U.S. economy grows more than expected

[Bono71]

Let the discussion about what this means, begin.


http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=568&e=3&u=/nm/20041222/bs_nm/economy_gdp_dc

[fertilizeonarbusto]

1. It means it will be quietly revised downwards

after the holidays.

[Bono71]

3. What if it isn't?

[HuckleB]

4. That's unlikely.

But the bigger question is, "Who is actually benefitting from this "growth?" -- if it has any basis in reality.

[MrUnderhill]

7. This was the "final" revision.

There can be annual tweaking quite some time from now, but this was the third and final assessment of third Quarter economic activity.

It was reported as 3.7% (advance) in October, then revised upward to 3.9% last month (preliminary), and again to 4% today (final). The deflator started at 1.3% for both advance and preliminary numbers and up a tick to 1.4% for the final.

[Bono71]

8. I thought that was the case, thanks.

[Deja Q]

2. But we're in the 4th quarter, with crap xmas sales, with 2 days to go.

The jury's out, but it'll be fun to see how the 4th quarter is expected to be played out.

[Bono71]

5. As much as I hate *, I am rooting the economy.

[okieinpain]

32. me too, bush or no bush. still got to eat.

[MrUnderhill]

11. "Cr@p Xmas sales" ?

It's been looking pretty solid so far. Not '98 or '99 outstanding (8-9%), but far from "cr@p".

[Bono71]

12. The stock market is looking nice, as well. Hope we can continue the mo'.

[Skittles]

19. is the stock market where Clinton left it yet

?????

[Bono71]

21. No but that was about 4 years ago (an eternity for the market)...

If you've been buying since 9-11, you've done well, especially in certain sectors.

And plenty of stocks have surpassed where they were under Clinton (though certainly not technology!).

[Skittles]

28. all I know is

my 401K STILL is not where it was when Clinton left office. BUSH F***ING SUCKS and if you are trying to promote this credit-card economy you are a FOOL.

[Bono71]

35. Whoa..dude...

I'm not trying to argue. I've made money in the market since Bush took over, and I made money in the market when Clinton was at the helm.

That has nothing to do with "a credit card economy" or my thoughts on Bush. I think Clinton was the best president of my lifetime and I think Bush was by far the worst.

[Skittles]

37. do NOT insult me by calling me a f***ing DUDE

thank you

[Bono71]

38. ????? If I am not mistaken you implied that I was "a fool."

The unfortunate thing about these boards is that tone does not come through... I am not trying to be hostile, (Bro?).

[Skittles]

41. I said IF

you believe this piece of SHIT economy, based on offshoring and credit card spending, is SOLID - THEN YOU ARE A FOOL.

[Bono71]

44. Well, I think the economy isn't going gang busters, and I have

doubts about long term stability. That stated, I would not characterize the current state of affairs as "sh*t." And I also do not believe that I am a fool, but I am starting to have some opinions of you.

[Skittles]

48. it IS SHIT

a big giant pile of SHIT. You'll find out soon enough, as will we all.

[Bono71]

50. It's a two-way street. n/t

[Skittles]

64. no

as long as that incompetent piece of garbage stays in the White House it is a DEAD END STREET

[Skittles]

18. bullshit

the latest news is it's bad for middle-class retailers and GREAT for luxury items - big surprise there

[Bono71]

20. Not all "middle class" retailers are doing poorly, though

some big names are (Walmart).

[Skittles]

29. WRONG

Wal-mart is DOWN

[Bono71]

34. Thats what I wrote. Walmart ain't the only game in town.

[Skittles]

36. Wal-mart ain't the only one that is down

MOST OF THEM ARE

[Bono71]

39. Not down, go read-up, most are not meeting expectations...big difference.

[Skittles]

40. I have read they are down from sales at Dec 21 last year

that is DOWN

[Bono71]

42. Who is "they?"

[Skittles]

45. retail figures

RETAILERS; it was reported on the news yesterday.

