Economic Growth Roars Ahead at 8.2 Percent Rate

[mr mahs]

OH BOY The liberals are running out of things to complain about....

WASHINGTON – The economy roared ahead at an astounding 8.2 percent annual rate in the third quarter, the fastest pace in nearly two decades and a much stronger performance than previously thought. It raises hope that a long spell of lackluster business activity is finally over.

The revised gross domestic product, released by the Commerce Department Tuesday, was a full percentage point higher than the 7.2 percent growth rate estimated a month ago.

The new estimate, based on more complete data, reflected stronger investment by business on new equipment and software, less severe cuts in companies' inventories and brisker spending on residential projects.

Those were the main factors behind the upward revision to third-quarter GDP, which measures the value of all goods and services produced within the United States and is considered the broadest barometer of the country's economic health.

The 8.2 percent growth rate, more than double the 3.3 percent pace registered in the second quarter, represented the best showing since the first quarter of 1984, when the economy surged at a 9 percent pace. Economists were predicting third-quarter GDP would be revised up, with estimates ranging from a 7.3 percent pace to an 8 percent pace.

[igloo]

Originally posted by mr mahs

OH BOY The liberals are running out of things to complain about....

They NEVER run out of things to complain and bitch and moan about!........

They will simply move to the next complaint of the day, without anyone remorse or shame that the previous baseless complaint they spent so much time on proved worthless....

It is what they must do to fuel their existence....blame this, complain about that, America is evil, point fingers, bitch and moan, build "No War for Oil" t-shirts, blah, blah, blah.......

[jamiroguy1]

Great!!! The economy is out of the crapper!!! Too bad we'll never see a because of continued tax cuts to rich for the next 12 years but I'm sure things will work out. Just trust your government. They'll take care of us!! Right, Iggy?

[igloo]

Originally posted by jamiroguy1

Great!!! The economy is out of the crapper!!! Too bad we'll never see a because of continued tax cuts to rich for the next 12 years but I'm sure things will work out. Just trust your government. They'll take care of us!! Right, Iggy?

You are right!....Bush sucks, America sucks!

Those damn tax cuts for the "rich".....Who cares if they provided a stimulus.......

Fuck Bush...the nerve of that bastard helping his rich, wealthy campaign donors......

Impeach Bush!.....The guys inherits a train wreck economy, initiates economic measures, economy recovers, and for what?...so the rich can add their third Mercedes, fourth home, and a new winter coat for the poodle

Down with Bush and those wealthy bastards !!!!

[jamiroguy1]

Originally posted by igloo

You are right!....Bush sucks, America sucks!

Those damn tax cuts for the "rich".....Who cares if they provided a stimulus.......

Fuck Bush...the nerve of that bastard helping his rich, wealthy campaign donors......

Impeach Bush!.....The guys inherits a train wreck economy, initiates economic measures, economy recovers, and for what?...so the rich can add their third Mercedes, fourth home, and a new winter coat for the poodle

Down with Bush and those wealthy bastards !!!!

Hey take it easy... What are you? Some kind of Commy. You're probably one of those stupid arab al qaeda taleban terrorist. How dare you speak of der feurer like that!!! You are a traitor to the US!!

[bigpoppanils]

i wonder how much in taxes igloo is saving per year under the tax cut plan.

[jamiroguy1]

I know thanks to bush's tax cuts, I'm able to buy 3 extra 40's a year. Drink up everyone... Hoooorrray!!!

[mrmatas2277]

Originally posted by igloo

Impeach Bush!.....The guys inherits a train wreck economy, initiates economic measures, economy recovers, and for what?...so the rich can add their third Mercedes, fourth home, and a new winter coat for the poodle

:laugh:

[seximofo2k]

Lets see what the long term affects are from this tax cut as are debt continues to accumulate...

[seximofo2k]

Lets see what the long term affects are from this tax cut as we increase spending in Iraq and our deficit reaches record heights...

