Economy grew 3.5 percent in third quarter

[Winehole23]

Economy grew 3.5 percent in third quarter (http://rawstory.com/2009/10/breaking-economy-grew-35-percent-quarter/) (http://rawstory.com/2009/10/breaking-economy-grew-35-percent-quarter/)


Thursday, October 29th, 2009 -- 7:42 am


By The Associated Press (http://rawstory.com/2009/author/raw117/)




http://www.istockphoto.com/file_thumbview_approve/3723653/2/istockphoto_3723653-stack-of-100-dollar-bills.jpg





The economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes.


The Commerce Department's report Thursday delivered the strongest signal yet that the economy entered a new, though fragile, phase of recovery and that the worst recession since the 1930s has ended.


Many analysts expect the pace of the budding recovery to be plodding due to rising unemployment and continuing difficulties by both consumers and businesses to secure loans.


Still, the much-awaited turnaround ended the streak of four straight quarters of contracting economic activity, the first time that's happened on records dating to 1947.


It also marked the first increase since the spring of 2008, when the economy experienced a short-lived uptick in growth.


The third-quarter's performance — the strongest since right before the country fell into recession in December 2007 — was slightly better than the 3.3 percent growth rate economists expected.


Armed with cash from government support programs, consumers led the rebound in the third quarter, snapping up cars and homes.


Consumer spending on big-ticket manufactured goods soared at an annualized rate of 22.3 percent in the third quarter, the most since the end of 2001. The jump largely reflected car purchases spurred by the government's Cash for Clunkers program that offered a rebate of up to $4,500 to buy new cars and trade in old gas guzzlers.


The housing market also turned a corner in the summer. Spending on housing projects jumped at an annualized pace of 23.4 percent, the largest jump since 1986. It was the first time since the end of 2005 that spending on housing was positive.


The government's $8,000 tax credit for first-time home buyers supported the housing rebound. Congress is considering extending the credit, which expires on Nov. 30.


The collapse of the housing market led the country into the recession. Rotten mortgage securities spiraled into a banking crisis. Home foreclosures surged. The sector's return to good health is a crucial ingredient to a sustained economic recovery.


Brisk spending by the federal government, led by efforts to stimulate the economy and on defense, also played into the third-quarter turnaround. Federal government spending rose at a rate of 7.9 percent in the third quarter, on top of a 11.4 percent growth rate in the second quarter.
In other encouraging developments, businesses boosted spending on equipment and software at a 1.1 percent pace in the third quarter, the first increase in nearly two years.


Third-quarter activity also was helped by increased sales of U.S.-made goods to customers overseas, as economies in Asia, Europe and elsewhere improved. The cheaper dollar is aiding U.S. exporters, making their goods less expensive to foreign buyers. Exports of U.S. goods soared at an annualized rate of 21.4 percent in the third quarter, the most since the final quarter of 1996.


Businesses, meanwhile, reduced their stockpiles of goods less in the third quarter, after slashing them at a record pace in the second quarter. With inventories at rock-bottom levels, even the smallest increase in demand probably will led to factories boosting production. This restocking of depleted inventories is expected to help sustain the recovery in the coming months.


Even with the third-quarter improvement, the economy isn't out of the woods yet.


Federal Reserve Chairman Ben Bernanke and members of President Barack Obama's economics team have warned that the nascent recovery won't be robust enough to prevent the unemployment rate — now at a 26-year high of 9.8 percent — from rising into next year.


Economists say the jobless rate probably nudged up to 9.9 percent in October and will go as high as 10.5 percent around the middle of next year before declining gradually. The government is scheduled to release the October jobless rate report next week.


Rising unemployment and continuing difficulties by both consumers and businesses to secure loans are among the forces likely to weigh on the recovery.


With joblessness growing and wages dipping slightly in the third quarter, consumers are expected to turn more restrained in the months ahead. That would put a much heavier burden on America's businesses to keep the recovery going.

[spursncowboys]

The economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes. Still increasing 3.5 when everyone expected 3.2 is pretty good.

[TheProfessor]

White House cautious on new economic figures

LINK (http://www.politico.com/news/stories/1009/28881.html)

It might not feel like it to most voters, but the U.S. economy is growing again after a more than a year of contraction.

The nation’s gross domestic product grew at a seasonally adjusted rate of 3.5 percent for July through September – the first growth since the spring of 2008, the Commerce Department said Thursday.

