The National Economic Report (NER) Excerpt for August 2010

The National Economic Report (NER) Excerpt for August 2010.

Brought to you by the Institute of Business Appraisers and American Business Brokerage, Inc.

The economic recovery that was supposed to lift the United States from the deep recession of 2007-2009 is not going according to plan. In fact, the “recovery” is on life support. The U.S. Department of Commerce reported on June 25 that the U.S. economy grew by just 3.7% during the first quarter of 2010, down substantially from the revised growth rate of 5.6% recorded for the fourth quarter of 2009. Disappointing as this rate was, it slipped again during the second quarter, with the economy growing by a less-than-expected 2.4%. And then, in August, the second-quarter GDP growth rate was downgraded further, to an anemic 1.4%. Most analysts, including the U.S. Federal Reserve, have lowered their growth forecasts for 2010, and numerous economists are openly wondering if the U.S. economy will slip back into recession.

One of the most troubling factors in this mix is the burgeoning Federal budget deficit, which topped $1 trillion for the second year in a row. As a result of accumulating budget deficits, Federal debt will consume 62% of the nation’s economic output this year, and is on pace to account for more than 100% of economic output by 2015. Other areas of concern include steep potential jumps in tax rates, the still-fragile housing and auto markets, and continuing sluggishness in consumer confidence. But it is the job market that remains most worrisome. The U.S. unemployment rate dipped from 9.9% to 9.5% over the three months ending in July, then edged back up to 9.6%. But private-sector job gains have been less than hoped, and the economy is adding jobs at a pace that is too low to keep up with population growth, much less replace jobs lost during the recession.

The National Economic Report (NER) is a product brought to you by the Institute of Business Appraisers (IBA) and American Business Brokerage, Inc. The NER is written by Kevin R. Hopkins, a former White House economist and senior contributing editor to Business Week magazine.

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