[igloo]

Originally posted by jamiroguy1

I know thanks to bush's tax cuts, I'm able to buy 3 extra 40's a year. Drink up everyone... Hoooorrray!!!

Excellent!...perfect example of tax cuts operating in an effecient manner.....

You get to chose how your money is spent, you are contributing to your local economy, and you are helping create new jobs.......and everyone is happy

[jamiroguy1]

Originally posted by igloo

Excellent!...perfect example of tax cuts operating in an effecient manner.....

You get to chose how your money is spent, you are contributing to your local economy, and you are helping create new jobs.......and everyone is happy

Wooo hoo! Now I get it! Bush is O.KKK in my book.

[igloo]

Originally posted by jamiroguy1

Wooo hoo! Now I get it! Bush is O.KKK in my book.

I knew you would come around!....It is only a matter of time before you put the George Bush action figure on your Christmas list

[mrmatas2277]

Originally posted by igloo

I knew you would come around!....It is only a matter of time before you put the George Bush action figure on your Christmas list

with Medicare reform grip?

[ChiefSlapahoe]

I wouldn't get too overexcited about the numbers. This Economist article explains why.

Boom or gloom?

Nov 20th 2003

From The Economist print edition

The global economy is looking surprisingly perky—unlike the dollar

STOCKMARKETS are sliding again; the gold price this week hit a seven-year high of $400 an ounce; and the dollar slumped to a new low against the euro. “So what's new?†you might ask: the world economy clearly remains fragile. What is new, however, is the recent batch of better-than-expected figures on economic growth around the globe. Not only has the American economy rebounded, but Japan and the euro area are also now growing again, albeit more slowly. The news from some emerging economies is even more bullish. Many economies in Asia and Latin America enjoyed their fastest growth for years in the third quarter. Adding it all together, the world economy as a whole probably enjoyed its fastest growth for two decades (see article). So why have financial markets got collywobbles?

One explanation is that share prices had risen ahead of themselves. Another might be worries that America's rebound is unsustainable, being based on a seemingly reckless fiscal policy, unusually low interest rates, and a consumer borrowing binge. If these sources of growth dry up, one of the few remaining policy tools is the dollar. This week it fell to another all-time low against the euro. Foreigners are less eager than they used to be to finance America's current-account deficit, and in an election year America seems prepared to do anything to support jobs, including letting the dollar tumble and erecting protectionist barriers.

Many American economists and policymakers have long argued that the current-account deficit does not matter. Thanks to America's superior economic performance, they say, foreign investors are eager to buy dollar assets. But that no longer seems true. Net inflows of investment into American bonds and shares plunged from $50 billion in August to only $4 billion in September, the lowest level since the crisis caused by the collapse of Long-Term Capital Management in October 1998. The very suggestion that foreigners might not continue to buy dollar assets in future was enough to make some investors sell this week. A cheaper dollar will help to reduce America's external deficit, while at the same time supporting growth. The risk is that if the greenback falls too fast, bond yields could rise, choking off recovery.

That is why Washington cannot afford careless talk or gestures, such as its announcement this week that it plans to impose new quotas on imports of Chinese textiles. Following America's action earlier this year on steel tariffs, this sparked concerns that the government is desperate to protect jobs at any cost. And that cost could be high if it tries to hobble China.

America has long been the primary engine of the global economy, but increasingly China and the rest of Asia have become a second important engine of growth. By some measures (based on purchasing-power parity) China has accounted for a slightly bigger slice of global growth than America in recent years. For many economies, exports to China have given a bigger boost to growth over the past year than have exports to America. In the past 12 months, China's imports have risen by 40%, America's by a paltry 2%. Japan's exports to “Greater China†(also including Hong Kong and Taiwan) are now bigger than those to America.

If the overhang of consumer debt does eventually cause America's recovery to sputter, then the world economy will be better off if China's economy remains robust. Aeroplanes are always safer with two engines than with one.