That marks a sort of unofficial end to the recession that has bedeviled President Barack Obama since he took office. Economists credited the growth to consumer spending – up 3.4 percent – fueled in part by government stimulus, such as the popular Cash-for-Clunkers car-buying program.

But Obama economic adviser Christina Romer stopped well short of declaring victory. “The U.S. economy is moving in the right direction. However, this welcome milestone is just another step, and we still have a long road to travel until the economy is fully recovered,” Romer said in a statement.

That’s because more than 15 million Americans remain out of work, and a jobs report is due next week that’s likely to show the nation’s unemployment rate continues to creep upward toward 10 percent.

That means the White House and politicians on the Hill will be very careful about declaring the recession over, even if the economy has finally started growing again.

The Obama administration said its analysis found that the $787 billion stimulus program contributed between 3 and 4 percent points to the GDP growth – meaning the nation’s output would have risen little, if at all, in the past quarter without it.

On the Hill, House Republican Leader John Boehner took the GDP news as an opportunity to take a swipe at the Obama administration. “Any positive signs for our economy are welcome, but a jobless recovery is not what the American people were promised,” Boehner said. “President Obama and his economic team said the trillion-dollar ‘stimulus’ would create jobs immediately and keep the unemployment rate below eight percent. Since then, roughly three million jobs have been lost and unemployment has risen to near 10 percent.”

In advance of the new data, White House press secretary Robert Gibbs told reporters at the White House, “we still have, in the President's mind, much work to do to ensure an environment that is helping to create jobs.”

On Friday morning, the White House will release the first comprehensive accounting of the total numbers of jobs created by the $787 billion stimulus act.

[angrydude]

GDP is a deeply flawed economic indicator. It doesn't care where the money comes from, what liabilities you incurred to get it, or what its spent on, just as long as its spent.

[Winehole23]

Yep.

[MannyIsGod]

I just wish people would retain some perspective and remember then sense of panic felt this time last year and in the subsequent six or so months. We weren't talking about avoiding a minor recession, we were talking about the second great depression.

Now, I know there still needs to be jobs created, financial sector reform, and we have debt concerns but just think about where we are and about where we thought we'd be.

[Winehole23]

We weren't talking about avoiding a minor recession, we were talking about the second great depression.Unfortunately, reflation means reflating asset bubbles. When the inevitable correction comes, it won't be pretty.

[MannyIsGod]

Unfortunately, reflation means reflating asset bubbles. When the inevitable correction comes, it won't be pretty.

Be more specific.

[Winehole23]

http://www.minyanville.com/articles/markets-indices-s%26p-msci-russell-BRIC-brazil-dividend-earnings-ratio-/index/a/25171/p/1

[Winehole23]

http://www.spurstalk.com/forums/showthread.php?t=137934

[MannyIsGod]

http://www.spurstalk.com/forums/showthread.php?t=137934

I'm definitely not touting the free market as much as I used to if much at all these days. This article shows how irrational and short sighted people are. I'm not sure what the US can do about that though. I know he says a large cause is because of easy money but I know he's not advocating we raise interest rates now is he?

[boutons_deux]

"reflating asset bubbles"

Investment banks are gearing up for the "insurance policy bubble", where they buy $500K insurance policy for $200K, then mark it up with their fee, and sells it on to some investor, who waits for the policy holder to die to realize his gain.

[SnakeBoy]

I'm definitely not touting the free market as much as I used to if much at all these days.

Well you should be touting the free market or a free and fair market to be more precise. What we have now is a corrupt market not a free market.

You should watch the frontline episode called "The Warning" about Brooksley Born and what happened to her.

Here's the link, it's worth the time imo...
http://www.pbs.org/wgbh/pages/frontline/warning/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

[Wild Cobra]

The economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes.

Bullshit. We would have bottomed out and recovered anyway, and I am all but certain, a better recovery with better job recovery if congress hadn't spent so much money.

[balli]

Bullshit. We would have bottomed out and recovered anyway, and I am all but certain, a better recovery with better job recovery
dumbness.

[DarrinS]

Well, it's better than zero.

[LnGrrrR]

Bullshit. We would have bottomed out and recovered anyway, and I am all but certain, a better recovery with better job recovery if congress hadn't spent so much money.

You're certain yes, but there's no way of proving it, is there? And since the majority of the 'fuel' for the economy seemed to be purchases of cars and houses, then it could be said that was an effective 'jumpstart' for our economy.

You can disagree whether it was necessary, or correct to do, but it does seem to have proven effective.

[Winehole23]

Bullshit. We would have bottomed out and recovered anywayYes, but the crash would have been severe. There's no knowing how severe really.


and I am all but certain...Beware of any sentence that follows these words.


