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Figure 2-1
Mean GDP Growth, 2007–2013
Percent change at an annual rate
6
4
2
0
-2
-4
4.9
4.6
3.3
4.0 3.7
2.8
1.8
2.2
1.8
0.2 0.6
0.9
1.6
1.8
1.0
0.4 0.3
-0.4
-1.0
-0.2
-1.8
2.5
2.8
1.8
2013:Q4
2.9
2.4
(GDP only)
-6
-8
-7.9
-5.8
-10
2007:Q1 2009:Q1 2011:Q1 2013:Q1
Note: Mean real GDP growth is the average of the growth rates of real GDP and real gross domestic income
(GDI). The bullets show mean GDP and the bars show the GDP and GDI growth in each quarter. The
estimate for 2013:Q4 is for GDP only. Shading denotes recession.
Source: Bureau of Economic Analysis, National Income and Product Accounts; CEA calculations.
income- and product-side of real GDP (Figure 2-1).1 During the four quarters
of the year, growth was strong in exports (4.9 percent) and in residential
investment (6.6 percent), and moderate in business fixed investment (3.0
percent) and consumer spending (2.1 percent). State and local purchases
edged up slightly following four years of decline, while Federal spending fell
6.2 percent.
Fiscal Policy
Federal fiscal policy evolved through several near- or after-deadline
Congressional actions that made fiscal policy uncertain and created a difficult
planning environment for businesses and consumers.
Toward the end of 2012, policy focused on the potential negative
effects of the “fiscal cliff,” a confluence of expiring tax cuts and scheduled
spending declines that were on track to occur simultaneously, which might
have resulted in a sharp fiscal-policy tightening on January 1, 2013. The
Congressional Budget Office (CBO) estimated that these policies, if allowed
to occur, would have lowered real GDP growth by about 2.25 percent during
1 Research shows that an average of the two growth rates is better correlated with a wide
variety of economic indicators than either the product-side measure (which is headlined in the
Commerce Department reports) or the income-side measure alone (Nalewaik 2010, Economic
Report of the President 1997, pp. 72-74).
The Year In Review And The Years Ahead | 47