[ChiefSlapahoe]

And another. Basically, GDP is probably overstated, and the numbers don't mean much in light of the fact that consumers have mortgaged their futures by taking on so much debt. This economy is built on credit. GDP numbers this high are not sustainable except in the case of emerging market countries like China. It's only a matter of time before the American economy collapses like a house of cards. I'm not saying this will happen within the next few months, but it will happen, eventually.

The world economy

Altogether now...

Nov 20th 2003

From The Economist print edition

A global boom at last appears to be under way. Can the recovery last?

FED up with economic doom-mongers? One way to silence them, at least briefly, is to tell them that in the third quarter the world economy grew at its fastest pace for two decades. Much of this was due to the impressive lift-off in America, whose GDP grew at an annual rate of 7.2%. But by no means all of it: the recent recovery has been truly global, with most economies picking up speed.

Japan's economy grew at an annual rate of 2.2% in the three months to September. This was faster than expected and marked Japan's seventh straight quarter of expansion. The euro area is still lagging, but even its economies beat expectations, managing to grow by 1.6%. Recent business surveys suggest stronger growth in the fourth quarter, although much will depend on the euro's strength. This week the currency rose to a new high against the dollar of almost $1.20.

But by far the most striking figures have come from emerging economies, notably in Asia. China's GDP rose at an annual rate of 18% in the third quarter, seasonally adjusted; Singapore's grew by 17%, and Taiwan's by 24%. J.P. Morgan Chase estimates that Russia's economy expanded by 8%, Argentina's by 12.5% and Brazil's by 4% after two quarters of decline. In total, the bank reckons, emerging economies grew at an average rate of 8.7%, more than twice as fast as the developed world and their quickest pace since 1994, before the wave of crises that hit emerging markets from Mexico and Asia to Russia and Argentina.

Totting up all countries' growth, weighted by GDP at market exchange rates, J.P. Morgan Chase says that the world economy grew by an annualised 5% in the third quarter. If instead the data are weighted by GDP measured at purchasing-power parity (the method preferred by the IMF, which adjusts for price differences between countries and so gives more weight to emerging economies) then global growth in the third quarter was an astonishing 6.3%, the fastest since at least the 1980s. Some of this, admittedly, reflects a rebound from a second quarter in which SARS severely depressed output in much of Asia. In the year to the third quarter, global growth was a more modest 3.2%.

After such a sprint, America and emerging Asia are almost certain to see slower growth in the current quarter and next year. Europe and Latin America, on the other hand, look set to speed up. Global growth in 2004 is widely forecast to be above its long-term potential rate for the first full year since 2000.

Although many commentators had tipped the world economy to recover in the second half of this year, few had expected such a bounce. Is the recovery as good as it looks? And can it be sustained?

The GDP inflator

Some sceptics say the rebound in both America and Japan has been exaggerated by their GDP deflators, the price indices used to convert nominal GDP growth into real terms. There is clearly something odd happening in Japan. Nominal GDP is still falling—by 0.4% in the year to the third quarter. Yet real GDP growth looks strong because the deflator has fallen by 2.7%. Most economists think Japan's GDP deflator exaggerates the extent to which prices have fallen. If it does, Japan's real GDP growth is being overstated. It is certainly hard to believe that an economy is expanding strongly when total income is falling.

A few economists argue that America's growth is also partly a phantom, because of the way inflation is measured. If a computer now has twice the power of one that cost the same a year ago, its price is reckoned to have fallen by 50%. This “hedonic†pricing, which few European countries use, has helped to boost the measured real increase in America's IT investment this year. Business investment in computers has risen by 54% in real terms since 2000. In dollar terms, spending is 8% down.

Even if growth is being overstated, economies are undeniably perking up. So the Jeremiahs are looking for things that might go wrong. The biggest danger is the build-up of consumer debt in some economies, such as America, Britain and Australia, which may eventually cause households to trim their spending. Many economists dismiss such worries because, they argue, rising debts have been accompanied by large gains in the value of household assets, mainly homes, so consumers' net worth has not fallen.

