The headline figures from today’s GDP report for the second quarter of 2012 aren’t great: Annualized first quarter growth was revised up to 2.0 percent from 1.9, and second quarter growth was 1.5 percent, neither of which is anything near recovery speed. But there was a lot more to the report than just those numbers. So what else did it tell us?
The economy’s above its pre-downturn peak
Real GDP peaked before the recession in the fourth quarter of 2007. It took a while, but as of the last quarter of 2011, the economy is officially bigger than its pre-recession peak:
Given that it usually takes, well, one quarter for the economy to exceed its previous peak, and it took sixteen quarters for the economy to get above where it was in quarter three of 2007, this isn’t encouraging in the slightest. We’re still well below where we’d be absent the recession, or if the recession were less severe. But it does mean we’ve caught up to where we were before it hit.
Inflation is pretty constant
Nominal GDP, or GDP unadjusted for inflation, has been growing faster than real GDP, indicating that there’s been some inflation. But that rate has been very slow, and there is a short sliver of time in 2009, indicated by the black region in the below graph, that actually saw deflation:
By contrast, Israel, which has seen a much stronger recovery than the U.S., allowed inflation to sharply spike as the crisis hit, and as a result nominal GDP did not stop growing even as real GDP tanked.
The public sector is doing worse
Almost all the economic gains have been concentrated in the private sector, as budget cuts have pushed public economic growth downward:
The public sector grew heavily due to the stimulus and related programs in early 2009, but then, as the stimulus wore off, the private sector improved and state and federal governments alike started to cut spending, it tanked.
Exports are growing, but so are imports
Trade, both importing and exporting, took a big hit during the downturn but has started to recover, and roughly as quickly on both ends:
The report also measured the growth of disposable income since the recession. After a predictable fall during the downturn, it’s growing, and growing faster than the GDP so far this year:
Some political scientists think that disposable income is a better predictor of election results than GDP growth, and so if it continues to outpace GDP, Obama could be doing better than we suspect.