1st Quarter GDP revised upward to 5.6%

[Engineer]

Edit: 6/29/06: 1st Quarter GDP revised to 5.6% (from the earlier estimate of 5.3%)

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Edit: 1-27-06: 4th quarter GDP advanced numbers came in up at 1.1%. Much slower than the 4.1% GDP growth in Q3.


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Well, despite manufacturing leaving and booming deficits, the economy seems to be rolling along. Hopefully, will continue and "trickle down" to the rest of us peons that have been frozen (yes, my company froze wages for 2005 ). Maybe X-mas season can keep the trend alive.

By JEANNINE AVERSA, AP Economics Writer
1 hour, 2 minutes ago



WASHINGTON - 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.

The third-quarter's showing marked a sizable pickup from the 3.3 percent increase in gross domestic product registered in the second quarter of this year.

GDP measures the value of all goods and services produced within the United States and is the best barometer of the nation's economic standing.

The 4.3 percent growth rate matched the performance posted in the first quarter of 2004. The last time economic activity was higher was in the third quarter of 2003, when the GDP soared at a blistering 7.2 percent pace.

The upwardly revised reading for GDP in the third quarter also exceeded the expectations of business analysts. Before the report was released, they were forecasting the economy to clock in at a 4 percent pace.

Consumers and businesses did their part to keep the economy rolling ? even as they coped with elevated energy prices during the third quarter.

The lifeblood of the economy, consumer spending, grew at a sprightly 4.2 percent pace in the third quarter, stronger than the 3.9 percent growth rate previously estimated. The new figure marked the fastest pace in consumer spending since the final quarter of 2004.

Businesses boosted spending on equipment and software at a 10.8 percent annual rate in the third quarter. That was better than the 8.9 percent growth rate first estimated for the period and close to the 10.9 percent growth rate seen in the second quarter.

Investment in housing construction and other residential projects grew at a brisk 8.4 percent pace in the third quarter. That was up considerably from the 4.8 percent growth rate initially estimated but was down from the 10.8 percent pace registered in the second quarter.

An inflation gauge tied to the GDP report showed prices rising at a 3.6 percent rate in the third quarter, slightly less than initially estimated for the period.

When food and energy prices are excluded, "core" inflation_ which the Federal Reserve watches closely ? actually moderated. Core inflation rose at a rate of 1.2 percent in the third quarter, a tad less than first estimated and down from a 1.7 percent pace in the second quarter.

The good news on the economy, however, hasn't helped President Bush's approval ratings in polls, which have sunk to some of the lowest levels of his presidency.

While the overall economy has weathered fallout from the hurricanes well, the labor market has felt more deeply the devastation from the storms.

Employment in September declined for the first time in two years; In October payrolls grew by just 56,000 ? an anemic performance.

When the government's new employment report for November is released Friday, many economists are forecasting a healthy rebound, with the economy adding more than 200,000 jobs during the month.

Federal Reserve Chairman Alan Greenspan and his colleagues, at their Nov. 1 meeting, said the hurricanes only "temporarily depressed" employment and production and that rebuilding efforts would energize activity going forward.

Mayland and other economists believe the economy in the October-to-December quarter will grow at a pace of around 4 percent.

More worried about the prospects of inflation flaring ? rather than any serious business slowdown ? in the wake of the hurricanes, the Fed opted to boost interest rates in November and signaled another rate increase was likely at its next meeting, Dec. 13.

Katrina slammed into the Gulf Coast in late August, with Rita following in late September. Those storms, which battered crucial oil and gas facilities, choked off commerce and destroyed businesses, sent energy prices skyward and fanned inflation fears.

After Katrina, energy prices surged to record highs. Oil prices shot up past $70 a barrel in late August and gasoline prices topped $3 a gallon. They have moderated since then. That's helping to lift consumer confidence along with retailers' hopes for a brighter holiday sales season.

Meanwhile, a measure of corporate profits tied to the GDP report showed after-tax profits falling by 3.7 percent in the third quarter from the prior quarter, reflecting the impact of the hurricanes. Over the year, however, profits are up a healthy 9.4 percent.