...a better recovery with better job recovery if congress hadn't spent so much money.You could be right, but we'll never find out. Allowing a chaotic deflationary crash is a political loser, especially knowing beforehand that in principle it's avoidable.

We can't dial it back to 1921, but the way Harding dealt with the post WWI crash -- lowering taxes, reducing spending, and "wage flexibility" -- might have worked this time, but the political price to be paid for pauperizing tens of millions of spoiled rotten Americans, even for "just a few years", would have been prohibitively high, and the likely reaction could be dangerous to public order.

Americans don't have the sand our grandparents and great grandparents had. But maybe our children will. It's a tough old world we're leaving to them. A falling tide lowers all boats.

[Wild Cobra]

Yes, but the crash would have been severe. There's no knowing how severe really.
We disagree on the severity. I say the lack of natural recovery and worries about the future made it worse. You think otherwise.

You could be right, but we'll never find out. Allowing a chaotic deflationary crash is a political loser, especially knowing beforehand that in principle it's avoidable.

I know, there is not way to see an alternate future.

[LnGrrrR]

I know, there is not way to see an alternate future.

Japan's "lost decade" might be a good indicator, from the small amount I've read.

[Wild Cobra]

Japan's "lost decade" might be a good indicator, from the small amount I've read.
Only if they had all the same causes and economy type. That is not the case.

[ChumpDumper]

Pfft. Remember, WC said the recession was caused by Democrats' saying there were problems with the economy.

He made a graph.

[LnGrrrR]

Only if they had all the same causes and economy type. That is not the case.

Let's be realistic WC. Will a depression ever have ALL the same causes and economy type? Highly doubtful. There may, however, be similar circumstances. Let's go to wikipedia to look at the circumstances.

http://en.wikipedia.org/wiki/Lost_Decade_(Japan)



The strong economic growth of the 1980s ended abruptly at the start of the 1990s. In the late 1980s, abnormalities within the Japanese economic system had fueled a massive wave of speculation by Japanese companies, banks and securities companies. A combination of exceptionally high land values and exceptionally low interest rates briefly led to a position in which credit was both easily available and extremely cheap. This led to massive borrowing, the proceeds of which were invested mostly in domestic and foreign stocks and securities.




Recognizing that this bubble was unsustainable, the Finance Ministry (http://www.spurstalk.com/wiki/Ministry_of_Finance_(Japan)) sharply raised interest rates in late 1989. This abruptly terminated the bubble, leading to a massive crash in the stock market. It also led to a debt crisis; a large proportion of the debts that had been run up turned bad, which in turn led to a crisis in the banking sector, with many banks being bailed out by the government.


Sounds rather similar to the US situation.

[Wild Cobra]

Sounds rather similar to the US situation.

We didn't have a massive interest rate cause ours, and it was only investors at risk, and stupid people who borrowed too much. We bailed out the rich. The banks who did have proper lending practices had no problems, and rather than spend hundreds of billions, we could have backed the banks for loans who did have proper practices.

Too big to fail my ass. Let them fail.

[LnGrrrR]

We didn't have a massive interest rate cause ours, and it was only investors at risk, and stupid people who borrowed too much. We bailed out the rich. The banks who did have proper lending practices had no problems, and rather than spend hundreds of billions, we could have backed the banks for loans who did have proper practices.

Too big to fail my ass. Let them fail.

Only investors and stupid people? Obviously it was alot more than that, because the taxpayer bailed them out.

Again WC, the causes may not be EXACTLY the same, but they're quite similar.

[ChumpDumper]

We didn't have a massive interest rate cause ours, and it was only investors at risk, and stupid people who borrowed too much. We bailed out the rich. The banks who did have proper lending practices had no problems, and rather than spend hundreds of billions, we could have backed the banks for loans who did have proper practices.

Too big to fail my ass. Let them fail.So if they failed, all the depositors would have received their guaranteed deposits back from....


....the federal government.

How much would that have cost, directly from the payments and indirectly from the inevitable run on other financial institutions?

I expect a graph.

[MannyIsGod]

We can't dial it back to 1921, but the way Harding dealt with the post WWI crash -- lowering taxes, reducing spending, and "wage flexibility" -- might have worked this time, but the political price to be paid for pauperizing tens of millions of spoiled rotten Americans, even for "just a few years", would have been prohibitively high, and the likely reaction could be dangerous to public order.

