The US Economy Is Growing Much Slower Than You Think...

Tyler Durden's picture

Submitted by Bill Bonner via Acting-Man blog,

Deceptive and Fraudulent …

"Products are paid for with products," said French economist and free-trade proponent Jean-Baptiste Say. He meant that if you want to get something, you better have something you can trade for it. What would Say make of the latest US GDP report?

Last week brought two important pieces of news: one deceptive, the other fraudulent. 

The deceptive news was that the Fed, in its last Ben Bernanke moment, would stay the course. The course in question is the "12-Step Counterfeiters Anonymous" program popularly known as "tapering" of QE.

The Fed says it will stay on the program, leading investors to believe that the central bank's PhDs were steadfast in their commitment to end their bond buying … and that the economy was healthy enough that it didn't need QE to prop it up. Neither of those things is true.

The fraudulent news was that US economy grew at a 3.2% annualized pace in the last quarter of 2013. We're still in the weakest recovery since the end of World War II. But since 1950, the composition of the US economy has changed so substantially that GDP 'growth' no longer means what it used to mean.

"Disappointing numbers on jobs and housing also raise concerns about whether the economy is accelerating," reports the Wall Street Journal.  Wait. Jobs and housing are fairly important. If the news from those quarters is disappointing, what's really up with the economy?

The explanation: "A big driver of growth in the fourth quarter was consumer spending, which grew 3.3%." The Journal quotes Bill Simon, Wal-Mart's USA CEO: "I never cease to be amazed at the American consumers. They figure out a way to make it work …"

A New Kind of Growth

We are not so much amazed as appalled. And we are not so much reassured at this recovery, however weak, as we are alarmed by it. Where did consumers get the money?

They didn't earn it. So, they had to run down their balance sheets, either by spending their savings … or taking on debt. That makes this a new kind of growth: The more you grow the poorer you get.

The economy used to grow by making people wealthier. Now, consumers go further into debt, while their incomes are stagnant or falling. In 1980, a $7 trillion economy included $2 trillion of what City economist and author of Life After Growth Tim Morgan calls "globally marketable output" (GMO) – real wealth, the kind of stuff you can sell to pay your bills.

But then the economy underwent plastic surgery at the hands of quack policy makers. Now, it's unrecognizable. Today, we have a $16 trillion economy. But how much of that is from GMO? Well, about $13 trillion is consumer spending. And various statistical adjustments. Only $3 trillion is what Morgan calls GMO.

That's the real growth of the US economy since 1980 – a piddly, pathetic $33 billion a year. Barely enough to keep up with population increases.

Growth? Forget it.

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knukles's picture

That's what the fucking intangibles are for!
I mean when the non-seasonal permanently upward  biases and revisions just don't cut it anymore, hire an Argentine into the BLS.
Oh yeah, and them quality improvement adjustments.
Like my Popsicle's got smaller and now're sweetened with Corn Syrup


kaiserhoff's picture

I'm still waiting for someone, anyone, to split the growth charts into private sector versus gubbermint growth. 

Maybe that will be scary enough to destroy the New Yawk, Vichy DC axis.

economics9698's picture

The only thing growing real fricking good is inflation.  When I pay $13 for a fricking Philly, onion rings, and drink at I-Hop I know this crap is getting crazy.

For the record most sales were up 2% in 2013, with an inflation rate of, cough, cough, 1.5%, an average company made 0.5% real growth.  Take that to the bank and cash it.


The unofficial inflation rate was 7.7%, my guess is about 4%, either way companies better be real careful or they will be in the red real quick.  So many companies will be fooled by inflation profits and be losing in real terms…it is not going to be a pretty sight.

WarriorClass's picture

The only hope at this point is to kill your congressman.


max2205's picture

12 trillion in govt transfer payments over 4 years will make any eCONomy look good

nightshiftsucks's picture

So if I up arrow you does that make me part of a conspiracy ?