Rising house prices have allowed consumers to borrow more and so spend more. But do higher house prices really create wealth, and thus substitute for the need to save? In its latest Inflation Report the Bank of England says that it is not clear that rises in house prices cause households to be wealthier in aggregate. Those who have yet to buy a home or who want a bigger one face a higher cost of living. Thus increases in house prices largely redistribute wealth rather than create it. Moreover, the price of homes can fall, whereas debt is fixed in value.

In general the euro area is much less burdened with consumer debt than America. But its Achilles heel is the risk of a further big rise in the euro. The euro is already up by more than 40% from its 2001 low against the dollar, but exchange rates tend to overshoot. In 1985-87 the D-mark rose by almost 100% against the dollar. In theory, the adverse impact of a stronger dollar on growth can be offset by lower interest rates. But the European Central Bank has been slow to cut them.

Another potential threat to global recovery is the risk of increasing protectionism. Fears were re-ignited this week when America's Commerce Department said it would set new quotas on imports of clothing from China (see article).

Such action is foolish, particularly when China has become a second powerful engine of global growth alongside America. Indeed, this year China is helping to pull many economies along as it buys more and more imports. It has become especially important for other Asian countries: both South Korea and Taiwan now export more to China than to the United States. Japan and Germany have both seen their sales to China rise by around 40% this year, while exports to America have fallen. China is now Japan's second-largest export market. If Hong Kong is included, it will overtake America some time next year.

China's integration into the world economy is the best hope for more balanced growth that relies less on America. American manufacturers view China as a threat. But if trade protection caused China to sputter, that would be a much greater danger for the world economy.

[bigpoppanils]

Originally posted by mrmatas2277

with Medicare reform grip?

*chuckle*

[bigpoppanils]

i am worried about the dollar. while a weak dollar would make US exports more competitive, it would hurt foreign investment in this country.

i would like the administration to take a firm stance on the issue though. Since spring the dollar has been very volatile, much due to comments by John Snow (the Secretary of the Treasury) and Bush. first Snow advocates a weaker dollar. Then Bush claims tHat the dollar should be strong. Then they reverse views. Then they present equal views, and change their minds again.

the currency markets are volitile as it is. htey dont need this kind of drama.

Then there is the issue of the Asian economies pegging their currencies to the US dollar. While loosening the peggings may be good for US exports, the financial markets, particularly in the US bond market, will suffer through a lot of turmoil. I'm not really too sure if the potential financial shocks outweigh the benefits.

[PinkFloyd40]

no reasonable analysis expects gdp growth to remain at 8%+.... for a developed economy thats ridiculous and even stating our inability to do is not only completely obvious but utterly ridiculous in terms of intellectual debate on the subject illustrating a clear lack of economic knowledge... irregardless of the unsustainability of such tremendous growth, this anomaly is certainly a good one... a huge quarter as such gives tremendous confidence to the markets and, more importantly, to individual business owners who see it as reason for optimism... gdp growth in 4Q i think will be in the 4.5% range, which, while slighly more than half the current rate, is still a fantastic rate when compared globally w/ other developed nations, particularly european, who have pitiful growth if even any and unemployement rate 50% percent higher than the US...

the indicators of late have been overwhelmingly positive... consumer confidence is up, jobless claims fell to 351k and have been on a steady downward trend since august, equity markets have seen fantastic returns this year (albeit from the trough of last year which negates the returns somewhat, though i feel only partially), corporate profits have reached their highest growth rate in 19 years (30%), chicago PMI just reported today reached its highest level since Feb. of '95 (64.1), the consensus for employment is at +135k which could easily be raised up, business spending was up 14%... shall i keep going? b/c i really can, i'm certainly at no loss for positive data...