Americans don't have the sand our grandparents and great grandparents had. But maybe our children will. It's a tough old world we're leaving to them. A falling tide lowers all boats.


:lol Com'on now. If not wanting to repeat the great depression makes one spoiled rotten then I guess thats me. Whats the point of advancing our society if we simply view the past sufferings with some kind of misplaced nostalgia? I'm fairly certain those who lived through the Great Depression would avoid it had they the chance to do so.

I can find fault in the average American for many things, but I can not fault them for not wanting to be out of work and or poor.

[doobs]

Anyone else worried that this jobless recovery, along with rising prices of oil and other commodities and quantitative easing and high levels of federal spending, might ultimately result in stagflation?

[Wild Cobra]

Only investors and stupid people? Obviously it was alot more than that, because the taxpayer bailed them out.
Yep, stupid people electing stupid politicians.

Again WC, the causes may not be EXACTLY the same, but they're quite similar.
I'll agree to the point that Japan has a high tax burden and higher debt burden. We have been following. You cannot borrow yourself out of bankruptcy.

Look at the huge market drops when the bailout was being passed. Isn't that any indication to you it was the wrong approach?

OK, all the glitsy commercials made lemmings pull out second mortages and equity from their homes. People speculated in the housing market that was 100% sure to crash. Yes... they were stupid.

Bankers were given paths to loan money on bad loans. The investors on those banking stocks should all have lost their values rather than being propped up with tax dollars. When shareholders are threatened with bankruptcy, they make better decisions than when they are given money for bad choices.

Look... They are doing it again. They will fail again, because the regulations haven't changed.

[Wild Cobra]

Anyone else worried that this jobless recovery, along with rising prices of oil and other commodities and quantitative easing and high levels of federal spending, might ultimately result in stagflation?
My worry isn't the commodity prices, but that our government will tax productivity out of existance, and even more jobs will be lost.

[Winehole23]

Anyone else worried that this jobless recovery, along with rising prices of oil and other commodities and quantitative easing and high levels of federal spending, might ultimately result in stagflation?Worried? No.

I see that as one of the best possible outcomes, the very best being a Japan style outcome.

[Winehole23]

:lol Com'on now. If not wanting to repeat the great depression makes one spoiled rotten then I guess thats me. Whats the point of advancing our society if we simply view the past sufferings with some kind of misplaced nostalgia? I'm fairly certain those who lived through the Great Depression would avoid it had they the chance to do so.Sure. I'm not a bit nostalgic for it. I just don't think we'd weather it as well. We're spoiled rotten irrespective.


I can find fault in the average American for many things, but I can not fault them for not wanting to be out of work and or poor.I don't fault anybody for it.

Strawman alert.

[MannyIsGod]

Sure. I'm not a bit nostalgic for it. I just don't think we'd weather it as well. We're spoiled rotten irrespective.

I don't fault anybody for it.

Strawman alert.

I'm fairly certain saying someone is spoiled rotten implies a fault, WH. Rotten certainly doesn't imply anything positive.

I'm not sure how well we'd weather it. I do think that there were perhaps many in the 1920s who felt the same way you do.

[Winehole23]

I'm fairly certain saying someone is spoiled rotten implies a fault, WH. Rotten certainly doesn't imply anything positive. Sure, but the dependent clause -- because they don't want to be poor and unemployed -- is pure strawman.

What I said is we mightn't survive depression as well as our ancestors because we are spoiled. Not that we are spoiled because we are unwilling to be poor and unemployed.

[Winehole23]

We disagree on the severity. I say the lack of natural recovery and worries about the future made it worse. You think otherwise.So does Irving Fisher.

http://us.yhs.search.yahoo.com/avg/search?fr=yhs-avgb&type=yahoo_avg_hs2-tb-web_us&p=b

[Winehole23]

From the excellent LondonBanker: http://londonbanker.blogspot.com/2008/07/fishers-debt-deflation-theory-of-great.html

[Winehole23]

Assuming, accordingly, that, at some point of time, a state of over-indebtedness exists, this will tend to lead to liquidation, through the alarm either of debtors or creditors or both. Then we may deduce the following chain of consequences in nine links: (1) Debt liquidation leads to distress selling and to (2) Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes (3) A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be (4) A still greater fall in the net worths of business, precipitating bankruptcies and (5) A like fall in profits, which in a “capitalistic,” that is, a private-profit society, leads the concerns which are running at a loss to make (6) A reduction in output, in trade and in employment of labor. These losses, bankruptcies and unemployment, lead to (7) Hoarding and slowing down still more the velocity of circulation.

