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(Schiff)—Rampant government spending continues to mask fundamental weaknesses in the US economy. Recently, national debt grew much faster than the economy for the third quarter in a row, just one of many warning signs concerning legendary investors. Our guest commentator explains just how much the government is spending to make the economy seem strong, even as the US remains in the midst of a “private sector recession.
Over the past year, economist Daniel Lacalle has repeatedly warned that the United States is in the midst of a “private sector recession” and that official GDP measures are being propped up by government spending. The latest GDP numbers from the federal government strongly suggest he is right.
Today, the federal government’s Bureau of Economic Analysis released its revised estimate for GDP growth in the fourth quarter of 2023. According to the report, total GDP increased $334.5 billion (quarter over quarter) during the fourth quarter. That’s down from the third quarter’s quarter-over-quarter increase of $547.1 billion, but is nonetheless an ostensibly robust rate of growth.
Yet, if we compare GDP growth during the fourth quarter to growth in the total national debt, we find that the numbers don’t look quite so robust after all. While GDP may have grown by $334 billion during the period, the national debt grew by more than twice as much: $834 billion. In other words, for every dollar of GDP growth, the national debt grew by 2.7 dollars.
Moreover, this is the third quarter in a row during which debt growth has substantially outpaced GDP growth. During the third quarter, the federal debt grew $1.5 dollars for every dollar of GDP growth. During the first quarter, the debt grew 3.5 dollars for every dollar of GDP growth.
The fact that this has now happened three quarters in a row is notable as well. Over the past fifty years, it is rare to find debt growth exceeding GDP growth for more than two quarters in a row except during periods of economic weakness when the federal government relies on monetary expansion and federal spending to “stimulate” economic growth. For example, we find a three-quarter streak during the Great Recession and the years immediately afterward—when job growth was extremely weak. The same can also be seen in the quarters following the 2001 recession.
This isn’t shocking. If the federal government is trying to boost GDP numbers through “stimulus” it will both spend freely and expand the money supply as the central bank purchases Treasuries to avoid a surge in interest rates. (See more on how the central bank enables deficit spending.) The current reliance on federal deficit spending to keep up the appearance of GDP growth further backs up Lacalle’s theory that the United States is in the midst of both a public-sector expansion and a private-sector contraction. That is, the private sector is experiencing many recessionary trends, such as falling real wages, a decline in manufacturing, and growing bankruptcies. Meanwhile, however, government spending is booming, so sectors of the economy that are closely tied to government spending continue to expand. In aggregate, total GDP numbers thus show an increase, even as the private sector stagnates.
After all, it’s important to keep in mind that GDP measures include government spending, and will also include the consumption that results from additional government spending on welfare programs, weapons manufacturing, and more. As the federal government spends its deficit-financed dollars, the recipients of these dollars consume more, thus pushing up current GDP.
The general problem with this trend can be seen if we apply it to a private firm. Imagine, for instance, that a private firm managed to increase its production by a million dollars, but at the same time took on an additional $2.5 million in debt to buy new sports cars for its least productive employees. Even worse, this new debt is in addition to a huge existing debt load.
This sort of debt should never be confused with good debt, which is debt taken on to fund new capital goods. That could potentially increase productivity later on. Government debit never good debt, however, because it is taken on for purposes of immediate consumption—usually on social welfare benefits or on bombing faraway countries.
Unfortunately, as we find debt growth repeatedly top GDP growth, we are likely to see more of this phenomenon moving forward. The federal debt is now larger than the entire GDP of the United States, and the gap between debt and GDP in each year has now widened to more than six trillion dollars. As this trend continues, expect to see deficit spending play a larger and larger role in GDP.