[Ms_Mary]

54. Me. My sales are down 12% for nov 04 compared to nov 03

This hurts because I'm a *small* business. It's also a striking difference because until mid October, my sales were markedly higher this year than last year. That put me in a big bind because when my sales suddenly dropped, I had to pay for orders put in when I was projecting higher sales. YeOUCH.

[Bono71]

56. I feel your pain...what kind of merchandise?

[Ms_Mary]

57. Feed & sporting goods, fishing gear...

[Bono71]

58. I have a brother who owns a sporting goods (along with hunting/fishing)

in Baton Rougue, LA...he says the same thing re: sales.

[Ms_Mary]

59. I don't know about where your brother is, but here,

if people aren't supporting their fishing hobby, the economy is in bad shape! Even for the off season, it's been slow. I usually get some Christmas shoppers and this year it's been minimal.

[Bono71]

61. He's in Louisiana...so you know it's bad.

[MrUnderhill]

26. Not at all. "Bad" is a relative term.

As is "cr@p".

Some had predicted fabulous holiday sales growth of 7% or more, which has obviously not occured.

But estimates of the more conservative organizations of 3-5% seem to be about accurate for this year. Not stelar... not "write home to mom"... but not bad. And when you add back in record gift card "sales", it still looks like a pretty good year.

[Skittles]

30. the consensus is SO-SO

that is NOT GOOD

[lastliberalintexas]

47. Don't waste your time, Skittles

Methinks Frodo has returned from the grave.

[Skittles]

65. I am so sick of these f***ing morons

I just can't get away from them and they make me so sick.

[MrUnderhill]

66. I believe that's what I said.

"So-so" is also not "cr@p".


How about "blah"? Or "plain vanilla"?

"Fair to middlin"?

[okieinpain]

33. the part about imports not being as big is kind of weird

"The U.S. economy grew at a slightly stronger rate than thought in the third quarter because imports were not as hefty "

is it because people aren't placing orders, or because american's are trying to purchase more american made goods. we all know that wal-mart is the biggest importer of those goods, and we also know wal-mart is not having a good christmas.

[HuckleB]

69. Really? So the usually overhyped, pro-biz press is suddenly over-negative?

Why would that be?

The 12 Disappointments Of Christmas:
http://www.forbes.com/commerce/2004/12/21/cx_da_1221topnews.html

[MrUnderhill]

73. I haven't seen them as "overly negative"

What are you basing that on?

They are correctly reporting that the season has not been as "hot" as they had anticipated a couple months ago. But underperforming spectacular expectations is not the same thing as doing poorly.

[HuckleB]

74. "Spectacular expectations."

Hmm. Sounds like you might be a member of the propaganda crew that keeps telling us the economy is going to get better. When is that going to happen, again? And when will we pay for the debt we've accumulated in the meantime?

[MrUnderhill]

76. You missed it..

It already happened (did you blink?). :-)

As for the deficit/debt - you're 120% correct. I believe the economy HAS been improving - but at too high a price.

[liberal N proud]

6. It just means that the estimates were deflated to start with.

If you lower the bar before you give the actual numbers you can set the bar so low that anything looks good
The article said it grew "slightly"

Corporate profits took a tumble in the period, partly because of a series of hurricanes that wracked Southeastern states in the period. Overall profits after taxes fell 4.2 percent during the third quarter...

[Massachusetts]

9. "Liars figure..figures don't lie"

[Bono71]

10. So what do these figures mean?

[mbperrin]

13. The real joker is the inflation number.

The GDP is deflated by the inflation number, so the smaller the inflation reported, the better the GDP number. (For example, if there were no inflation, the raw number would also be the final number.)

By leaving out food and energy, the deflator is hugely understated. Don't know about you, but here, electricity is up 20% over last year, gasoline up 50%, milk has doubled, bread had doubled, tomatoes have quadrupled, oranges have doubled.

There is no growth. This feels exactly like the stagflation we went through in the early 80s under Reagan.

Avoid debt. Buy real stuff. If at all possible, have as much food on hand as possible. Drive the most economical vehicle you have. Long about mid-year next year, the truth will be so far out of synch with reporting that even the most casual observers will realize there's a huge problem.

