Graphs of GDP report, consumer confidence, capital goods orders
The depths of the recession
More great data courtesy of the Minneapolis Fed: This shows just how far the U.S. economy shrank from the pre-recession peak. The 5.1% drop ranked as the deepest recession downturn since World War II. As for where we are now, the third quarter report shows that after 15 quarters, the U.S. economy is just a faint 0.2% above its prior peak.
The current mix
A few interesting observations here. First, consumption both now and historically has been the driver of the U.S. economy, but as Americans pare their debts, it’s provided less of a boost. It’s no surprise that residential investment — housing, basically — has provided nothing to the present recovery, but it’s noteworthy that taken over 37 pre-bubble years, housing really never has. And the chart also shows how capital expenditures have played a big role in the current expansion, whereas the government sector is now a drag.
Core capital-goods orders
Take that, Dick Fuld: Core capital-goods orders reached the highest level since the collapse of Lehman Brothers. Business investment has been very strong, in part because companies are catching up after not retooling during the recession. Tax incentives that are due to expire at the end of the year also may be playing a role.
This shows the once-strong correlation between consumer confidence and jobs growth breaking down. It’s caused quite a bit of debate among economists — some who say the recent deterioration in confidence points to a big slump in consumer spending in the months ahead, others who say the breakdown points to a public dissatisfied with the economy but not altering their personal behavior.