Mysterious “Skyquakes” Are Causing Strange “Booms” in the Sky, and Scientists Have No Explanation
by Michael Snyder
(End of the American Dream)—What is causing the extremely loud “booms” that people are hearing in the sky all over the world? We are being told that “skyquakes” are responsible, but scientists have no idea why these “skyquakes” are occurring. In some cases, the “skyquakes” cause such powerful shaking that…
The Biggest Sale on Long-Term Storage Beef EVER
by Sponsored Post
Let’s cut to the chase. Prepper All-Naturals is offering an unprecedented 40% off for it’s “Beef Steak” survival bags with promo code “steak40”. With a 25-year shelf life and a single ingredient (beef, of course), our most popular product is available for a very limited time with the biggest discount…
Seattle Is Ordered to Stop Blocking Illegal Alien Deportations in the Most Hilarious Court Decision Ever
by PJ Media
A federal court has just pooped in the oatmeal of the West Coast, Messed Coast™governors and local election officials suffering from acute cases of Trump Derangement Syndrome who think they can stop illegal alien deportations. And after this hilarious and thorough legal takedown from the 9th Circuit Court of Appeals,…
Illegal Alien Terror Suspect Found Dead in Cook County Jail Cell
by Slay News
An Islamic illegal alien has been found dead in his jail cell after being arrested on terrorism charges. According to CWBChicago, 22-year-old Sidi Mohamed Abdallahi was found dead at the Cook County jail in Illinois on Saturday. Abdallahi was arrested on felony terrorism and hate crime charges in October. He…
Trump’s Wild Bunch Is Ready for Action
by Frank Miele
If for no other reason than that it will elicit fear in the hearts of autocracy-phobics, I propose that Donald Trump’s second-term Cabinet be known as “The Wild Bunch.” The name is best known as the title of Sam Peckinpah’s classic 1969 western featuring a colorful cast of aging outlaws…
FAA Issues Flight Restrictions Over Questionable Drone Activity Near Trump’s Bedminster Golf Course
by Just The News
The Federal Aviation Administration (FAA) on Tuesday said that it has issued two flight restrictions on the area surrounding President-elect Donald Trump’s Bedminster golf club in New Jersey, following questionable drone activity. The drone sightings were first reported on Nov. 18, but have continued into this week, according to Fox…
Ex-FBI Agent Convicted for Stealing From Jan 6 Defendant During Raid
by Trending Politics
A former Houston-based FBI agent has been convicted of stealing valuables and cash while conducting searches. In one instance, the agent stole cash and silver bars from a non-violent January 6 defendant’s home. Nicholas Anthony Williams, 36, was indicted on January 31 in the Southern District of Texas. Williams, who…
Democrats, Media Elite Urge Biden to Pardon Trump’s Alleged ‘Enemies List’
by Breitbart
President Joe Biden should issue preemptive pardons to his political allies and those deemed to be on President-elect Donald Trump’s alleged “enemies list,” Democrats and their media allies believe. Delivering a preemptive pardon indicates an admission of guilt, although Democrats claim a preemptive pardon would only be intended to block…
Fani Willis Forced to Release All Communications With Jack Smith, J6 Committee
by Trending Politics
The Fulton County Superior Court has ruled against District Attorney Fani Willis, ordering her to disclose communications with Special Counsel Jack Smith and the House January 6 Committee. The decision, announced on Tuesday, follows a lawsuit brought by Judicial Watch, a conservative watchdog group, which accused Willis of violating Georgia’s…
Lindsey Graham Is the Warmongering NeoCon Leading the Charge to Upend Pete Hegseth
by JD Rucker
Pete Hegseth represents a shift away from the wokeness that has infected the United States military. This is possibly the biggest reason President-Elect Donald Trump tapped him to be the next Secretary of Defense and the vast majority of Republicans on Capitol Hill can support this, at least for the…
‘Where Are Black Democrats?’: Charles Payne Tells Personal Story to Call Out ‘Huge Double Standard’ of Biden Family
by Nicole Silverio, DCNF
(DCNF)—Fox Business host Charles Payne called out the alleged “huge double standard” of President Joe Biden’s family Tuesday by revealing that his brother, who struggles with a crack addiction, is currently serving a jail sentence. Payne said his brother, who is getting out of jail on Friday, is likely one…
Zelensky Admits Ukraine Can’t Retake All Its Land: ‘We Must Seek Diplomatic Means’
by Breitbart
Ukrainian President Volodymyr Zelensky conceded in an interview on Tuesday that Ukraine does not have “enough forces” to restore sovereignty over Russian-occupied Crimea and “must seek diplomatic means” to end the Russian invasion and regain its land. The state-run Ukrinform outlet reported that Zelensky described Crimea – which Russia colonized…
Ultra-Processed Foods: How Bad Are They for Your Health?
by Olivia Cook
(Natural News)—Despite the serious health risks associated with eating junk food, they remain the most consumed food products in many countries, particularly developed ones. But a review published in The BMJ, which studied 9.8 million people, warns that eating a lot of ultra-processed foods can increase your risk for 32 diseases. Among these are heart…
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by Tyler Durden, Zero Hedge
(Zero Hedge)—As the retail apocalypse that started with Amazon and e-commerce continues, the latest victim is The Container Store. The retail giant could file for bankruptcy as soon as next year, according to the New York Post, who said the retailer is blaming its recent descent on “a weak housing…
Mysterious ‘Car-Sized Drones’ Over New Jersey Prompt FBI Investigation
by Zero Hedge
Several weeks of mysterious drone swarms over the skies of one New Jersey county near the military research and manufacturing facility Picatinny Arsenal have sparked concerns among residents and prompted an FBI investigation. “It’s kind of unsettling,” Mike Walsh, a Morris County resident who has spotted the drones on numerous…
UNESCO’s New Mission: Train Influencers About Combatting Online “Misinformation”
by Reclaim the Net
The UN Educational, Scientific and Cultural Organization (UNESCO) is now incorporating teaching influencers how to “fact check” into its activities. UNESCO claims that influencers have become “primary sources of news and cultural information” around the world – which prompted it to carry out a survey into how these online personalities…