As interest rates double and quadruple next year (yep, 10% by next Christmas), and as US dollars slide by 50% of more against a marketbasket of currencies like the Euro and the yen, it is going to be rough.

Ask your parents or your grandparents for more practical tips on making it through tougher times with high prices, fewer dollars, and a really lousy job market (yep, much worse than now.)

(edited to correct excitable spelling)

[Bono71]

14. Interesting analysis. It would be something if interest rates hit

that number, wouldn't it?

[lastliberalintexas]

51. Well, Greenspan has threatened as much

He's said that he wants to see prime up by several points, at least. That might not mean 10% yet, but 8-9% is very likely.

And what kind of "something" do you think it would be?

[Bono71]

52. Not sure I understand your question re: "something"...

If you mean what do I think will happen, well for starters, the price of real estate is going down (along with other long term investments like stocks) and I would imagine rents are going up (less demand for housing means more demand for rentals).

I would imagine you would see a shift to more money markets, cds and the like. If I can get 8%, why not?

The 4% gwoth would probably slow as well.

Just an ameteur's thoughts.

[mbperrin]

60. Check out the 14% rate in May 1981:

http://www.newyorkfed.org/markets/statistics/dlyrates/fedrate.html

[MrUnderhill]

62. Not actually correct. The GDP figure is NET of inflation.

"Inflation" as measured by the deflator, of course.

[mbperrin]

67. I believe that's what I said.

If the inflation number rises, that makes GDP appear smaller. By minimizing inflation by leaving out energy and food, that makes GDP look bigger.

[MrUnderhill]

68. Could be...

But I must admit it doesn't appear that way - even on re-reading.

[GOPBasher]

15. All on borrowed money.

My economy grows when I max out all my credit cards, too. However, the bills then come -- with interest.

[ProfessorGAC]

16. What It Means: Nothing!

This is single datapoint in which lots and lots of the bills for the Iraq mobilization and resupply hit. That added to GS, almost all of which is on borrowed cash.

It's a meaningless point in time, apropos of nothing in the long run.
The Professor

[Bono71]

17. That sounds right, the gubmint is pumping a ton of cash into the

system right now.

[MrUnderhill]

27. But it's also...

the same song you've sung for several consecutive quarters.

Eventually, it adds up to quite a bit more than "nothing".

[ProfessorGAC]

31. Huh?

What are you talking about? I've been singing this song for several quarters because that's what's been happening for several quarters. If you haven't noticed, we're running a $40 billion per MONTH deficit. Transfer payments have not increased this year at all, aside from COLA adjustments. Since those are based upon CPI, those increases are small and have little impact on overall gov't spending.

What am i supposed to do, lie about the data to make people happy? Exactly how much research have you done into this to know that i'm wrong? None, i would expect.

If you want someone to lie about the economic condition, listen to the harlots who work at Treasury. They'll tell anybody anything that they want to hear.
The Professor

[Cheswick2.0]

22. what economy? The one in China and India where they are making all the

products were aren't buying this Christmas season?

The economy sucks. People are dropping of the unemployment rolls an no one is shopping.

[Bono71]

25. Ummm, I don't think this is accurate.

[Rose Siding]

23. China's economy grew at 9% this year

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=2&u=/nm/20041219/bs_nm/china_economy_dc

[Bono71]

24. It grew more than that the last 3 years...here they come...of course

their GDP is a fraction of the US, but it is only a matter of time. We need to learn how to deal with them because they will be a superpower (financially and militarily) if they aren't already.

That said, 4% is very good, especially when compared to western europe.

[plasticsundance]

43. This report is total bullshit!!

Even by conservatives in the know:

http://www.hussmanfunds.com/wmc/wmc041206.htm

It's uncanny how cheerful the economic outlook seems to analysts whose ideas are unbaked by any apparent knowledge about the economy. Among the fatuous bits of applesauce dropped from the table of CNBC's monthly employment report Breakfast of Champions was the idea that the inevitable adjustment to the U.S. current account deficit will be good for U.S. growth.

