First Quarter US Real GDP By State: Map: US Bureau of Economic Analysis

From U.S. Bureau of Economic Analysis (BEA), News Release, "Gross Domestic Product by State, 1st Quarter 2022" Thursday, June 30, 2022: 

Gross Domestic Product by State, 1st Quarter 2022 

Real gross domestic product (GDP) decreased in 46 states and the District of Columbia in the first quarter of 2022, as real GDP for the nation decreased at an annual rate of 1.6 percent, according to statistics released today by the U.S. Bureau of Economic Analysis (BEA). The percent change in real GDP in the first quarter ranged from 1.2 percent in New Hampshire to –9.7 percent in Wyoming (table 1).

Source: U.S. Bureau of Economic Analysis

 

Building A Company That Fails Is Easy: Building A Company That Lasts Is Difficult: Government Is Not Responsible For Business Success: Reprint of a Ten Year Old Blog Post

 

A reprint of my July 19, 2012 blog post about the incorrect belief government is responsible for successful companies follows:

Thursday, July 19, 2012

Building A Company That Fails Is Easy: Building A Company That Lasts Is Hard: Obama Is Wrong In Thinking Government Schools, Roads And Other Government Infrastructure And Services Are Responsible For Successful Companies: Romney Did Build Bain Without The Government

Posted By Milton Recht

Anyone with enough cash; a valuable asset to sell or put up as collateral; with family and friends who will lend them money; or with the ability to borrow from a bank can start a company.

A thousand times everyday in the US, somebody decides they want to be in business for themselves. They think of an idea that will make them money. They make room in the den, garage, attic. They rent space, sign a lease, incorporate, sign partnership papers, file doing business as papers, pay necessary governmental fees, print business cards, think of logos, trademarks, advertisement slogans, create a company Facebook page and twitter account.

New businesses in the hundreds, if not thousands, start in someone's mind every day. Accountants, lawyers and bankers are contacted.

All it takes to start a business in the US is some money and an idea. Money allows an entrepreneur to lease space, hire workers, salesmen, accountants, lawyers. Money allows advertising, sample products, etc. Money allows a business to start. Money allows anyone to build a business.

What happens to most of these ideas, embryonic businesses, start-ups and future McDonald's, Microsoft, Google, GM, WalMart, etc? They die a quick death.

All the entrepreneurs' businesses that start and disappear used government services and infrastructure. The failed businesses hired people who used government schools, roads, and other government services and infrastructure.

Obama and the Democrats say government services and infrastructure are responsible for the business success of Romney and other entrepreneurs. By the same logic, government services and infrastructure are responsible for the business failures.

Romney's and other entrepreneurs' success is not at all due to anything supplied by government. New business success is due to the entrepreneurs' willingness to take more risk than the average individual, along with some unique innate entrepreneurial ability that is not learned in schools or we would not see the high failure rate of new businesses that we do. Of course, a little luck helps, but luck cannot turn a lousy business into a success.

Biil Gates, Mark Zuckerberg, Ray Kroc, Sam Walton, Larry Page, Sergey Brin and the thousands of other successful entrepreneurs are responsible for the success of their companies. They owe nothing to the government, government services and infrastructure for the success of their companies. Other entrepreneurs and start up companies in the same field doing the same thing, with the same government services and infrastructure as the successful business start-ups, failed and died prematurely.

Government provided services and support are not the essential ingredients for business success.

Socialism, High Taxes, Capitalism and Economic Sustainability: Reprint of a Six Year Old Blog Post

A reprint of my October 16, 2015 blog post about profit and economic sustainability follows:

Friday, October 16, 2015

What Socialists and High Tax Progressives Forget About Capitalism

Posted By Milton Recht

Capitalism is nothing more than private ownership with a profit motive. Economic profits exist only after all costs are paid. Material, labor, and equipment costs, plus debt cost (interest and principal) and a fair return on invested monies must be paid regularly or a company will cease to exist. If there are no profits, then there is insufficient money to pay back completely the costs of material, labor, equipment, and debt and equity investment. Without profits, workers do not get fully paid; material and equipment suppliers do not get fully paid; lenders and investors do not get paid.

A company that cannot regularly pay back its costs will cease to exist. Workers will not work for free or partial wages. Suppliers will not supply it. Lenders will not lend to it and investors will not invest in it.

Capitalism enables business to be self-sustaining. It enables a company to pay back all its ongoing costs. Capitalism is a sustainable economic system. The companies that are not self-sustaining are removed and replaced with sustainable companies.

