Gross Domestic Product (GDP) is the value of goods and services produced by labor and property located in a specific country or region. It is perhaps the most important of all economic indicators.
2.
Wisdom
Important
As GDP goes, so goes the economy. A rising GDP lifts all sectors of the economy. A falling GDP affects all sectors of the economy.
3.
Knowledge
Important
> 2% increase in real GDP is fair, and yet, still a good time to invest.
4.
Current Assessment
Fair
Real gross domestic product (GDP) increased at an annual rate of 2.5 percent in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.
5.
Future Assessment
Fair
The European sovereign debt crisis will keep the US GDP growth rate at or around 2%.
Probable Outcomes
Possible Outcome
Probability
Value
Reasons and Explanations
1.
Awesome
0%
> 6%
2.
Good
10%
> 4%
3.
Fair
80%
> 2%
The European sovereign debt crisis, specifically in the countries of Greece, Italy and Spain, will keep the US GDP growth rate around 2%.
Consumer spending accounts for 2/3 of the GDP of the US. Personal Income is the total income "before tax" for consumers that they can spend.
2.
Wisdom
Important
The more Personal Income, the greater the purchasing power of the consumer. And the greater their purchasing power, the better the economy of the US.
3.
Knowledge
Important
Personal income needs to be rising more than 0.2% per month for the economy to be growing adequately.
4.
Current Assessment
Bad
Personal income growth rates have been fluctuating, and sometimes negative. Unemployment, de-leveraging, and high foreclosure rates are keeping personal income levels down.
5.
Future Assessment
Fair
Personal income levels are expected to increase as the economy improves.
Probable Outcomes
Possible Outcome
Probability
Value
Reasons and Explanations
1.
Awesome
0%
> 1%
2.
Good
10%
> 0.5%
3.
Fair
70%
> 0.2%
Personal Income levels are expected to rise adequately month over month as the economy improves, despite problems in the European economy.
4.
Bad
20%
> 0%
5.
Terrible
0%
< 0%
Name:
GDP by Industry
Description:
GDP by Industry as measured by the US Dept of Commerce - Bureau of Economic Analysis (BEA)
Author:
US GDP by Industry - US Dept of Commerce - BEA
US GDP by Industry - BEA - Annual Percent Changes in Value Added Prices
GDP by Industry shows the contribution to Gross Domestic Product by key sectors, revealing who is driving the economy (Government, Business or Consumers).
2.
Wisdom
Important
Since 2/3 of the US GDP is accounted for by consumer spending, it is important to see in the breakdown of GDP by industry their contribution versus the governments or business.
3.
Knowledge
Important
All sectors of the US Economy need to be growing, and most importantly, the consumer sector needs to be growing 2%+.
4.
Current Assessment
Fair
The private producing sectors of the US are generating goods and services at approximately 3% growth rate.
5.
Future Assessment
Fair
GDP growth rates will be between 2% and 4% in Q4 2011, and will likely stay in that range throughout 2012.
Probable Outcomes
Possible Outcome
Probability
Value
Reasons and Explanations
1.
Awesome
0%
> 8%
2.
Good
10%
> 4%
3.
Fair
80%
> 2%
The European sovereign debt crises, and problems with the US housing market, high unemployment and de-leveraging, will keep GDP growth rates below 4%, and likely above 2%.
4.
Bad
10%
> 0%
5.
Terrible
0%
< 0%
Name:
U.S. Balance of Payments (International Transactions)
Description:
The U.S. Balance of payments is the combined balances on trade in goods and services, income, and net unilateral current transfer
The US Balance of Payment shows the relative competitiveness of the US economy in manufacturing (goods), services and income (financing) versus the world.
2.
Wisdom
Important
Where the US has a balance of payment surplus, it shows relative strength versus rest of the world, such as services and financing. Where it has balance deficits, it shows weakness in competition versus the world.
3.
Knowledge
Important
The US needs to have a growing service trade surplus for a healthy economy. The trade deficit in goods has been a trend for many years, as US consumers desire foreign products more than foreigners demand US made products.
4.
Current Assessment
Fair
The current US Balance of Payments is fair, with services and financing (income) at a surplus and raising steadily but slowly, and goods at a deficit, but near a constant percentage of GDP (about 3%).
5.
Future Assessment
Fair
Services and financing (income) trade surpluses are expected to increase steadily and slowly. The trade deficit for goods is expected to hover around $200B, but improve as the economy slowly improves.
Probable Outcomes
Possible Outcome
Probability
Value
Reasons and Explanations
1.
Awesome
0%
> $0B in goods surplus
2.
Good
10%
< $100B in goods deficit
3.
Fair
80%
< $200B in goods deficit
Services and financing trade surpluses continue to increase slowly. Goods trade deficit hovers around $200B.
4.
Bad
10%
<$250B in goods deficit
5.
Terrible
0%
> $250B in goods deficit
Name:
International Investment Position
Description:
US Commerce Dept - BEA - International Investment Position
Author:
US Commerce Dept - BEA - International Investment Position
The International Investment Position measures the value of foreign investments in US companies and the value of US investments in foreign companies each quarter.
2.
Wisdom
Important
In a healthy US economy, there is both high investment in US companies by foreign investors and high investment of US companies in foreign ones.
3.
Knowledge
Important
The US economy needs to be within $2 Trillion of the value of foreign investments in order to have a strong, healthy economy.
4.
Current Assessment
Fair
US investments in foreign companies is more than $2T less than foreign investment in US companies.
5.
Future Assessment
Fair
The International Investment gap is likely to stay in the Fair range of less than $4.0T.
Probable Outcomes
Possible Outcome
Probability
Value
Reasons and Explanations
1.
Awesome
0%
< $1.0T
2.
Good
10%
< $2.0T
3.
Fair
70%
< $4.0T
The value of foreign investments in US companies is likely to stay less than $4.0T throughout the slow, worldwide economic recovery.
4.
Bad
20%
< $6.0T
5.
Terrible
0%
< $8.0T
Name:
International Trade in Goods and Services
Description:
US Commerce Dept - BEA - International Trade in Goods and Services
Author:
US Commerce Dept - BEA - Balance on Goods and Services Trade