[mr mahs]

Originally posted by PFloyd40

no reasonable analysis expects gdp growth to remain at 8%+.... for a developed economy thats ridiculous and even stating are inability to do is not only completely obviousy but utterly ridiculous in terms of intellectual debate on the subject illustrating a clear lack of economic knowledge... irregardless of the unsustainability of such tremendous growth, this anomaly is certainly a good one... a huge quarter as such gives tremendous confidence to the markets and, more importantly, to individual business owners who see it as reason for optimism... gdp growth in 4Q i think will be in the 4.5% range, which, while slighly more than half the current rate, is still a fantastic rate when compared globally w/ other developed nations, particularly europe, who have pitiful growth if even any and unemployement rate 50% percent higher than the US...

the indicators of late have been overwhelmingly positive... consumer confidence is up, jobless claims fell to 351k and have been on a steady downward trend since august, equity markets have seen fantastic returns this year (albeit from the trough of last year which negates the returns somewhat, though i feel only partially), corporate profits have reached their highest growth rate in 19 years (30%), chicago PMI just reported today reached its highest level since Feb. of '95 (64.1), the consensus for employment is at +135k which could easily be raised up, business spending was up 14%... shall i keep going? b/c i really can, i'm certainly at no loss for positive data...

[ChiefSlapahoe]

Originally posted by PFloyd40

no reasonable analysis expects gdp growth to remain at 8%+.... for a developed economy thats ridiculous and even stating are inability to do is not only completely obviousy but utterly ridiculous in terms of intellectual debate on the subject illustrating a clear lack of economic knowledge... irregardless of the unsustainability of such tremendous growth, this anomaly is certainly a good one... a huge quarter as such gives tremendous confidence to the markets and, more importantly, to individual business owners who see it as reason for optimism... gdp growth in 4Q i think will be in the 4.5% range, which, while slighly more than half the current rate, is still a fantastic rate when compared globally w/ other developed nations, particularly europe, who have pitiful growth if even any and unemployement rate 50% percent higher than the US...

the indicators of late have been overwhelmingly positive... consumer confidence is up, jobless claims fell to 351k and have been on a steady downward trend since august, equity markets have seen fantastic returns this year (albeit from the trough of last year which negates the returns somewhat, though i feel only partially), corporate profits have reached their highest growth rate in 19 years (30%), chicago PMI just reported today reached its highest level since Feb. of '95 (64.1), the consensus for employment is at +135k which could easily be raised up, business spending was up 14%... shall i keep going? b/c i really can, i'm certainly at no loss for positive data...

Get off the condascension high horse. Thanks. You missed my point. I'm not suggesting everyone is expecting 8% growth per quarter. What I am driving at is that while things look rosy in the very near term, the U.S. economy has a dismal outlook for a number of reasons (1) Consumer spending has been force-fed for 2 years and no more bullets left (2) no decline or even slowdown in consumer spending in over a decade (3) debt ratios thru the roof everywhere--mortgage debt, installment debt, corporate debt, new upsurge in margin debt (4) massive budget deficits at all levels of government (5) huge trade deficit which is sinking the dollar and will trigger foreign selling (6) another frenzy of stock market speculation (the PEs of many stocks are far out of whack with historical PEs (7) ditto for the bubble in home prices (8)heavy deflationary pressure from China and Mexico (goods) and India (services). Bottom line, don't get too hopped up on near term economic numbers. You can't look at economic numbers in a vacuum.

[jamiroguy1]

Originally posted by ChiefSlapahoe

Get off the condascension high horse. Thanks. You missed my point. I'm not suggesting everyone is expecting 8% growth per quarter. What I am driving at is that while things look rosy in the very near term, the U.S. economy has a dismal outlook for a number of reasons (1) Consumer spending has been force-fed for 2 years and no more bullets left (2) no decline or even slowdown in consumer spending in over a decade (3) debt ratios thru the roof everywhere--mortgage debt, installment debt, corporate debt, new upsurge in margin debt (4) massive budget deficits at all levels of government (5) huge trade deficit which is sinking the dollar and will trigger foreign selling (6) another frenzy of stock market speculation (the PEs of many stocks are far out of whack with historical PEs (7) ditto for the bubble in home prices (8)heavy deflationary pressure from China and Mexico (goods) and India (services). Bottom line, don't get too hopped up on near term economic numbers. You can't look at economic numbers in a vacuum.