Economy rebounds with 4.8% annual growth rate in Q1; GDP strongest since 2003, inflation weakens

WASHINGTON (AP) ? Casting off an end-of-year lethargy, the economy bounded ahead in the opening quarter of this year at a 4.8% annual pace, the fastest pace of growth in 2 1/2 years.

The latest report on the economy, released by the Commerce Department on Friday, showed that consumers, businesses and government all did their part in terms of robust spending and investment to spur a healthy pace of growth in the January-to-March quarter.

The 4.8% increase in the gross domestic product marked a vast improvement from the feeble 1.7% annual rate registered in the final quarter of 2005, when fallout from the Gulf Coast hurricanes, including high energy prices, prompted people and companies to tighten their belts.

The GDP measures the value of all goods and services produced within the United States and is considered the best barometer of the economy's fitness.

The first quarter's performance ? the best showing since the third quarter of 2003 ? was close to economists' expectations. Before the report was released, private analysts were forecasting the economy to clock in at a 4.9% growth rate.

A recent spate of good economic reports, however, hasn't helped President Bush's standing with the public. He is shouldering his lowest-ever job approval rating, at 36%, according to an AP-Ipsos poll.

Even with the economy zipping ahead in the first quarter, inflation actually moderated.

An inflation gauge closely watched by the Federal Reserve showed that core prices ? excluding food and energy ? rose 2%, down from 2.4% in the fourth quarter.

The inflation reading, however, was taken before oil prices zoomed to a record high of more than $75 a barrel last week. Although prices have retreated since then, they still remain high.

To keep inflation at bay, the Fed is expected to boost interest rates again at its May 10 meeting, which would mark the 16th increase since June 2004. But after that, the central bank could take a break ? perhaps temporarily ? in its rate raising campaign, Fed Chairman Ben Bernanke suggested Thursday.

Bernanke and other Fed policymakers indicated that they want to proceed with caution because they don't want to hurt economic activity by pushing rates up too high.

 

[dmcowen674]

Originally posted by: Engineer

Well, despite manufacturing leaving and booming deficits, the economy seems to be rolling along.

Hopefully, will continue and "trickle down" to the rest of us peons that have been frozen

(yes, my company froze wages for 2005 ).

But but but that's impossible according to the resident Republicans, they swear wages are rising all the time.

 

[conjur]

Those numbers wreak so bad I can smell them over the smog over here.

This is a false recovery and people need to wake up before the crash hits.

 

[Genx87]

If your company is stupid enough to freeze wages when the job market is like it is, find another place to work.

 

[Genx87]

Originally posted by: conjur
Those numbers wreak so bad I can smell them over the smog over here.

This is a false recovery and people need to wake up before the crash hits.

nearly 3 years of 3+% GDP growth and you are still using that tired line?
If recovery was fake the feds would see it in the numbers and not raise interest rates to head off inflation. They havent done any of the above, I think you are blowing a bunch of hot air.

 

[Stunt]

Engineer,
"booming deficits" is not entirely true. While the deficit is not ideal, it continues to shrink, not boom as you so claim. Show me where the deficit has gone up from 2004 to 2005 and I will consider your "booming" claim


Conjur,
All major economic indicators are signalling a solid recovery, factory orders are up, inflation is down, interest rates are rising, consumer confidence is rising, and many other areas are showing promise. Of course you probably think the tech boom under clinton's term was not a "false recovery" even though it was.

 

[conjur]

As I've said, this is a false recovery. Look below the numbers and you'll find the incredibly fragile foundation upon which those numbers rest.

Does not bode well for the future. Not well at all.

 

[conjur]

Originally posted by: Genx87

Originally posted by: conjur
Those numbers wreak so bad I can smell them over the smog over here.

This is a false recovery and people need to wake up before the crash hits.

nearly 3 years of 3+% GDP growth and you are still using that tired line?
If recovery was fake the feds would see it in the numbers and not raise interest rates to head off inflation. They havent done any of the above, I think you are blowing a bunch of hot air.

Just wait until their ruse is discovered. Why do you think they want to stop publishing the M-3 value?

