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IQ15 to IVQ18 GDP (% Yearly Change) vs. Productivity (% Yearly Change)

United States Gross Domestic Product vs. Productivity Growth

United States Gross Domestic Product vs. Productivity
(Year to Quarter)
Quarter/Year GDP (% Change) Productivity (% Change)
* Revised from Final Report

If you haven't done so yet, we recommend that you review the section on how we suggest this data should be interpeted.

Economic Analysis

Unless otherwise stated all references to Gross Domestic Product (GDP) or Productivity is based on year to quarter data.

Gross Domestic Product-Productivity

Our calculations for the fourth quarter of 2018 indicate that the U.S. economy grew at a 3% rate. This is greater than the Bureau of Economic Analysis’ (BEA) calculation of 2.2%. I have discussed the reasons behind the differences before, so I will not go into those now. I will say that I believe our calculations are more accurate. We both agree that for the year the economy grew at a 2.9% rate.

The economy is growing. Where the BEA and Data Stats disagree is what this means. The BEA believes that this shows a thriving economy. At Data Stats we believe that for many reasons the economy is just above stall speed and a recession is imminent.

The enclosed area of the plot has a GDP range of approximately 1.5 to 2.5%. The Productivity range is about -0.2% to about 1.0%. Two years ago, there were nine data (quarters) points within the enclosed area. Presently there are five. Eleven quarters have been out of that range. Some just barely.

There have been cases in the past where one quarter is out of the range and the subsequent quarter falls back into the enclosed area. An example would be the second and third quarters of 2014. I would look at this as possibly happening for the first quarter of 2019.

The first quarter of every year since 2013 has shown reduced economic activity when compared to the rest of the year. For example, 2016 was 1.3%, 2017 was 2.0% and 2018 was 2.8%. Again these are Data Stats’ figures. They may be higher than that of the BEA. There is agreement among economists that the first quarter of 2019 slowed from the last quarter of 2018. Their estimate of growth is around 1.5%. If the first quarter of 2019 is about 1.5% or greater, then I would say that this is normal behavior. A figure that is less than 1.5% fore warns of trouble ahead. The consensus forecast for the decade is an average of 2.0%. This is a far cry from the 3.0 to 4.0% predicted by the Trump administration.

The biggest take away from this quarter’s data is that the economy has hit a wall at about 2.8 to 3.0% and may not be able to improve further. A savior for business may be that productivity showed a sharp increase during the quarter. Increasing productivity brings with it a lower cost of doing business.


At Data Stats, we look for a recession starting in 2019. Most economists do not see a recession until the end of 2020. The first thing that they mention is the roaring economy. We do not see an economy that can withstand the negative forces around. For every positive factor there is also a negative factor. The biggest factor is one that the United States has no control over. The world’s economies are slowing down and the U.S. will be affected. The global economy is the weakest since 2008-09.

In the United States, the cause of the recession will be the massive amount of corporate debt that has been accumulated over the last few years and for many it cannot be repaid. The government has lowered interest rates to the point that many felt it was a cheap source of money. However, corporations did not borrow to expand operations but to buy back its stock. The economy did not benefit, but will pay the price.

The unemployment/employment numbers are constantly pointed out as signaling a good economy. The employment numbers, contrary to popular opinion, are a recession indicator. All of the past eleven recessions were preceded by increasing employment numbers. In the past, it hasn’t matter whether the unemployment level was 3.1% or 7.1%. Increasing employment signals a recession when the change from a low point to a new level is more than 0.5%. It is presently 0.3%.

Other factors include an inverted yield curve, tariffs, high government debt and a return to high credit card use by the general public among many others.


There is no question that a recession will occur. As long as there is commerce, as long as there is a business cycle, there will be a recession at some point. The only question is timing. It is much better to be prepared for one than not.

My goal here in presenting this information to you is to give you advance warning of the upheaval coming. My objective is to give you a six to nine months warning so you can prepare. If you wait for the government to announce a recession, by definition, it will be six to nine months after the fact. You will not have any time to prepare. If it is a short recession of a year or less, the recession may be over by the time you receive notice. I would rather be early than late. You have a chance to get ready. It is highly suggested that you take it and implement it immediately when needed.

Raymond D. Matkowsky

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