The above eight changes cause (9) Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.

[LnGrrrR]

Look at the huge market drops when the bailout was being passed. Isn't that any indication to you it was the wrong approach?


I blame that on all the Republicans saying the bailout wasn't going to work. If only they had talked up the plan, the economy would've went into an upswing.

[MannyIsGod]

Sure, but the dependent clause -- because they don't want to be poor and unemployed -- is pure strawman.

What I said is we mightn't survive depression as well as our ancestors because we are spoiled. Not that we are spoiled because we are unwilling to be poor and unemployed.

Fair enough.

[Nbadan]

As long as the world economy remains on life support I'm not worried about inflation, much less stagflation......temporary worker numbers are up which are a good sign that employers are either hiring or are getting ready to hire more permenant workers...job-less growth come just before economic runs...all the signs are there for a few years of economic growth....if Obama can reduce overall spending during this growth, maybe we can start paying off some of that 10 trillion dollar debt Bush left us...

[SnakeBoy]

all the signs are there for a few years of economic growth....

All the signs are there that we are doing exactly the same thing we did before. With luck maybe we do get a few years of economic growth out it. Then....

[Wild Cobra]

I blame that on all the Republicans saying the bailout wasn't going to work. If only they had talked up the plan, the economy would've went into an upswing.
No, the big market players know better than what is hyped. The republicans only stated the truth.

[DarrinS]

It's obvious that TARP and Obama's stimulus saved the Earth from economic collapse.

[florige]

I blame that on all the Republicans saying the bailout wasn't going to work. If only they had talked up the plan, the economy would've went into an upswing.



They did more than say it wasn't going to work. The evil they displayed with those tea parties and all the hate is something I have never seen before.

[MannyIsGod]

Cute Darrin. Why are you rooting against the economy? Why do you hate America?

[DarrinS]

Cute Darrin. Why are you rooting against the economy? Why do you hate America?


I'm not rooting against the economy. I've already recovered my losses from mid-2008.

I just think some of your comments are over-the-top.

[MannyIsGod]

Be more specific.

[spursncowboys]

They did more than say it wasn't going to work. The evil they displayed with those tea parties and all the hate is something I have never seen before.
:lol Your being facetious right?
If we are to blame others for argueing in a negative aspect, then it's the media's fault for pushing a recession until their guy got elected. It's the Dem's fault for Iraq going so bad from 05-07. It's the media's fault we didn't recover faster than we did, for calling it a recession when Bush had 5% unemployment, in 02 I think.

[Winehole23]

Check yr sarcasm meters, boisss.

[spursncowboys]

I'm not rooting against the economy. I've already recovered my losses from mid-2008.

I just think some of your comments are over-the-top.
Some?

[clambake]

I'm not rooting against the economy. I've already recovered my losses from mid-2008.

i wonder how that happened?

[spursncowboys]

i wonder how that happened?

Definitely government intervention. It couldn't be the 70% of the economy owned by private sectors.

[clambake]

you're right.

[LnGrrrR]

No, the big market players know better than what is hyped. The republicans only stated the truth.

Isn't it your theory that talking negatively about the economy impacts the economy negatively?

[Wild Cobra]

:lol Your being facetious right?
If we are to blame others for argueing in a negative aspect, then it's the media's fault for pushing a recession until their guy got elected. It's the Dem's fault for Iraq going so bad from 05-07. It's the media's fault we didn't recover faster than we did, for calling it a recession when Bush had 5% unemployment, in 02 I think.


Isn't it your theory that talking negatively about the economy impacts the economy negatively?
I agree with SnC in the aspect that the M$M's are so vocal to what their demonrat buddies say. The republicans has so little voice. It's one thing to say the economy is bad when it really is good. People stop and think about if they really want to spend money. This is primary (yes, in my opinion) that caused the repression. I say reprerssion purposely. I think they wanted this to control the economy more.

As for the stocks last September, there was a direct immediate correlation to what congress was doing at the time. If you want to blame the republicans, then take it from the viewpoint that they didn't say the economy was bad, but that the bailout was bad for the economy. They didn't cause anything. The domocrats did. At most, they caused a little fear in those few of us who listen, but most of us already shared that viewpoint without having to be told how to think.

If the democrats didn't pass the bailout, the DOW, S&P, and other market indicators wouldn't have dropped like it did, almost with certainty. Like I said about big money investors, they don't listen to the talking heads like the uninformed public does. They have experts that analyze the "what-ifs."