This "recovery" has been paid for with deficit spending.

 

[Genx87]

Originally posted by: conjur

Originally posted by: Genx87

Originally posted by: conjur
Those numbers wreak so bad I can smell them over the smog over here.

This is a false recovery and people need to wake up before the crash hits.

nearly 3 years of 3+% GDP growth and you are still using that tired line?
If recovery was fake the feds would see it in the numbers and not raise interest rates to head off inflation. They havent done any of the above, I think you are blowing a bunch of hot air.

Just wait until their ruse is discovered. Why do you think they want to stop publishing the M-3 value?

This "recovery" has been paid for with deficit spending.

Ill keep waiting but something tells me when it comes it may be a few years down the road and just a natural progression of our economy as interest rates slowed the economy.

No doubt you will be on here proclaiming you predicted this event years in advance.

But what else can we expect when dealing with somebody who thought the economic boom of the late 1990s was a realistic position for our economy to remain in forever.

I do have to ask you a question about the boom of the late 1990s most liberals are infautated with. What is the difference between a 4.1-4.2% growth rate and a 4.2-4.5% growth rate that labels one a "boom" and another a "doom"?

 

[Future Shock]

GDP Growth != Wage Growth
(or <>, or NOT=, or choose your syntax...)

Genx87, there are far too many variables that influence wages that do not correspond to GDP. Frankly, wage growth has been highly restricted to certain areas of the economy for the past several years. The company that I currently consult for (probably one of the largest multinationals in existance) just announced limited bonuses and salary restrictions...and I can verify that rates for IT and management consulting continue to fall overall.

Conversely, Wall St. bonuses are expected to reach back to the 90s levels - very good indeed.

So the capitalists seem to be doing very well, the busieness climate seems to be improving...but the workers aren't getting much of a share.

Future Shock

 

[Genx87]

This isnt 2001-2002 when we had lots of people getting laid off and high unemployment.
If you dont like what your company is paying go find somebody else. The job market is tight right now for highly skilled people. If you lack an education and arent skilled then I agree, you may be sol, but this has been the truth for quite some.

 

[conjur]

Originally posted by: Genx87

Originally posted by: conjur

Originally posted by: Genx87

Originally posted by: conjur
Those numbers wreak so bad I can smell them over the smog over here.

This is a false recovery and people need to wake up before the crash hits.

nearly 3 years of 3+% GDP growth and you are still using that tired line?
If recovery was fake the feds would see it in the numbers and not raise interest rates to head off inflation. They havent done any of the above, I think you are blowing a bunch of hot air.

Just wait until their ruse is discovered. Why do you think they want to stop publishing the M-3 value?

This "recovery" has been paid for with deficit spending.

Ill keep waiting but something tells me when it comes it may be a few years down the road and just a natural progression of our economy as interest rates slowed the economy.

No doubt you will be on here proclaiming you predicted this event years in advance.

But what else can we expect when dealing with somebody who thought the economic boom of the late 1990s was a realistic position for our economy to remain in forever.

WTF are you talking about now? Are you claiming I said the dot-com bubble was sustainable for a long-term period?

I'd love to see that quote of mine.

I do have to ask you a question about the boom of the late 1990s most liberals are infautated with. What is the difference between a 4.1-4.2% growth rate and a 4.2-4.5% growth rate that labels one a "boom" and another a "doom"?

What happened in 2000-2001? Companies with P/E ratios of >11,000 had a huge reality check and many of them went bust (along with billions in VC money).

What's different now? Just a different form of speculation but this time it's coupled with massive gov't support in the form of deficit spending and (money) printing presses.

 

[Genx87]

What's different now? Just a different form of speculation but this time it's coupled with massive gov't support in the form of deficit spending and (money) printing presses.

please, are you going to attribute every economic growth period to govt deficit spending?