Yeah!! What he said.

[mrmatas2277]

Originally posted by jamiroguy1

Yeah!! What he said.

...thanks for the headache on Thanksgiving Eve Chiefslap

[mr mahs]

Originally posted by ChiefSlapahoe

Get off the condascension high horse. Thanks. You missed my point. I'm not suggesting everyone is expecting 8% growth per quarter. What I am driving at is that while things look rosy in the very near term, the U.S. economy has a dismal outlook for a number of reasons (1) Consumer spending has been force-fed for 2 years and no more bullets left (2) no decline or even slowdown in consumer spending in over a decade (3) debt ratios thru the roof everywhere--mortgage debt, installment debt, corporate debt, new upsurge in margin debt (4) massive budget deficits at all levels of government (5) huge trade deficit which is sinking the dollar and will trigger foreign selling (6) another frenzy of stock market speculation (the PEs of many stocks are far out of whack with historical PEs (7) ditto for the bubble in home prices (8)heavy deflationary pressure from China and Mexico (goods) and India (services). Bottom line, don't get too hopped up on near term economic numbers. You can't look at economic numbers in a vacuum.

Debt is the american way lol.

I do agree with the consumer debt levels being high but a collapse like you described is unlikely. With the current 7 trillion dollar economic output which will likely increase as a job recovery is imminent. The last couple of years with the tech bubble burtsing companies were reluctant to spend capital on new goods but the economy didn't just halt, in fact business made cut backs and consolidated debt especially with the record low interest rates.

I have been arguing with some of my friends about the housing bubble which has seen gains in the last 3 years of 75%+ in some areas. Now if you look at the last couple of years the refinancing boom by the consumer which we all know is 2/3 of the economy has kept us afloat. Now for the housing prices to crumble the economy would have to be at a red hot pace for interest rates to climb up high enough to stiffle the demand. If the rate goes to 7% I think a 10-15% drop in real estate prices will occur doesn't sound like much but on a 400k peice of property it's 60k. Now this is troublesome to some but the rise in 401k plans and stock portfolios which caused that rate to rise in the first place, either by the bond market or the fed raising rates to fight off inflation will off set that worry because a home is a necessity and isn't easily liquadated so the loss will be unrealized. This rise in economic activity means more jobs and more revenue from taxes which can easily fight off the deficit in the municipalities unless of course the local govt's decide to spend more. In a recession it is necessary to cut taxes and to pack on a little debt to recover. We won't experience the la la land of the late 90's which were unhealthy to begin with but by the latest ecomic numbers we should be just fine.

[colono76]

Heres an intriguing way to look at a lot of the problems facing america's economy today--- Economics is driven largely by politics. The nature of politics is short term and this mirrors itself in the economic policy under taken by many administrations.

An article written by Paul Krugman in the NYT a few months ago explains the policy standpoints of liberal and conservative economic ideals with a striking bluntness. He discusses the "naiively optimistic" supply siders who hope to reducse taxes on the wealthiest margin in order to stimulate economic growth to a point where government spending will not need to be cut, as nothing but a political campaign that supports an extremely conservative party base more interested in starving the size and strength of the central government.

Again the fact that politics reflection on economic policy creates an atmosphere of concern within the short-term these recent numbers can have a huge impact on GW's chance of reelection in 04 without the fact that these cuts and raging deficit are going to create a long term situation where either spending on new deal and great society programs are going to be severly cut back or the governemtn is going to look to pay back the deficit through the bond market.

The politics and policies of GW that may look good in the short term with numbers like 8.3% GDP growth may be nothing but hype. What kind of effect is this going to have on our future generations pocketbook;s???