I solidly blame the democrats for the job losses and bad economy. Fear is hard to temper when you have so many pundits saying the same thing about "how bad the Bush economy is." Even though it was good, the fear made it bad.

[Winehole23]

Even though it was good, the fear made it bad.

WC: do you say stuff because you believe it, or do you believe it because you say it?

I gotta tell you: the notion that this recession was caused by an attitude problem is seriously, seriously unhinged.

[Wild Cobra]

WC: do you say stuff because you believe it, or do you believe it because you say it?

I gotta tell you: the notion that this recession was caused by an attitude problem is seriously, seriously unhinged.

If you say so.

What was wrong with it before the democrats started downtalking it? Nothing. It wasn't strong, or robust, but it was growing at a slow pace. It simply didn't take much fear to derail it.

[ChumpDumper]

I agree with SnC in the aspect that the M$M's are so vocal to what their demonrat buddies say. The republicans has so little voice.You guys always pimp the ratings of Fox News and Rush Limbaugh.

Disingenuous.

[Winehole23]

What was wrong with it before the democrats started downtalking it? Nothing.Trillions of dollars sunk into derivatives nobody understood, under the assumption that home prices would never drop, after we built 15 years supply in a 5 year window. A massive, massive debt bubble, with not much real wealth supporting it. What could possibly go wrong?

Irving Fisher explains it well:


The public psychology of going into debt for gain passes through several more or less distinct phases: (a) the lure of big prospective dividends or gains in income in the remote future; (b) the hope of selling at a profit, and realising a capital gain in the immediate future; (c) the vogue of reckless promotions, taking advantage of the habituation of the public to great expectations; (d) the development of downright fraud, imposing on a public which had grown credulous and gullible.

Fisher then sums up his theory of debt, deflation and instability in one paragraph:


In summary, we find that: (1) economic changes include steady trends and unsteady occasional disturbances which act as starters for cyclical oscillations of innumerable kinds; (2) among the many occasional disturbances, are new opportunities to invest, especially because of new inventions; (3) these, with other causes, sometimes conspire to lead to a great volume of over-indebtedness; (4) this in turn, leads to attempts to liquidate; (5) these, in turn, lead (unless counteracted by reflation) to falling prices or a swelling dollar; (6) the dollar may swell faster than the number of dollars owed shrinks; (7) in that case, liquidation does not really liquidate but actually aggravates the debts, and the depression grows worse instead of better, as indicated by all nine factors; (8) the ways out are either laissez faire (bankruptcy) or scientific medication (reflation), and reflation might just as well have been applied in the first place.@ the LondonBanker link above


It wasn't strong, or robust, but it was growing at a slow pace. It simply didn't take much fear to derail it.Lehman and AIG failing on the same weekend caused the fear. Bad talking had nothing to do with that. Massive fiduciary irresponsibility (i.e., very stupid and imprudent business decisions) did.

[ChumpDumper]

What was wrong with it before the democrats started downtalking it? Nothing.:lmao

[spursncowboys]

WH: Who really thought housing prices wouldn't drop?

[Winehole23]

WH: Who really thought housing prices wouldn't drop?Nearly everyone who sold MBSs.

[MannyIsGod]

:lmao

I'm honestly not sure who aside from WH humors this shit. On one hand I admire his patience while on the other I wonder if he's actually sane.

WH, its odd because I feel you're actually more pessimistic than me but yet you engage this crap in an idealistic manner. You sir, are a conundrum.

[Winehole23]

Declarations of the end of the recession may be premature. All recessions in the past four decades have had at least one positive quarter for GDP, followed by a renewed downturn, points out John Williams, who produces the Shadow Government Statistics (www.shadowstats.com (http://www.shadowstats.com/)) for his subscribers, who suspect there may be more (or less) to the numbers the government churns out.


Indeed, he writes, some 92% of the third quarter's GDP growth came from non-recurring factors and thus are not sustainable. (Funny how the stock market will ignore non-recurring factors in corporate earnings reports but took those in the GDP report at face value.)


"The estimate of 3.5% annualized real growth for third-quarter GDP included a 1.7% gain from auto sales, a 0.6% gain from new residential construction, and a 0.9% gain from a largely-involuntary inventory buildup, which appears to be understated," Williams writes in subscriber note.


Of course, automobile sales soared at a 56% annual rate with the help of the cash for clunkers while residential construction expanded at a 23% annual rate in the face of massive inventories of unsold and foreclosed homes, courtesy of the first-time homebuyers' tax credit.


