Tag Archives: GDP

Gross Domestic Product and Other Measures of Wellbeing

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Today, the Bureau of Economic Analysis released its advanced estimate for Gross Domestic Product for the 4th quarter of 2011.  As expected, GDP grew again (by 2.8%), marking the tenth straight quarter of growth.

While GDP growth is a good indicator that The Great Recession is finally over, other measures, such as the number of mass layoffs, have been mixed.  In December 2011, there were 1,384 mass layoff events (an increase of 52 events over November 2011) affecting 145,648 workers. However, the annual numbers for 2011 as a whole show a more positive story, with the lowest number of events (18,521) since 2007.  Similarly, the Bureau of Labor Statistics (BLS) reported that median weekly earnings for full-time workers increased during the fourth quarter of 2011 by 1.6% over the same period in 2010 (a positive sign), but in urban areas, this increase was not enough to keep up with the inflation rate of 3.3% during the fourth quarter of 2011 (a not so positive sign).

So where does this leave us?   Unfortunately, eschewing speculation and using only facts, it is hard to say as our table below shows.

Next week, BLS will be reporting January 2012 unemployment rates and BEA will be reporting December 2011 personal income and outlays.  These are two additional important measures of the economy that can help us better understand whether there is cause for celebration.  We will be watching them so we can provide our readers with more facts on whether the economy is indeed improving.

Unemployment in California: As CA Goes, so Goes the World?

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In an economic news release published a few days ago, the Bureau of Labor Statistics reported that California’s unemployment rate in December 2011 was 11.1%, down from 11.3% in November 2011.  This marks the fifth straight month that unemployment has fallen in the state; a promising sign after years of economic stagnation.

While other states have also endured exceptionally high rates of unemployment—notably Nevada (12.6% in December 2011), Rhode Island (10.8%), and Mississippi (10.4%)—, the sheer size of the California economy makes developments there especially important for the rest of the U.S. economy. As shown by the chart below, California is responsible for a full 12% of the country’s Gross Domestic product, the largest contributor of all the states.

 

Similarly, California’s economy has world-class standing: if taken on its own, the state’s 1.9 trillion dollar economy would place it among the top ten economies in the world, ahead of Canada, the Russian Federation, Spain, Mexico, South Korea, and Australia.

 

 

So how important is California to the rest of the US economy? As the chart below shows, California’s unemployment rate, while generally higher than the United States on the whole, is almost a perfect mirror of the general national trends.

 

While Wall Street and the popular media focus predominantly on the fates of the PIGS—e.g., Portugal (number 37 in the world in terms of  GDP in 2010), Italy (number 8), Greece (number 32) , and Spain (number 12)—the close correlation between developments in California and developments in the US as a whole suggests the need to refocus our attention. As such, the continuing improvement in California’s unemployment rate should give us all a glimmer of hope as we slowly make our way on the path to recovery.