Not-for-profits and governments are not financially self-sustaining. They are not economically sustainable systems. Left on their own, they would cease to have funds and government printed money would be worthless. They always are in need of more outside funding. Not-for-profits are always planning fund raising campaigns to pay off expenses they have already incurred or will incur in the coming year. Governments are always looking for ways to increase fees and taxes and to rollover debt to pay for government employee salaries, government programs and the military. Governments and not-for-profits are dependent on a vibrant capitalistic system to create wealth and companies with profits. Without a dynamic fully functioning capitalistic system, governments will quickly run out of funds to tax and redistribute.

Not-for-profits and governments need a replenishable source of funds. Capitalism is the only economic system that can regularly generate a sustainable source of profit and wealth.

Taxes and income and wealth redistributions do not create income, profits or wealth.

Government interference through laws, regulation and taxes creates structural rigidities and additional expenses for businesses. In general, government reduces businesses ability to generate wealth and profits and adapt to changing business environments.

A government that increases business costs through restrictive laws and regulations and harshly taxes business and wealth will find itself unable to accomplish for its populace the very things it thought its laws, regulations and taxes would allow it to do. It will diminish its very source of sustainability. It will find that its source of funding is no longer as reliable and plentiful as it once was. It will find it cannot do what it set out to do through law, regulation and tax.

First Quarter US Personal Income By State: Map: US Bureau of Economic Analysis

From U.S. Bureau of Economic Analysis (BEA), News Release, "Personal Income by State, 1st Quarter 2022" Wednesday, June 22, 2022:

Personal Income by State, 1st Quarter 2022 

State personal income increased 4.8 percent at an annual rate in the first quarter of 2022 after increasing 3.6 percent in the fourth quarter of 2021, according to estimates released today by the U.S. Bureau of Economic Analysis (BEA) (table 1). The percent change in personal income across all states ranged from 8.5 percent in South Dakota to 1.3 percent in Hawaii.

Source: U.S. Bureau of Economic Analysis 

 

Fed's Past GDP Projections Are Often Incorrect

A decade ago, the Federal Reserve was bad at estimating future GDP growth. Why should investors think that the Fed has improved its GDP forecasting ability?

A reprint below of my August 22, 2015, blog post, "Comparison Of Federal Reserve GDP Projections Versus Actual GDP: GDP Bonds Anyone?"

 Saturday, August 22, 2015

Comparison Of Federal Reserve GDP Projections Versus Actual GDP: GDP Bonds Anyone?

Posted By Milton Recht

From The Wall Street Journal, Opinion, "A Fine Fed Mess: Are financial assets falling to match the slowing real economy?"

Source: The Wall Street Journal

Market-Based Solutions
There are market-based solutions that would improve the forecasts of GDP, that do not involve model building or a dependency on a particular school of economics. Event-based financial instruments where the amount of the payout is directly and computationally dependent on observable economic indicators, observable prices or observable outcomes, such as election outcomes in the Iowa Electronic Markets [now defunct], inflation forecasts of US Treasury TIPS and other prediction-based actively traded instruments are more accurate than model-based forecasts.

A US Treasury GDP bond of different maturities, where payouts are computationally dependent on actual reported GDP of different time periods, would allow for the computation of future expected (forward) GDP growth rates. These forward growth rates, if they behave like other prediction market-based forecasts, will have greater accuracy than any model based forecast, including a Federal Reserve model.

One has to wonder why the Federal Reserve has not promoted the idea of a market-based, GDP dependent, financial instrument to improve the accuracy of its GDP forecast and to allow for computation of expected GDP growth rates for many different future time periods. Is it a fear of immediate accountability and feedback? The ability of investors to read real-time, market-based forecasts of the future of the US economy from a GDP-based bond would provide a level of oversight, feedback and accountability to the Federal Reserve's actions and judgments to improve future GDP growth that the Federal Reserve is not used to having.

The Budget and Economic Outlook: 2022 to 2032: CBO Presentation

From CBO, "The Budget and Economic Outlook: 2022 to 2032" Presentation by Christina Hawley Anthony, Robert Arnold, and Joshua Shakin, CBO Unit Chiefs, at a joint seminar by CBO and the Congressional Research Service, June 14, 2022:

Summary
CBO projects a federal budget deficit of $1.0 trillion in 2022 and an average annual shortfall of $1.6 trillion from 2023 to 2032, under the assumption that existing laws governing taxes and spending generally remain unchanged. Federal debt held by the public is projected to dip to 96 percent of GDP in 2023, but then to rise each year thereafter, reaching 110 percent in 2032, higher than it has ever been.

In CBO’s projections, elevated inflation initially persists in 2022 and then subsides as supply disruptions dissipate, energy prices decline, and less accommodative monetary policy takes hold. The price index for personal consumption expenditures increases by 4.0 percent in 2022, real (inflation-adjusted) GDP grows by 3.1 percent, and the unemployment rate averages 3.8 percent.

The Budget and Economic Outlook: 2022 to 2032 from Congressional Budget Office