“The US Just Had Its Worst Year of Economic Growth Since 2011”

The article chosen for the GDP report is titled “The United States Has Had Its Worst Year of Economic Growth Since 2011.” It was obtained from the Washington Post blog on January 27, 2017. The essay addresses how slow economic recovery was in 2016 relative to the years since 2011. After 2011, the nation has seen the slowest economic growth of 1.6 percent. The economy grew by 2.6 percent the previous year. This was not in accordance with analysts’ forecasted rise of 2.2 percent.

The slow growth was attributed to poor business investments, especially in the oil industry. However, in the fourth quarter, investments in business started to rise. This was attributed to rise in global prices of oil.

As the growth continued to turn up, businesses were adding more inventories and spending more as the year was closing. The people were previously afraid to spend money, due to clarity that the new administration was going to bring corporate reforms in terms of trade, economic policies, immigration, regulations, spending.

The economists look at the figures fairly positive doing comparisons with other nations. They, however, are not sure about the target set by Trump of 4percent growth.

Relationship between the article and GDP

The article discusses the country’s income and expenditure. In the article, the slow growth is as a result of low prices of oil in the larger part of 2016. This paralyzed the U.S sector of energy. Also, business investors were not sure whether to invest because of the incoming administration of Trump. They are uncertain of the economic policies, regulations or corporate reforms the administration is set to bring.

The components of GDP have been highlighted in most parts of the column. In the article, businesses began to invest and stock more towards the end of the year. This constitutes two of the most important components of GDP: investment and expenditure. Net exports dealt a blow because of the low prices of oil. Government expenditure is still an unknown factor with the incoming administration.

Real GDP is highlighted in the article. As we know real GDP is economic growth that has factored in inflation. One of the analysts in the article discusses the impacts of raising taxation; it is said, that eventually prices would increase. This is in line with the fourth quarter figures in 2016 that caused a 1.3 percent rise in prices. Markets are waiting for Trump to offset inflation risk in 2017.

Analysis of the Article

While the country is experiencing not so good economic growth since 2011, the growth percentage can be accepted because other aspects like education are doing well. The country is near achieving full employment. This is where all citizens in the U.S will get a job if they want one. This will be boosted heavily by more Investments and further cuts in taxes. This is a positive that can be taken from the recent growth figures.

In the article, one chief economist, Caranci says that the recent 1.9 percent growth by the U.S puts them a head of other countries with sluggish economies especially in Europe and Asia. This is not true considering that GDP is not a measure of how well-off a country and its citizen are. There are many countries with lower GDP growth annually but its citizens are more satisfied. They do not work long hours and have better relationships at work and at home. Generally, GDP alone cannot make other country envious of another.

Source

Name of article: “The US Just Had Its Worst Year of Economic Growth Since 2011”

Author: Ana Swanson

Date: Jan 27, 2017

Link: https://www.washingtonpost.com/news/wonk/wp/2017/01/27/u-s-economy-expanded-1-9-percent-in-fourth-quarter-2016-gdp-up-1-6-percent/?utm_term=.a5995cfabc51