The Weakest Economic Recovery Since World War II Putters Along
New GDP data released today shows an economy that continues to grow, though at a disappointingly moderate pace.
The good news is that GDP growth picked up after the weak, snow-encrusted first quarter of 2015, when the economy eked out a 0.6 percent growth rate. The bad news is that growth was expected to hit a 2.5 percent rate or better in the second quarter, but initial estimates arriving today pegged that rate at 2.3 percent. Over the first six months of the year, the economy has expanded at an annual rate of 1.5 percent.
The U.S. recession officially ended in the second quarter of 2009. Since then, growth has been relatively steady but lackluster. Compared to other recoveries since the end of World War II, the current recovery is notably weak – without question the weakest of the bunch. The average annual growth rate from 2011 through 2014 was 2.0 percent, based on updated figured released today.
Economists have argued about the causes — a glut of capital, excessive regulation, the domination of finance, low wages driving weak demand — but the simple fact remains: This is a feeble recovery.
This graphic we produced on the Federal Reserve Bank of Minneapolis’s website tells the story – look for the bright red line:
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Budget ‘Chaos’ Threatens Army Reset: Retired General
One thing is standing in the way of a major ongoing effort to reset the U.S. Army, writes Carter Ham, a retired four-star general who’s now president and CEO of the Association of the U.S. Army, at Defense One. “The problem is the Washington, D.C., budget quagmire.”
The issue is more than just a matter of funding levels. “What hurts more is the erratic, unreliable and downright harmful federal budget process,” which has forced the Army to plan based on stopgap “continuing resolutions” instead of approved budgets for nine straight fiscal years. “A slowdown in combat-related training, production delays in new weapons, and a postponement of increases in Army troop levels are among the immediate impacts of operating under this ill-named continuing resolution. It’s not continuous and it certainly doesn’t display resolve.”
Pentagon Pushes for Faster F-35 Cost Cuts
The Pentagon has taken over cost-cutting efforts for the F-35 program, which has been plagued by years of cost overruns, production delays and technical problems. The Defense Department rejected a cost-saving plan proposed by contractors including principal manufacturer Lockheed Martin as being too slow to produce substantial savings. Instead, it gave Lockheed a $60 million contract “to pursue further efficiency measures, with more oversight of how the money was spent,” The Wall Street Journal’s Doug Cameron reports. F-35 program leaders “say they want more of the cost-saving effort directed at smaller suppliers that haven’t been pressured enough.” The Pentagon plans to cut the price of the F-35A model used by the Air Force from a recent $94.6 million each to around $80 million by 2020. Overall, the price of developing the F-35 has climbed above $400 billion, with the total program cost now projected at $1.53 trillion. (Wall Street Journal, CNBC)
Chart of the Day - October 6, 2017
Financial performance for insurers in the individual Obamacare markets is improving, driven by higher premiums and slower growth in claims. This suggests that the market is stabilizing. (Kaiser Family Foundation)
Quote of the Day - October 5, 2017
"The train's left the station, and if you're a budget hawk, you were left at the station." -- Rep. Mark Sanford, R-S.C.