Hoover Institution at Stanford University

FACTS ON POLICY: The Economy in 2007—Select Economic Indicators

February 19, 2008

Overall, the economy slowed in 2007.

The economy grew in 2007 but at slower rates than in 2006. The slowdown occurred mostly in the last two quarters of 2007.

Here are the performance results for ten select economic indicators during the past year:

1. Gross Domestic Product: Real GDP increased 2.2 percent in 2007, which is slightly lower than the 2.9* percent annual growth rate in 2006. As of the end of 2007, GDP totaled $11.7 trillion in 2000 dollars and $14.1 trillion in nominal dollars.

(*Note: numbers may not match up with the numbers listed in the Economic Indicators 2006 article because we use revised numbers in this current version. If available, for this article, we use data for the entire year, whereas the data from the 2006 article may have been from the third quarter.)

2. Personal Consumption Expenditures: Real personal consumption expenditures increased 2.9 percent, from $8.1 trillion (2000 dollars) in 2006, to $8.3 trillion in 2007. The growth rate was slightly lower this year than in the past two years. Personal consumption expenditures grew 3.2 percent in 2005 and 3.1 percent in 2006.

3. Personal Income: Per capita disposable income grew 3.1 percent between 2006 and 2007, from $28,064 to $28,669 (2000 dollars). Per capita disposable income grew 1.5 percent between 2004 and 2005, and 3.1 percent between 2005 and 2006.

4. Industrial Production: Industrial production, the total output of U.S. factories and mines, increased 1.5 percent in 2007. Compared to 2006, when industrial production grew 3.0 percent, growth slowed in 2007.

5. Federal Deficit: The federal deficit declined 34.0 percent between 2006 and 2007, from $248 billion to $163 billion. In 2007, the deficit was 1.2 percent of GDP. The deficit as a proportion of GDP has been declining for the past six years. (Before that, the federal budget showed a surplus.) During the early 1980s, the deficit as a proportion of GDP averaged 5.0 percent.

6. Unemployment Rate: The unemployment rate increased 0.6 percentage points, from 4.4 percent to 5.0 percent between December 2006 and December 2007. The total number of unemployed persons increased slightly, from 7.0 million to 7.1 million between 2006 and 2007.

7. Trade Balance: The monthly trade deficit for November 2007 shot up to $63.1 billion, from $57.8 billion in October 2007. The trade deficit was higher than in November 2006 ($58.5 billion), but in terms of aggregate numbers, the deficit declined 7 percent between 2006 and 2007, from $698.2 billion to $650.0 billion (January–November figures).

8. Consumer Prices: The consumer price index (CPI) for all urban consumers increased 4.1 percent between December 2006 and December 2007. The CPI increased 2.5 percent in 2006. Energy prices alone increased 17.4 percent in 2007, while food prices increased 4.9 percent.

9. Consumer Credit: Total outstanding consumer credit, the amount of consumer debt not including mortgages, increased 4.2 percent between November 2006 and November 2007, which is the same rate of increase as in 2006. In November 2007, outstanding consumer credit totaled $2.5 trillion, up from $2.4 trillion in November 2006.

10. Producer Price Index (PPI): The PPI, an indicator that measures wholesale prices, shot up at the end of 2007. The PPI for all commodities increased 3.9 percent between 2006 and 2007. This is comparable to past years; however, during the last quarter of 2007, the PPI grew at an annualized rate of 6.8 percent.


 

Figure 1
GDP and Personal Consumption Expenditures, 2000-2007

 

Figure 2
A Comparison of Select Economic Indicators, 2005-2007

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