Blame Crash's picture

It makes you stupid.

  You have to wonder what's going on in the heads of these crackpots who come here and counsel the murdering of people.  Are they for real or something else?

Anusocracy's picture

Like that's different than hiring government murderers.

Voters are the real subhumans - they think it's our right to kill all those people overseas. Like their lords and master, they are still animals.

Hippocratic Oaf's picture

S&P just junked Puerto Rico.

Jumbotron's picture

"That's what the fucking intangibles are for!
I mean when the non-seasonal permanently upward  biases and revisions just don't cut it anymore, hire an Argentine into the BLS.
Oh yeah, and them quality improvement adjustments.
Like my Popsicle's got smaller and now're sweetened with Corn Syrup


<AHEM> Knuckles......that's why ALL of our assholes smell like a Corn Syrup sweetened Popscicle.

Sudden Debt's picture

everybody still remembers that "growth" and GDP changed a few month ago when they used other metrics right?

so... near zero... IS WAY BELOW ZERO

I just thought I'd mention it....

seek's picture

I agree, virtually every business owner I know but one has seen negative Y/Y growth since '07 (with a slight flattening or bump up in 2010 on a dead cat bounce.)

The majority of companies that report positive growth engineered it via accounting and layoffs, and it has nothing to do with demand, which is down.

BraveSirRobin's picture

You should live in the Washington, DC area (also known as the "National Capital Region"). Everyone here is making money hand over fist. I just don't know what the problem could possible be everywhere else. 

Ol Man's picture

Actually it is not growing at all.  Using real inflation numbers, gdp is negative and has been for awhile...Lets try to keep it real....


HyBrasilian's picture

What you describe is called 'GROATH'

Winston Churchill's picture

A goitre is the kind of growth we are getting.

TuPhat's picture

Maybe it's a cancer.  We'll get more cancer and it does grow.

kaiserhoff's picture

Gray Slime,

Many variations on the story, a mistake in gene splicing, radiation, pollution...,

but a super molecule is created which has no natural enemies, and gradually the whole earth is covered by a gray slime.

NoDebt's picture

I posted the same comment, below.  No growth.  None.  Inflation understatement only.  I could stretch and make that argument for the last 30 years.  But the last 5 it's so blatant I can't believe there could even be a legitimate debate about it.

Lux Fiat's picture

Yep.  20% of reported GDP is based on hedonics, which weren't used in measuring economic activity prior to the mid-1980s.

Five8Charlie's picture


You keep using that word. I do not think it means what you think it means.

Sudden Debt's picture

I don't know... hat pile of shit does keep getting bigger and bigger...

Kaiser Sousa's picture

enjoying the show as they try to close the Dow with a least a 50 point gain though it just tried to go to flat...

meanwhile also hilarious was the all day sideways trading of the phony Gold and Silver paper markets...

its like 1260, and 20 are the levels they just cant surrender....

fucking joke...

Lux Fiat's picture

Yes, since 1980, probably safe to say that most of what we term economic growth has been debt masquerading as prosperity.  And now we are borrowing to pay interest on the Fed. debt.  Not a recipe for long-term stability.

yogibear's picture

"since 1980, probably safe to say that most of what we term economic growth has been debt masquerading as prosperity."


Flakmeister's picture

Since we fucked with the tax code to reward being a rentier more than being an entrepreneur...

The party was going to end anyway, but that doesn't mean you have the trash the place before leaving..

Aside: Funniest thing W. said was "Entreprenuer, the French don't even have a word for it"  \facepalm.... 

kchrisc's picture

Guillotine, the french don't even have a word for it.

bilejones's picture

You have nailed it exactly.

None of this shit is accidental.

yogibear's picture

The Hope and Change economy is really the economy of smoke and mirrors.

oddjob's picture

hope and change is now choom 'n' doom.

Blame Crash's picture

Hoopla and Charades is more like it.