At the center of that argument is the idea that the U.S. can simply grow its way out of the deficit by exporting more, creating growth in the U.S. economy, which will be stimulative to foreign growth, which will therefore support demand for our exports. The argument is so circular that it's impossible to know where to start.

<snip>

The share of GDP absorbed by U.S. consumption and investment has never been larger.

<snip>

The fact is that there is only one way in which the U.S. has ever resolved a significant current account deficit, and that has been for the U.S. to suffer a significant retrenchment in gross domestic investment. Even if we don't experience a deep recession, one thing is clear: U.S. gross domestic investment (some combination of housing investment and capital spending) is likely to show very disappointing growth in the years ahead.

[Bono71]

49. I don't disagree with this piece...however, the current snap shot

certainly isn't all doom and gloom.

As for China, that's one thing I think most agree on, if they keep inflation in check (big if) it is only a matter of time until they are our equals or surpass us and an economic superpower.

[AP]

55. Concentrated wealth at the top fed by record debt isn't a pretty picture.

[HuckleB]

71. Indeed. It's not.

This "revised" report does not take the whole picture into account. They've airbrushed out the parts they don't want folks to think about.

[AP]

72. And they released it 2 days before Christmas to get people to feel good...

...going into more debt so that even more wealth can be concentrated at the top.

[captain jack]

46. The bar has been lowered.

[plasticsundance]

53. China only amplifies the problem

Bono71,

It's more than a question of China taking over as the next superpower, it is how much the activities in China will "erode" the industrial base of the US. It is unlikely there'll be another superpower, but more like a consolidation of power. However, I think an economical collapse, or derailment in the US, would fall across the global broad, regardless.

It might not even come as a precipitous collapse, but more like a gradually dissipating process. In fact, it would be nice if many economists and the Feds had at least an inkling or tinge of gloom and doom, providing an impetus for them to stop the course of reckless actions and statements. I fear that the dot.com bubble will look like a walk-in-the-park compared to what will come next.

I think I posted this once somewhere at DU, but if not, I will again. This is an excellent article from BusinessWeek titled, The China Price

http://www.businessweek.com/magazine/content/04_49/b3911401.htm

"But there's a huge cost to the China relationship, too. Foremost is the question of America's huge trade deficit, of which China is the largest and fastest-growing part. While U.S. consumers binge on Chinese-made goods, the U.S. balance-of-payments deficit is nearing a record 6% of gross domestic product. The trade shortfall -- coupled with the U.S. budget deficit -- is driving the dollar ever downward, raising fears that cracks will appear in the global financial system. And by keeping its currency pegged to the greenback at a level analysts see as undervalued, China amplifies the problem."

"Will America's industrial base erode to a dangerous level? So far the hardest-hit industries have been those that were destined to migrate to low-cost nations anyway. But China is ramping up rapidly in more advanced industries where America remains competitive, adding state-of-the-art capacity in cars, specialty steel, petrochemicals, and microchips. These plants are aimed at meeting insatiable demand in China. But the danger is that if China's growth stalls, the resulting glut will turn into another export wave and disrupt whole new strata of American industry."

[Laughing Mirror]

63. Please correct your headline: Economic Growth Revised Up in 3rd Quarter

Not quite the same headline as yours.

[HuckleB]

70. Weak Holiday Sales Prompt More Discounts

http://www.forbes.com/associatedpress/feeds/ap/2004/12/21/ap1722720.html

[Yavin4]

75. Of Course The GDP Is Up

Remember people this was an election year. Government spending on ALL levels, Federal, State, and Local were all up. Gotta get those incumbents re-elected, right? Also, interest rates are still historically low. They're at 2.25%. They may be going up, but they're still low.

Given the massive fiscal and monetary stimuli for the past year, you can argue that the economy under-performed. Go look at interest rates for the Clinton years. Greenspan never lowered rates less than 4% throughout the entire Clinton presidency. Yet, Clinton had phenomenal growth rates.