 

[Engineer]

Originally posted by: Stunt
Engineer,
"booming deficits" is not entirely true. While the deficit is not ideal, it continues to shrink, not boom as you so claim. Show me where the deficit has gone up from 2004 to 2005 and I will consider your "booming" claim

For the first time in 5 years the US deficit shrank to a yearly total of 313,000,000,000. Booming as too fvcking big regardless. Shrinking is nice but it still sucks. 1 out of 5 years in which GDP finally beat the debt isn't something to brag about.

 

[Engineer]

Originally posted by: Genx87
If your company is stupid enough to freeze wages when the job market is like it is, find another place to work.

Apparantely you haven't read much about the automotive industry lately, eh?

Oh, and even though there was a wage freeze, I have enough perks (vacation time, overtime paid at 1.5 times, etc) to keep me here....for now. Just bitching as my right to do so!

 

[Genx87]

Originally posted by: Engineer

Originally posted by: Stunt
Engineer,
"booming deficits" is not entirely true. While the deficit is not ideal, it continues to shrink, not boom as you so claim. Show me where the deficit has gone up from 2004 to 2005 and I will consider your "booming" claim

For the first time in 5 years the US deficit shrank to a yearly total of 313,000,000,000. Booming as too fvcking big regardless. Shrinking is nice but it still sucks. 1 out of 5 years in which GDP finally beat the debt isn't something to brag about.

Deficits are probably best measured by %s. How does this one compare to past % of gdp deficits?

60 years ago when the govt ran a 10 billion dollar deficit I am sure people shat themselves. Today 10 Billion is spent to wipe the arse of the unfornate after a tornado rolls through.

In 60 years I bet 300 billion will look silly compared to a budget of 10 trillion and a GDP of 30 trillion.

I think we need to have a balanced budget however people are making a bigger deal about the raw numbers than they should.

 

[ntdz]

More great news. I see conjur and dave are up to their old tricks desperatly trying to downplay good economic news. You guys just make yourself look more and more foolish, check that, you are just re-confirming whate veryone knows, that you guys are insane.

 

[Engineer]

Originally posted by: Genx87

Originally posted by: Engineer

Originally posted by: Stunt
Engineer,
"booming deficits" is not entirely true. While the deficit is not ideal, it continues to shrink, not boom as you so claim. Show me where the deficit has gone up from 2004 to 2005 and I will consider your "booming" claim

For the first time in 5 years the US deficit shrank to a yearly total of 313,000,000,000. Booming as too fvcking big regardless. Shrinking is nice but it still sucks. 1 out of 5 years in which GDP finally beat the debt isn't something to brag about.

Deficits are probably best measured by %s. How does this one compare to past % of gdp deficits?

60 years ago when the govt ran a 10 billion dollar deficit I am sure people shat themselves. Today 10 Billion is spent to wipe the arse of the unfornate after a tornado rolls through.

In 60 years I bet 300 billion will look silly compared to a budget of 10 trillion and a GDP of 30 trillion.

I think we need to have a balanced budget however people are making a bigger deal about the raw numbers than they should.

I don't even think we "have" to have a balanced budget any more, but I do feel that defict growth should lag GDP growth in a majority of the years (occasional hiccup). The last 25 years has seen the overall debt ratio to GDP ratio go from the 30's to 70.

Hopefully, with strong GDP growth will come the needed revenues to lower the yearly deficits. However, pork spending on Medicare prescriptions and other pork (Iraq IMO, parts of the road bill, tax breaks to oil companies in the energy bill, etc), we may be pushing the deficit up soon, sadly!

 

[dullard]

Originally posted by: Genx87
Deficits are probably best measured by %s. How does this one compare to past % of gdp deficits?

Quarterly data would be better, but here is yearly data: link. Deficit as a % of GDP is right near the recent historical peaks of 1975-1976 (Ford), 1982-1986 (Reagan), and 1990-1993 (Bush Sr). However, it is far below the extremes that occured due to WW2 (Roosevelt, Truman).

 

[TheSlamma]

I don't buy those numbers at all.

 

[TheSlamma]

Oh wait I get it, 4.3% growth in illegal alien slave labor.. thats it okay I understand now.


What's better then to have labor work for $2 an hour? Labor that works for $2 an hour and can't go tell the cops.