NoDebt's picture

The economy hasn't grown at all since the 08-09 recession.  Any increases are due to understated inflation.

Flakmeister's picture


As in I went to the Doctor and he found a growth. I'll get the biopsy back shortly... 

halfawake's picture

which QE are we on again? and when does the next one start? i forget.

JustObserving's picture

That's the real growth of the US economy since 1980 – a piddly, pathetic $33 billion a year

The US manipulates its economic statistics to manufacture the illusion of growth

How does the US deliver such outstanding growth with a labor participation rate which is the lowest since 1978?

The answer is simple. Just manipulate the inflation rate lower and you get higher GDP.

The US Bureau of labor Statistics uses a variety of techniques including hedonics and substitution to manipulate the inflation rate lower. So if the price of cars has gone up by say, 10%, then one can attribute 70% of the increase due to improved quality and so the inflation rate for cars falls from 10% to 3%. This increases the GDP by 7% of the value of cars.  This technique is especially potent for computers since their speed and storage capacity increase a lot every year. Some quarters, 80% of US GDP growth was due to hedonic adjustment of computer prices.

So this US GDP growth is just a mirage manufactured by mendacious managers of the US economy.

Shadowstats has alternate inflation charts which show US inflation 3% to 6% higher. This means that real growth in the US economy has been zero or negative for quite a while. And the labor participation rate reflects that reality:

labor participation rate chart:

US GDP was adjusted higher by $500 billion on July 1,  2013  due to intangibles such as film royalties:

Kaiser Sousa's picture

S&P aka Sycophants & Pussies just downgraded Puerto Rico to junk...

its all good though.......just look at the Dow heading back up 100 points on the terrific news....

Save_America1st's picture

It's not growing at all in any beneficial sense unless you think like a Marxist that unemployment checks, EBT cards, and lying about the unemployment numbers by a whopping 20% are considered positive growth or actually stimulate the economy.

I'm not mistaken about what I know is the reality of it all, and I'm sure most people on ZH know the score just as well if not better.  I would say the "economy" (if indeed you could really call it that without laughing and puking at the same time) is retreating hastily right towards the fucking cliff. Or most likely it's already taken a big-time triple Lindy face first, Black Swan dive right off said cliff and is now just soaring through the breeze on the way down waiting for the bloody SPLAT! 

Cuz it's not the fall that kills's the sudden stop at the bottom, right?

This article should be posted on all the bullshit, propaganda websites where the statists push their lies and the Marxists hide out, and where all the sell-out "trendies" who think that fucking the country over to be on the side of evil is going to get them a seat at the table after the shit hits the fan.  Pathetic pussies, losers, traitors, and retards, one and all.

So put this on obama's favorite web sites:  Huff, Salon, CNBC, MSNBC, CNN, Media Matters, yadda, yadda, yadda...they all suck shit...and hey, let's just throw Fox in there as well, because they've pretty much sucked a big one too for the last 2+ years after caving into whatever pressure the Whore House in D.C. was putting on them.

And fuck you too, Fox Business, for cancelling Freedom Watch with Judge Nap.  I've never watched your channel again, bitchez.

So this article might be some good baby food for the sheeple...a little "wake-me-up" to help them get their heads outta their asses.  But then again, with general IQ's in the double-digits across the board for well over 50% of the Free Shit Army of sheeple these days, I guess it's just wishful thinking that even a handful of them can be cured of their Marxist disease.

Just sayin'...

NOTaREALmerican's picture

Re:  their Marxist disease

Well,  don't forget to include Big-MIC in your Marxist rant.   Big-MIC has been soaking off the public tit since the WW2 ended (or didn't end, depending how you look at Big-MIC).   

One person's Marxist scam is another person's slow-motion patriotic eagle.    Maybe the Marxists you don't like just wanted to live off the public tit like Big-MIC has done for the last 60+ years?

