Economy Grows at Robust Pace Despite Storms

Economy Grows at Robust 4.3 Percent Pace in Third Quarter Despite Gulf Coast Hurricanes


WASHINGTON (AP) -- The economy grew at a lively 4.3 percent pace in the third quarter, the best showing in more than a year. The performance offered fresh testimony that the country's overall economic health managed to improve despite the destructive force of Gulf Coast hurricanes.

The new snapshot of economic activity, released by the Commerce Department on Wednesday, showed the growth at an even faster pace than the 3.8 percent annual rate first reported for the July-to-September quarter a month ago.

The upgraded performance reflects more brisk spending by consumers and businesses as well as more robust investment on residential projects than initial estimates revealed.

"In anybody's book this is an outstanding performance for the economy," said Ken Mayland, president of ClearView Economics.

more: http://biz.yahoo.com/ap/051130/economy.html?.v=10

I learned in business college that economics pertains to the wealth gained by the rich. It has nothing to do with poor people getting poorer, hungry and cold.

certainly the construction business is benefitting mightily from the surge in demand.

not that that's much comfort to the locals....


just pointing out that 'the economy' can give a misleading picture.

When we get on Friday something close to economists expected 220,000 new jobs created last month, what will the Dems say to remind folks of the anemic job growth over 5 years of Bush?

Will someone ask why we expect business to pick up any of the slack if consumers are no longer spending as much as they once did? Could new home sales be at a record pace because buyers see a final opportunity to purchase a new house before interest rates go up again, so sales of existing homes slowing, construction activity easing, mortgage applications falling and confidence declining among home builders are the more important signs?

http://www.nytimes.com/2005/11/30/business/30econ.html

November 30, 2005
Economic Memo
Upbeat Signs Hold Cautions for the Future
By VIKAS BAJAJ

<snip>For every encouraging sign, there is an explanation. Consumer confidence is bouncing back from what were arguably some of its worst readings in years. Gasoline prices - the national average is now $2.15, according to the Energy Information Administration - have fallen because higher prices held down demand and Gulf Coast supplies have been slowly restored.

The latest reading on home sales, released yesterday, contradicts most recent measures of housing activity, which generally indicate a slowdown. And, yes, manufacturers' fortunes are on the mend, but few besides airplane makers are celebrating.

<snip>"I basically have a wait-and-see attitude (for the record pace of new-home sales) with some healthy suspicion about this report," said David F. Seiders, chief economist at the National Association of Home Builders. "Either there is something that all of those other reports are not telling us, or this will get revised."

In another seemingly upbeat report, the Conference Board, a research group supported by business, said consumer confidence jumped 16 percent. Still, it is below the pre-Katrina level. And the Commerce Department said orders for durable goods - big-ticket items that last more than three years - jumped 3.4 percent, but most of that increase was concentrated in military and commercial planes.

<snip>"That (hurricane-affected regions) is going to push up (housing-led) production activity into the first half of the year," said Michael C. Fratantoni, an economist at the Mortgage Bankers Association, which expects 3.7 percent economic growth in 2006, up from 3.6 percent in 2005. "The second half of the year, we see somewhat of a drop-off."

What was growth NOT INCLUDING energy?? I bet all the gains were in gasoline profits.....

That info was in the article.

"value" of "goods" was gasoline.

only the transfer of funds.

So, a huge medical bill that drives a family into credit card debt (which is included) and bankruptcy- when they lose their home to foreclosure (in which the purchase price is included)- all amount to "positives" in GDP. So, in the aggregate, a society can easily become poorer and trend downward in its standard of living- and GDP would still reflect a "growing" economy.

a Grossy Distorted Picture, one would think.

GDP simply measures economic activity, not quality of life. So a region that had the "good fortune" to be wiped out in a natural disaster, for instance, would show a tremendous spike in GDP during the subsequent rebuilding, but would the standard of living be any better for all of that economic activity?

I feel like we are, at best, in a stagnant economy. Why do these numbers say we are blazing? I "feel" that the economy might be robust to the top ten percent but that the bottom groups are languishing. Is this true? How can it be proven?

How much of these stats are the results of jobs being outsourced and the resulting corporate profits?

I just think that, for the most part, the best we can do economically under the neo-cons is "sluggish". True or false?

We're living in an ocean of borrowed money because of historically low interest rates from 2001-2004.

Think of this way. Imagine that you took out 25 credit cards at 0% interest, maxed them all out, and spent the money. Every store, every service company, etc. would be reporting higher sales because of your spending. Thus, the GDP for your immediate area would be high.

Now, imagine that the interest rate on your cards shifted higher. You take out less cards, spend less, etc. These same stores and service companies will be reporting a different story.

money from FEMA (all borrowed by the US treasury) and other federal cash is being pumped into the economy.

It's very easy to look good with borrowed money. But you can't look good for the long term. When your debts fall due, the good times come to a screeching halt.

Right now, the cost of carrying a lot of debt is not that great, but it will get much more expensive next year.

Most of this "growth" is being driven by the Fed's loose monetary policy from 2001-2004. During that period, interest rates were at historical lows. The housing boom was built on cheap debt.

Now, the Fed is tightening interest rates at a brisk pace, and it will do so throughout the year next year until housing prices break. This report assures that the Fed will tighten interest rate policies throughout 2006 taking the rate to over 6%, which will dramatically slow down the economy next year.

That petty act of his is going to cost the country alot in the coming years. There was NO need to bring the prime rate down to 1%. That was absurd and was only meant to prop up the economy to help Bush along. The interest rates may top 6% next fall.

