needed for the "I" in Investment

• Where does it come from - - - Stay Tuned!