"In aggregate, those one-time stimulus or inventory items represented 92% of the reported quarterly growth. The nature of the stimulus-related gains was that they tended to steal business activity from the future. The months ahead are the future. Accordingly, fourth-quarter quarterly GDP change likely will turn negative, again," Williams concludes.


In actuality, part of the GDP growth came from a very slightly slower cutbacks of inventories, explains Stephanie Pomboy of MacroMavens. Inventory liquidation dipped to $130 billion from the record $160 billion in preceding quarter. The GDP math translates this slower rate of decline as a positive, which added a full 1% to the quarter's annualized growth.


Add in the 1% from cash for clunkers and 0.5% for the homebuyer tax credit, and we're left with 1% growth -- of which half came from government spending, she adds. And while business was cutting back inventories, it also reduced capital spending for the fifth straight quarter, which doesn't suggest they're gearing up for future growth.



http://online.barrons.com/article/SB125690283808318415.html?mod=BOL_hpp_highlight

[MannyIsGod]

Yeah but what that article doesn't point out is that the stimulus will be injecting similar amounts into the coming quarters. Sure, auto sales won't be as high in the fourth quarter but the stimulus package will be injecting money elsewhere.

To be clear, I'm not in the camp (does it even exsist?) that says we're out of the woods yet. I'm not sure we'll see a retraction in the fourth Q, however. I do believe stimulus is going to be a major factor in any growth in the short term future - however.

[Winehole23]

:lmao

I'm honestly not sure who aside from WH humors this shit. On one hand I admire his patience while on the other I wonder if he's actually sane. Thanks, kinda.


WH, its odd because I feel you're actually more pessimistic than me but yet you engage this crap in an idealistic manner. You sir, are a conundrum.What so idealistic about backing up your own claims or responding to simple requests for information?

Even if the posters I reply to don't get it or don't pay attention (and who knows, occasionally they may), others might. No telling what impact may be had there. Responding to clowns, dolts and *low information voters* with reason and courteous attention is not only disarming, it is a good example for others and good practice for oneself. FWD is probably the best on this board at maintaining his equanimity and giving serious, thoughtful replies to very unserious posters. I kind of admire him for that.

Making fun of the ignorance of others is easy, and feeds my vanity; correcting it is hard, and reflects the humility of my own, still very considerable ignorance.

[Winehole23]

Yeah but what that article doesn't point out is that the stimulus will be injecting similar amounts into the coming quarters. Sure, auto sales won't be as high in the fourth quarter but the stimulus package will be injecting money elsewhere.Where might the impact be registered going forward? I confess to not knowing very much about it.


To be clear, I'm not in the camp (does it even exsist?) that says we're out of the woods yet. I'm not sure we'll see a retraction in the fourth Q, however. I do believe stimulus is going to be a major factor in any growth in the short term future - however.In a way, that was the point of the article. GDP growth is due to non-recurring factors, and therefore it is misleading to claim that the recession is "over".

[angrydude]

the stimulus is a bonus. unless the bonuses are going to come forever, eventually the underlying problems in the economy need to be fixed.

and the underlying problem is our shell game banking system (most notably the central bank).

too bad they bought off Washington a long time ago.

[MannyIsGod]

Where might the impact be registered going forward? I confess to not knowing very much about it.

In a way, that was the point of the article. GDP growth is due to non-recurring factors, and therefore it is misleading to claim that the recession is "over".

As far as what might be registered if you look at what has been spent so far and what is going foward you see a huge portion of the stimulus is still going to be spent.

So while Cash for Clunkers may be history there are other programs which will take its place. As for what those are I don't have the breakdown but I've looked at some articles at EPI.org with breakdowns.

I don't agree with the premise of your 2nd paragraph however. In order to start economic growth its important to first stop the contraction. To make my point clearer I'll use an analogy of a severe cut. On its own the severe cut may heal, but if we use treatment we can make the healing process move more efficiently. By stitching the wound and providing first aid we can more quickly stop the bleeding and facilitate healing.

Well, the stimulus package is like that stitching and first aid treatment. In essence the argument in the article is that because the wound is stitched that you can't say its healed. Superficially that's a valid point, but in the context of what would have occurred had we not taken action then we can certainly say that healing has started and that it is occurring more efficiently with the added help.

So yes, much of the spending that was facilitated by government funds here is unsustainable, but that spending helped preserve jobs which in turn has positive economic domino effects down the line.

We're not healed, but the wound is obviously healing.

[MannyIsGod]

Thanks, kinda.

