Is the economy in good shape or in bad shape?
The result is somewhat mixed. The good
news is the decline in the unemployment
rate. The January rate fell to 4.9 percent,
which is down from 10.0 in October 2009
at the worst of the financial crisis/recession.
data source:
https://research.stlouisfed.org/fred2/data/UNRATE.txt
(More about unemployment at a later date.)
However, the growth rate of the economy, as measured
by real gross domestic product (GDP), has
not returned to the previous trend growth rate.
The growing gap between the blue and red
curves shows the consequences of not returning
to the trend.
The results of last week’s New Hampshire primary
indicate that many voters are unhappy with the
current situation. Although Bernie Sanders and
Donald Trump are very different, both of their
campaigns are based on appealing to voter discontent.
Technical note: the trend rate is calculated with
the regression
log RGDP = 3.32389 + 0.003483 t
where t is the number of the quarter (1, 2, 3),
starting with 1948. Data source:
https://research.stlouisfed.org/fred2/data/GDPC1.txt
The annual percent growth rate is 400*(10^.003483-1) = 3.22 percent
……………..
–Douglas Downing
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