 

[Stunt]

Originally posted by: Engineer

Originally posted by: Stunt
Engineer,
"booming deficits" is not entirely true. While the deficit is not ideal, it continues to shrink, not boom as you so claim. Show me where the deficit has gone up from 2004 to 2005 and I will consider your "booming" claim

For the first time in 5 years the US deficit shrank to a yearly total of 313,000,000,000. Booming as too fvcking big regardless. Shrinking is nice but it still sucks. 1 out of 5 years in which GDP finally beat the debt isn't something to brag about.

Deficits as percentage GDP:
US -2.7%, UK -3.5%, France -4.3%, Germany -4.2%, Italy -3.1%, Japan -9.3%.

Also, the debt to gdp level, the only realistic indicator of wealth is going DOWN in the US. While the deficit is an issue, it will not cause the demise of the US as some people claim, nor is it "booming".

Consider this: is a man with $120k income and a $78k debt [US] is far better off than a man making $37k and a $61k debt [Japan]

 

[Stunt]

Originally posted by: TheSlamma
Oh wait I get it, 4.3% growth in illegal alien slave labor.. thats it okay I understand now.


What's better then to have labor work for $2 an hour? Labor that works for $2 an hour and can't go tell the cops.

Tell me the difference between an illegal alien and an american citizen...in terms of productivity and consumption of goods and services?

 

[Engineer]

Originally posted by: Stunt

Originally posted by: Engineer

Originally posted by: Stunt
Engineer,
"booming deficits" is not entirely true. While the deficit is not ideal, it continues to shrink, not boom as you so claim. Show me where the deficit has gone up from 2004 to 2005 and I will consider your "booming" claim

For the first time in 5 years the US deficit shrank to a yearly total of 313,000,000,000. Booming as too fvcking big regardless. Shrinking is nice but it still sucks. 1 out of 5 years in which GDP finally beat the debt isn't something to brag about.

Deficits as percentage GDP:
US -2.7%, UK -3.5%, France -4.3%, Germany -4.2%, Italy -3.1%, Japan -9.3%.

Also, the debt to gdp level, the only realistic indicator of wealth is going DOWN in the US. While the deficit is an issue, it will not cause the demise of the US as some people claim, nor is it "booming".

Consider this: is a man with $120k income and a $78k debt [US] is far better off than a man making $37k and a $61k debt [Japan]

Consider this...

A man makes 120k a year with a starting debt of 50k. His income grows by 4% while debt grows by 5%. At some point, he can no longer afford to pay his bills. Is the US there now? No, but growing the deficit faster than the revenue stream (as 2000-2004 has been), you'll eventually have an issue. Not to mention the effect of rising interest rates on the debt.

The debt has grown from 30's% to 70% in the last 25 years or so. If it keeps growing, we'll end up like Japan. Maybe not tomorrow, but will happen.

Of course, strong GDP growth like last quarter can really help keep the debt down as long as more revenue cutting tax cuts are thrown out there before any reaping of the last tax cuts is realized, if any.

 

[Stunt]

Originally posted by: Engineer
Consider this...

A man makes 120k a year with a starting debt of 50k. His income grows by 4% while debt grows by 5%. At some point, he can no longer afford to pay his bills. Is the US there now? No, but growing the deficit faster than the revenue stream (as 2000-2004 has been), you'll eventually have an issue. Not to mention the effect of rising interest rates on the debt.

The debt has grown from 30's% to 70% in the last 25 years or so. If it keeps growing, we'll end up like Japan. Maybe not tomorrow, but will happen.

Of course, strong GDP growth like last quarter can really help keep the debt down as long as more revenue cutting tax cuts are thrown out there before any reaping of the last tax cuts is realized, if any.

US's income is growing faster than the debt...your example has no relevance, I don't know why you would even mention it. You are pointing out the obvious...fortunately this is not the case.

Currently the debt is not growing relative to productivity unlike many other nations like Japan, Germany and others in Europe.

The deficit is shrinking in the US, and until this trend changes...I see no reason to get all worried. Deficits have been much higher in US history and currently are no worse than many other industrialized nations.