What so idealistic about backing up your own claims or responding to simple requests for information?

Even if the posters I reply to don't get it or don't pay attention (and who knows, occasionally they may), others might. No telling what impact may be had there. Responding to clowns, dolts and *low information voters* with reason and courteous attention is not only disarming, it is a good example for others and good practice for oneself. FWD is probably the best on this board at maintaining his equanimity and giving serious, thoughtful replies to very unserious posters. I kind of admire him for that.

Making fun of the ignorance of others is easy, and feeds my vanity; correcting it is hard, and reflects the humility of my own, still very considerable ignorance.

I hear what you're saying WH, but I've been on this board for a lot longer than you have and what i've realized is that there are people worth responding to in a serious manner and there are others whom are simply not worth the effort.

I agree with your analysis on FWDT though. He's always been one of my favorite posters here (but not necessarily for that reason).

[Winehole23]

there are people worth responding to in a serious manner and there are others whom are simply not worth the effort. Everyone makes this call for him/herself. Rather than making an existential judgment about others (*not worth it*), I prefer simply to state my own preference: sometimes I'd rather not reply.

[MannyIsGod]

Everyone makes this call for him/herself. Rather than making an existential judgment about others (*not worth it*), I prefer simply to state my own preference: sometimes I'd rather not reply.

Not replying is not nearly as entertaining. :lol:lol

You win the gentleman award though.

[Winehole23]

In essence the argument in the article is that because the wound is stitched that you can't say its healed.This begs the question IMO, but I see what you mean.

[Winehole23]

The coming crash in CRE has me a little spooked.

[Winehole23]

You win the gentleman award though.It wasn't my aim to. I have to live with myself. Golden rule and all that. Courteousness really isn't worth the name if you only extend it to people who you think deserve it.

[MannyIsGod]

This begs the question IMO, but I see what you mean.

Personally I don't believe the stitching is very strong and I would have liked a lot better but its what we have to deal with.

I know it always sounds like I'm championing the stimulus and that's not because I feel its a great piece of legislation. I have many issues with it but when I look at the political reality of things then I understand we were unlikely to get anything better.

I also believe that doing nothing would have been disastrous and that is reinforced when I see how much of an effect the anemic stimulus package has already had. I imagine the situation without that help and I really worry considering the level of growth is extremely low as it is.

[MannyIsGod]

It wasn't my aim to. I have to live with myself. Golden rule and all that. Courteousness really isn't worth the name if you only extend it to people who you think deserve it.

Don't worry, I know your actions are not motivated in that manner.

[Wild Cobra]

Yeah but what that article doesn't point out is that the stimulus will be injecting similar amounts into the coming quarters. Sure, auto sales won't be as high in the fourth quarter but the stimulus package will be injecting money elsewhere.
Do you have any confidence that the stimulous money will be used for the right things? I most certainly don't.

You don't bail out losers. Especially big losers. What good is "trickle-down bailouts" anyway?

Want to help the economy, then do things that actually help. Reduce or eliminate business taxes and corporate gain taxes. Let the dollar slowly drop so imports become more expensive and outsourcing becomes less attractive. The only way to help the economy is to make it profitable to have production here again.

To be clear, I'm not in the camp (does it even exsist?) that says we're out of the woods yet. I'm not sure we'll see a retraction in the fourth Q, however. I do believe stimulus is going to be a major factor in any growth in the short term future - however.

The stimulous cannot do shit, unless it is put in the control of the consumers. Even then, now that we have lost jobs in this economy, bring them back is the hard part. Eliminating taxes on producers is the key.

[Winehole23]

http://krugman.blogs.nytimes.com/2009/11/01/growth-and-jobs-the-lesson-of-the-clinton-years/

[Wild Cobra]

http://krugman.blogs.nytimes.com/2009/11/01/growth-and-jobs-the-lesson-of-the-clinton-years/
LOL... I liked this line:

As I said in my previous post, that’s well into President Palin’s second term.

[MannyIsGod]

http://krugman.blogs.nytimes.com/2009/11/01/growth-and-jobs-the-lesson-of-the-clinton-years/

Thats why he and others believe the stimulus was too small.

http://www.businessweek.com/bwdaily/dnflash/content/oct2009/db20091030_565596.htm

[jman3000]

Too small? or not focused enough on the right areas?

[MannyIsGod]

Too small? or not focused enough on the right areas?

Too small, and far too small. The argument is when output gap is over 2 trillion a stimulus package of under 1 trillion won't even come close to closing the gap even if you take into account some seriously generous modifiers.