MIDLAND, Mich. – U.S. gross domestic product (GDP) for the final quarter of 2014 came out at a “disappointing” growth rate of 2.6 percent, one that missed the predicted target of 3.2 percent. This gave pause to economists such as Timothy Nash, author of the “Monthly Economic Outlook: Northwood University Economic Outlook February 2015” released by Northwood University in Midland, Mich.
“What’s more, it’s dramatically lower than the 5 percent U.S. growth rate realized in the third quarter,” Nash adds, noting that the initial estimate of U.S. GDP for all of 2014 was 2.4 percent, slightly higher than that of the previous four years.
“It is important to mention, however, that the U.S. economy grew at an annual rate of 3.4 percent in the 1990s and averaged 3.3 percent growth from the end of World War II through 2008,” said Nash.
These most recent figures echo the overall sentiment of the latest “Monthly Economic Outlook’s” main focus — a close examination of the 2015 edition of the “Index of Economic Freedom.” Published jointly for 21 years by The Heritage Foundation and The Wall Street Journal, this annual study analyzes the economic condition of 186 countries relative to hundreds of economic variables that drive a nation’s economic success.
The study’s 10 broad categories include investment freedom, government spending, property rights, freedom from corruption, trade freedom, financial freedom, business freedom, fiscal freedom, monetary freedom and labor freedom. The study also places each country into one of five different classifications based on its score and the range of freedom in which it falls. These categories include free, mostly free, moderately free, mostly unfree and repressed. The U.S. has struggled to keep up in study results in recent years.
“In 2009, the United States was ranked as the sixth freest economy in the world, but by 2015, it dropped to 12th,” said Nash. “Not only has it dropped six places in the rankings, but it also moved from the classification of ‘free’ to ‘mostly free.’”
This year’s study also reveals that the U.S. has fallen below the world average in both the government spending and fiscal freedom categories — something that troubles Nash.
“We believe this data serves as additional validation for our call for pro-business tax reform and adoption of a balanced budget amendment,” Nash says.
For a more in-depth look at the study’s results, check out the latest Northwood University Monthly Economic Outlook available at the university’s virtual Free Market Library: Northwood University Economic Outlook February 2015 available here.
