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Economic News

GDP falls 2.9%, some panic about another recession

(Economic News) With new economic data out today, some are bracing for another recession, while others are saying the data should be taken with a grain of salt.

GDP empty wallet

GDP empty wallet

The GDP fell in the first quarter; what now?

According to the Bureau of Economic Analysis, the first quarter of 2014 have been analyzed, and it appears that the economy has contracted significantly more than previously estimated, declining at an annual rate of 2.9 percent, which is relative to the fourth quarter of 2013, when the real GDP grew 2.6 percent.

Despite the contraction, the DOW is up 50, and given that the slump erased the gains seen in the final quarter of last year, some believe that as quickly as we saw these losses, we could see gains next quarter, putting us back at the starting line.

But not everyone sees it that way, and some economists care saying this surprising data could spell another recession, just as the nation emerges from the economic crash that began in 2008.

Let’s face it – the GDP news is bad. But it’s not the only damning data, as exports declined 9.0 percent in the first quarter, Americans ate out significantly less in the same period, healthcare spending declined, and business orders fell for things like technologies. But on the other hand, job growth is still improving.

In other words, the economy is sending out mixed signals, which is why this GDP news has so many on opposite sides of the issue, citing various data points to portray the economy as healthy or crashing, typically dependent upon their political leanings.

How did this happen?

CNN points out that “Some economists take this GDP number with a grain of salt because it will be revised again next month when the Bureau of Economic Analysis makes historical revisions, going back to 1999.”

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Fox News cites a PNC economist who dispels the idea that this is solely a weather-related dip, noting that only $15 billion can be blamed on the weather – a drop in the bucket.

The truth is that whether we’re crashing or recovering, the economy is sputtering. The White House calls the recovery “incomplete,” and it must be noted that a strong GDP in the next quarter could regain lost ground, but for now, many are flinching after being socked by the crash, and why wouldn’t they?

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  1. It Will Never Be Right

    June 25, 2014 at 10:12 pm

    2.9% !!!!! An out of control federal government that is taking more and more of it is to blame, not weather, not feelings, not anything else, but a totally undisciplined ruling party and their unquenchable thirst for bigger government and more. Obama’s DeathCare alone has allocated some 15%+ of the economy. It would be a compliment to call this over-regulation. This is blatant will to overwhelm our nation’s economy.

  2. west129

    June 25, 2014 at 10:35 pm

    “… the nation emerges from the economic crash …”? Well, I am glad to get informed about that. From where I stand I never would have noticed.

    But what is one to expect when too many of the know it all are either Freudian who engage heavily in dream-work or are just busy cooking the books in an attempt to substantiate something of no substance. However, don’t worry. The trick is in. By being informed that the 1st quarter was really very bad paves the way that the next quarter could regain lost ground, of course.

    I don’t see mixed signals in all that revised information since it is merely an infantile attempt to manipulation the report for the next quarter by setting a lower reference line: Let me guess the news for the next quarter: “We regained 80% of the ground we lost in the 1st quarter”. Same old, same old worthless propaganda!

  3. JimmyZ

    June 25, 2014 at 11:35 pm

    When did we recover from 2008? Last time I checked we still had millions unemployed. 47 million on food stamps 10 million over 2008 levels. Fed reserve had to install new printing machines to feed and hyper inflate the stock markets. EPA was attacking the coal industry literally working to shut down the same industry that kept america warm over the harsh winter. Nuclear power plants at the same time shutting down because they are going bankrupt. GM the too big to fail company is loosing billions left and right. Housing market still flat except Obama is pushing the FHA to give out more loans to broke people. Good move, reminds me of a similar move Clinton did that started the housing bubble that crashed the economy in 2008. The US is producing massive amounts of oil yet we are still paying $2.50 more at the pump then in 2008. In 2006 a Big mac value meal was 2.71+tax today its 4.99+ tax. Prices have doubled yet incomes have actually decreased in the US. Please explain this recovery I am eager to understand your definition of recovery

    • Maiden

      June 25, 2014 at 11:47 pm

      Liberal propaganda, that’s what it is. One particular outrage: the government originally stated that GDP grew in the first quarter, then it was revised to -1%, now to -2.9%. Our agencies and the civil service have become corrupted, especially at the senior level. Many of the people in the agencies are left-wing and may seem to support Barack Obama by massaging numbers. But why complain folks? How about the GOP files some electable candidates and simply gets the socialists out of office, instead of always just complaining. Not more Ken Cuchenellies please!

