Is Joe Sixpack's Economy Deep Into A Recession?

Steven Hansen submits:GDP is not the economy for the vast majority of Americans. It is simply money flows. It ignores housing prices. It ignores net worth. It ignores health care. It ignores unemployment. It ignores the education of Joe’s kids. It ignores the play money Joe Sixpack has left over at the end of the month. GDP is a measure for those that believe higher money flows eventually improve the life of Joe Sixpack.

The global economy took another turn for the worse as Japan plunged into recession following two consecutive quarters of growth. Please consider Japan’s economy shrinks annualized 3.5%. Japan’s economy shrank an annualised 3.5 per cent between July and September, the steepest decline since the earthquake-hit first quarter of 2011, as exporters suffered big falls in shipments to key markets such as China and Europe.

By Steven Hansen:I am not a lover of GDP as THE measure of the economy. GDP measures money movement across sectors of the economy that economists have determined is "productive" growth. Nothing is wrong with GDP as "one of many" economic measures which can be used - but it is not an all knowing measure of an economy.When you use any broad measure, at times it misleads.

6 months ago I figured we could hope than in late 2009 we would see the beginning of the recovery. I am much less optimistic about the later half of 2009 now. The initial reports for the last quarter of 2008 showed GDP Down 3.8%, the worst since 1982. That has now been updated to an annualized decline of 6.2%. Still the economy actually grew for all of 2008 by just over 1%, something I don’t think most people realize.

Reuters reports Economy grew faster than expected in fourth quarter Gross domestic product expanded at a 3 percent annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said on Wednesday in its second estimate.

U.S. health care spending increased yet again in 2009, increasing 4%. Total health expenditures reached $2.5 trillion, which translates to $8,086 per person or 17.6% of the nation’s Gross Domestic Product (GDP). This represents yet another record high percentage of GDP taken by health care – for decades, year after year, health care takes more and more of the economic resources of the country.