And, lets not discuss all the bidnes men living off of Big-AG (and there rest of the corporate welfare).

halfawake's picture

+1 anyone paying attention since ww2 can see that wall street, mic, ag, and energy have been the biggest freeloaders in this country. gotta include them as major FSA members.

Save_America1st's picture

whatever they are, cronies, statists, fascists, marxists, commies, run of the mill socialists, they're all still traitors, criminals, frauds, and many are seriously fucking sociopaths.

What America needs right now to start with is a seriously hard-core dose of McCarthyism once again!  People may think he was a little too hard on some, but fuck it...he was fucking right all along, and since him not one person has stood up again against the traitors within this government who have destroyed this country like a vile, Marxist, cancer.

Time to call Marxists what they are.  Yes...obama is a fucking Marxist, plain and simple, through and through.  He knows it...everyone fucking knows it.  And everyone he surrounds himself with are treasonous, Marxists as well.

We need another McCarthy who will get in every one of those fuckers faces on camera and call them out for what they are...then bring them all up on criminal charges.  This country, this government needs an ass kicking and serious colon cleanse as well to rid itself of these scumbags. 

Then go through all city councils, school boards, local, city, state government, law enforcement, corporations, everything and route these scumbags out.

Destroy that fucking U.N. building and kick all those murderous, child molesting, Marxist freaks in the U.N. out of our country and dissolve all U.N. agreements.  They can all fuck right off and go take up shop in North Korea.  But they should never be allowed to set foot on American soil ever again. 

Burn the Federal Reserve down to the ground...that building doesn't belong on American soil either.  Tell those foreign private owners to fuck off and you'll see how pathetic and weak they really are when they can't feed off of America anymore.

But ya know what?  Not one single thing I've said will ever happen.  We'll have a civil war or WWIII first, I'm sure of it.  All of this is just sick theater and nobody is going to be able to change anything until it all completely collapses one of these days soon. 

Then hopefully us good guys will still be around and will win the day and be able to rebuild this country back to original specs.

If not...say hello to a whole new infinite Dark Ages on this planet, cuz once America goes down, that's gonna be all she wrote, folks.

kurt's picture

Sick 'em boy tear up that rope toy!

acetinker's picture

I don't recall pissin' in your cornflakes.  Maybe it was you, and you need someone to blame it on.

kurt's picture

I humbly apologise. I thought I was responding to an asshole who somehow misread history to an absurd degree and actually thought McCarthy was on the right track. By rope toy I was referring to the propensity for idiots to breath life into old boogey men who were a fraud the first time around.

El Vaquero's picture

McCarthy was a totalitarian cunt.  We don't need anymore totalitarian cunts. 

acetinker's picture

McCarthy may have been a totalitarian cunt, and he may have stepped on your sensibilities, but the fucker got right to the heart of the matter, didn't he?  You gonna tell me, just now, that the very Marxist tendencies of current leadership are not EXACTLY what McCarthy sought to expose?

Should'a known you were full of shit on first contact.  Shame on me.

SmittyinLA's picture

adding in debts and accumulating unfunded liabilities (-7 trillion a year) the US has a multi-trillions dollar negative economic growth rate-if that's what you mean when you say "growth". 

ejmoosa's picture

It's not really about the growth in the GDP anyway.  It's about what's left after all that "production" for salaries and profits.

You can triple the GDP, and if salaries and profits do not budge, the economy would tank.

The trillion in QE injected over the last year was just like an additional trillion in profits injected into the equation.

And things are still in the toilet....that's how bad it is.


STP's picture

Yep, and you've got to love the Fed Heads blabbing that the Economy is on the mend and we're recovering.   You're right, it's still in the toilet, and worse, somebody just flushed it and look at what happened to Wall Street yesterday.  And the swirling is not EVEN done yet!  I'm wondering what kind of Margin calls are going on, behind the scenes.  Couple the EM's with the Chinese Shadow Banking bubble, and I'm betting, that it's going to be a very, very interesting year.