The Bureau of Economic Analysis (BEA) recently reported that Q1 GDP was only 0.1% in the United States. Most of that anemic number was blamed on worse-than-usual weather. But it should be noted that if our government accurately accounted for inflation, it would be clear to all that economic growth didn’t just stall at the start of 2014; but rather it contracted sharply. And if our economy can be thrown into a tailspin by a few snow storms, it is an economy that simply has not recovered from the Great Recession–which supposedly ended five years ago.
Nominal GDP (Real GDP plus inflation) was reported by the government as 1.4% last quarter. This means that inflation in Q1 was estimated by the BEA to be running at a 1.3% annualized rate. However, according the Bureau of Labor Statistics, energy prices were up 3.3% year-over-year. Food prices as measured by the protein category (meat, poultry, fish, and eggs) were up 6.4% year-over-year. And Health care costs were up 9.9% in the past year–that’s the largest increase in health care expenditures in 30 years. Home prices were also up 13% in the past year.