  4. donjeep

    June 25, 2014 at 11:40 pm

    Goods and Services are our GDP… Government spending is NOT. We are so way out of balance in so many areas of our society it scares an old guy like me. Government social programs are fine as long as we have the funds to pay for them. We do not. Our Government is trying to be a safety net for too many people and lets call them special groups of people. Our Government is dysfunctional and what I find that also scares me is that more and more people on the internet are using terms like revolt and revolution. That has to be driving the NSA and FBI watch dogs crazy. Next up, a real spike in the inflation rate. And just one more note. Government jobs that produce nothing are on the rise all around the country. That is why employment rates and GDP are out of synch.

  5. Bobby S

    June 25, 2014 at 11:41 pm

    When you have unpopular President Obama thinking he can BS his way out of economic problems, of course, we are heading towards another financial crash greater than 2008, because shrinking middle class cannot be taxed to death anymore to pay for big bank crooked schemes. Schemes openly supported by Obama himself with greedy miser near-zero interest rates holding billions of dollars of other people’s money hostage.

    • Kate W.

      June 25, 2014 at 11:54 pm

      Where are you getting your misinformation…certainly not the IRS tax tables…Obama has lowered taxes on the middle class…a little hiccup in the economy is a good sign…to avoid a boom bust type of economy…we have had 50+ continuous months of steady job growth…Dow is healthy…interest rates are low…we’re in good shape and the 2.9% hiccup insures no inflation….thank you Obama for saving the USA from the lil bush/cheney economic disaster…just like FDR, after hoover…and I remember reagan’s “Black Friday” economic crash…What is it with the GOP and economic catastrophe’s?

      • It Will Never Be Right

        June 27, 2014 at 11:07 am

        Is that grape or cherry koolaid you drank? Perhaps the news across the nation regarding how many people’s health insurance has skyrocketed or been cancelled, or the cost of DeathCare alone, or the zeros your messiah has added to the deficit. I mean, either Google it with somewhat of an appearance of objectivity, or else shop for a glass belly button so you can see where you’re going.

      • JimmyZ

        June 30, 2014 at 9:32 pm

        Bush/Cheny Disaster? Please get a grip on actual reality not reality TV. The disaster started with Clinton being lax on Home loans and lax on banking regulations and pushing fannie and freddie to give out loans to the millions of low income families that did not have the job to support their $375,000 Homes. Don’t blame the wars. We have had tons of wars and survived just fine. Wars did not cause broke people to stop paying their mortgages. Giving loans to people that didn’t have the money to pay them back in the first place did. Wars didn’t make garbage cars that nobody wanted like GM did. Wars didn’t cause the banks to risk money they did not have on unsecured gambles in the stock exchange. And BTW those 2 wars never would have happened if good ole clinton had taken custody of Osama Bin Laden when Sudan tried to hand him over twice. Or if they just killed him when the CIA had him in their cross hairs. And 50+ months of steady job growth? Prove it and government jobs don’t count because government jobs are just highly paid welfare claims. And your idea of inflation is completely skewed as most products are now 30% or higher then their price 10 years ago. Car prices have nearly doubled. In 2008 we had $18,999 new cars. Today those same cars start at $28,999. Yet household median income for the middle class has fallen $4,450 in that same time. The Dow is only healthy because the Fed has propped it up by buying mortgage backed securitys worth 85 billion a month. Yes slowly the dollar devalues and prices will rise. Wait till the fed cuts off the stock markets completely and starts taking back that printed money. Or better yet wait until other nations decide that the US has devalued the currency too much then stops collecting American dollars. And then watch the stock markets crash. You think the US government is Arming police forces and government agencies that never had weapons before with military hardware out of the goodness of their hearts?

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