Wednesday, April 29, 2009

GDP Fell at 6.1% Annualized Rate

The United States GDP (Gross domestic product) fell at an annualized rate of 6.1% for the 1st quarter of 2009. This was less then the rate it fell at in the 4th Quarter of 2008, which was 6.3%, which means things are improving in the economy in general.

I just wanted to point out today, that all those people saying "we are headed to another Depression," couldn't have been further from reality. Let me explain to you all what a depression is. A Depression (Not the great depression, which was even worse) means that GDP falls at an annualized rate of 10% for 4 straight quarters. That's an average of 2.5% each quarter for 4 quarters. Considering that our annualized rate of decline was 6.3% and 6.1% respectedly for the 4th and 1st quarters, we are far from "Depression" levels. We would need to almost double the declines and have the declines persist for twice as ling as they already have to even consider a Depression scenario.

Unless a major unforeseen economic event strikes at the heart of the Nations economy, we will not even be close to Depression status anytime in the near future. The government has many, many new tools at it's desposal to combat a lessenign money supply, and put cash back into peoples pockets. Maybe next time the media begins to tout the current economic problems as a possible Depression scenario, you will take the time to go against the herd and invest in solid, debt free companies.

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