Will someone ask why we expect business to pick up any of the slack if consumers are no longer spending as much as they once did? Could new home sales be at a record pace because buyers see a final opportunity to purchase a new house before interest rates go up again, so sales of existing homes slowing, construction activity easing, mortgage applications falling and confidence declining among home builders are the more important signs?

http://www.nytimes.com/2005/11/30/business/30econ.html

November 30, 2005
Economic Memo
Upbeat Signs Hold Cautions for the Future
By VIKAS BAJAJ

<snip>For every encouraging sign, there is an explanation. Consumer confidence is bouncing back from what were arguably some of its worst readings in years. Gasoline prices - the national average is now $2.15, according to the Energy Information Administration - have fallen because higher prices held down demand and Gulf Coast supplies have been slowly restored.

The latest reading on home sales, released yesterday, contradicts most recent measures of housing activity, which generally indicate a slowdown. And, yes, manufacturers' fortunes are on the mend, but few besides airplane makers are celebrating.

<snip>"I basically have a wait-and-see attitude (for the record pace of new-home sales) with some healthy suspicion about this report," said David F. Seiders, chief economist at the National Association of Home Builders. "Either there is something that all of those other reports are not telling us, or this will get revised."

In another seemingly upbeat report, the Conference Board, a research group supported by business, said consumer confidence jumped 16 percent. Still, it is below the pre-Katrina level. And the Commerce Department said orders for durable goods - big-ticket items that last more than three years - jumped 3.4 percent, but most of that increase was concentrated in military and commercial planes.

<snip>"That (hurricane-affected regions) is going to push up (housing-led) production activity into the first half of the year," said Michael C. Fratantoni, an economist at the Mortgage Bankers Association, which expects 3.7 percent economic growth in 2006, up from 3.6 percent in 2005. "The second half of the year, we see somewhat of a drop-off."

Repair and rebuilding gets booked as economic growth, while the destruction manages to not get counted. The same thing happened after the Valdez spill. The billions spent on cleanup were "growth". The person who called bullshit is absolutely right.

Untill we can begin to pay off our bills the economy is not doing fine.....

And we should all bow down before the GOP. Ever think how much better the economy is under Dems? Everybody benefits, not just a few.

even though the unemployment rate is considered "low" does it take into account that well-paying jobs are being lost and people are now working at 2 jobs to sustain whatever lifestyle they may have had?

my husband and i will never have to worry about our futures, but what about the reat of the country. do we really want america to be a land of the haves and mostly have nots. don't we pay for this discrepancy in our souls? i worry about succeding generations because i cannot fathom where this will lead.

i do not for a minute believe this economy is "booming".

In Ohio we have had a bunch of plant closings just in time for Christmas. Combine all this with 50,000 katrina family's being cut off on December 1. I don't understand how unemployment can be so low. I think a lot of people have already fallen off the unemployment rolls and are thus invisible. This is just B.S. to try and bolster investor confidence for the holidays. The current economy is definitely a bubble thats going to burst soon.

is out there. They're not waiting for the perfect job. They are taking low-level temp jobs, part-time jobs, whatever they can to get them through the day.

In the past when there were plant layoffs, folks would wait a few months, stay on UE, and eventually their jobs would come back. This would make the UE rate grow. Now, when there are plant closings, people don't wait until the jobs come back. They sign up for temp work or any other low level paying job.

overall. Remember, the GDP measures all money earned and spent. The US economy is worth 11.9 Billion dollars. If one person were to make 1 TRILLION dollars in a year, the GDP would increase 8% to 12.9 Trillion dollars. While that is a strong gain, only one person made gains. In this economy it is only those at the top (5%) who are doing well. Wages have fallen behind inflation and spending is done on credit, a.k.a: DEBT.

The reality is that the working American has fallen behind.

When we get on Friday something close to economists expected 220,000 new jobs created last month, what will the Dems say to remind folks of the anemic job growth over 5 years of Bush?

Will someone ask why we expect business to pick up any of the slack if consumers are no longer spending as much as they once did? Could new home sales be at a record pace because buyers see a final opportunity to purchase a new house before interest rates go up again, so sales of existing homes slowing, construction activity easing, mortgage applications falling and confidence declining among home builders are the more important signs?

http://www.nytimes.com/2005/11/30/business/30econ.html

November 30, 2005
Economic Memo
Upbeat Signs Hold Cautions for the Future
By VIKAS BAJAJ

<snip>For every encouraging sign, there is an explanation. Consumer confidence is bouncing back from what were arguably some of its worst readings in years. Gasoline prices - the national average is now $2.15, according to the Energy Information Administration - have fallen because higher prices held down demand and Gulf Coast supplies have been slowly restored.

The latest reading on home sales, released yesterday, contradicts most recent measures of housing activity, which generally indicate a slowdown. And, yes, manufacturers' fortunes are on the mend, but few besides airplane makers are celebrating.

<snip>"I basically have a wait-and-see attitude (for the record pace of new-home sales) with some healthy suspicion about this report," said David F. Seiders, chief economist at the National Association of Home Builders. "Either there is something that all of those other reports are not telling us, or this will get revised."

In another seemingly upbeat report, the Conference Board, a research group supported by business, said consumer confidence jumped 16 percent. Still, it is below the pre-Katrina level. And the Commerce Department said orders for durable goods - big-ticket items that last more than three years - jumped 3.4 percent, but most of that increase was concentrated in military and commercial planes.

<snip>"That (hurricane-affected regions) is going to push up (housing-led) production activity into the first half of the year," said Michael C. Fratantoni, an economist at the Mortgage Bankers Association, which expects 3.7 percent economic growth in 2006, up from 3.6 percent in 2005. "The second half of the year, we see somewhat of a drop-off."