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Grimis
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#1 Posted on 31.10.03 0615.22
Reposted on: 31.10.10 0615.26
You mean the Democratic Presidential candidates are wrong on the economy? Go figure......

* * * * * * * * * * *
Economic growth strongest in two decades
Associated Press

WASHINGTON -- The economy grew at a scorching 7.2 percent annual rate in the third quarter in the strongest pace in nearly two decades. Consumers spent with abandon and businesses ramped up investment, compelling new evidence of an economic resurgence.

The increase in gross domestic product, the broadest measure of the economy's performance, in the July-September quarter was more than double the 3.3 percent rate registered in the second quarter, the Commerce Department reported today.

The 7.2 percent pace marked the best showing since the first quarter of 1984. It exceeded analysts' forecasts for a 6 percent growth rate for third-quarter GDP, which measures the value of all goods and services produced within the United States.

The economy's recovery from the 2001 recession has resembled the side of a jagged cliff; a quarter of strength often has been followed by a quarter of weakness. But analysts are saying that pattern could be broken, considering increasing signs the economy finally has shaken its lethargy and is perking up.

Near rock-bottom short-term interest rates, along with President Bush's third round of tax cuts, have helped the economy shift into a higher gear during the summer, economists say. The next challenge is making sure the rebound is self-sustaining, they say.

Democrats, however, argue that the tax cuts contributed to a record budget deficit in the recently ended 2003 fiscal year and have done little to spur significant job growth.

Although the nation's payrolls grew by 57,000 in September -- the first increase in eight months -- the economy needs to add a lot more jobs than that each month to drive down the 6.1 percent unemployment rate, analysts have said.

The administration has argued that as economic growth improves, meaningful job creation will follow. Bush will be counting on that as he heads into the 2004 presidential election season.

In other encouraging economic news from the Labor Department, new claims for unemployment benefits last week dropped by 5,000 to 386,000, a sign that layoffs are slowing. U.S. workers' wages and benefits went up by 1 percent in the third quarter, up slightly from a 0.9 percent increase in the previous quarter.

Amid signs that the recovery is regaining traction, the Federal Reserve on Tuesday decided to hold a key short-term interest rate at a 45-year low of 1 percent. Super-low short-term rates may give consumers and businesses an incentive to spend and invest more, boosting economic growth.

Economists believe the economy will grow at a slower -- but still healthy -- 4 percent rate in the final quarter.

In the third quarter, consumers ratcheted up their spending at a brisk 6.6 percent annual rate. That was the biggest increase since the first quarter of 1988 and was up from a 3.8 percent pace in the second quarter.

Consumers in the third quarter spent lavishly on big-ticket items, such as cars, boosting such spending by a whopping 26.9 percent rate. And, they also spent briskly on "nondurables" such as food and clothes, which grew at a 7.9 percent pace, the strongest showing since the first quarter of 1976.

While consumers have been the main force keeping the economy going, there are more signs that businesses are starting to do their part.

Especially encouraging was the 15.4 percent growth rate in spending by businesses on equipment and software in the third quarter. That marked the largest increase since the first quarter of 2000 and was up from a 8.3 percent growth rate in the second quarter.

Sustained turnarounds in capital spending and in hiring are crucial to the economy's return to full throttle. Economists said business wants profits to improve and wants to be sure of the recovery's vigor before it goes on a spending and hiring spree.

The red-hot housing market, powered by low mortgage rates, also contributed to the strong showing on third quarter GDP. Investment on residential projects grew at a 20.4 percent rate, the biggest increase since the second quarter of 1996, and more than three times the 6.6 percent growth rate seen in the second quarter.

Federal government spending, which grew at a 1.4 percent rate, was only a minor contributor to GDP in the third quarter. Spending on national defense was flat. But in the second quarter, military spending on the Iraq war -- which grew at a whopping 45.8 percent rate -- helped to catapult economic growth.

A better trade picture in the third quarter also contributed to GDP growth.

But inventory reduction by businesses continued to be a drag on the economy and reduced third-quarter GDP by 0.67 percentage point. And a continuing reluctance by businesses to build up stocks suggest that executives remain wary of the rebound's staying power.


* * * * * *

BTW, this graph (images.chron.com) is interesting too, considering everything is supposedly Bush's fault.


I don't know what the hell you did Grimis, but it sure broke something. Fixed the link though, and it seems to be all better. - Jag


(edited by Jaguar on 31.10.03 0927)
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Jaguar
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#2 Posted on 31.10.03 0822.45
Reposted on: 31.10.10 0823.48
What's wrong with this page? The bottom of Grimis' post has somehow merged the bottom of the board page into it...
-Jag

/edit Wheee, I saved the board!
/edit2 Hmmmm... he double posted and the other one wasn't broken.... I'll just go ahead and delete that other one...

(edited by Jaguar on 31.10.03 0929)
DrDirt
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#3 Posted on 31.10.03 0840.34
Reposted on: 31.10.10 0840.42
If this is sustained in some manner, it is certainly good news for W and bad for the Dems. However, so far this has been a jobless recovery. Sooner or later manufacturers and retailers will have to raise prices or I fear bigger layoffs are coming since they are being squeezed by increasing health and other costs. So far they haven't ben able to raise thier prices. Inflation isn't good but some is necessary.

The national debt has to be be brought under control or the price of money will screw things up for the private sector eventually. I don't blame the tax cuts or give them a lot of credit for the recovery. The Congress and the administration must get their penchant for increasing spending under control. Limit it to the rate of inflation and no the war on terrorism can't be used as an excuse. I am a Democrat who thinks we must rein in spending.

I have a friend who sells GM vehicles and while summer sales were brisk, things have slowed dramatically. They are running out of people who need new vehicles, even with the incentive financing. And people need raises, their paychecks haven't exactly jumped much in several years. Large consumer debt + no savings = long-term mess.

Finally, the President, any President, gets too much blame when the economy sucks and too much credit when things go well. See Clinton, Bill.
Grimis
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#4 Posted on 31.10.03 0937.13
Reposted on: 31.10.10 0938.51
I have no idea how I managed to do that....sorry.
godking
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#5 Posted on 31.10.03 1151.03
Reposted on: 31.10.10 1156.50
Krugman on the quarter:

First, while there was a significant pickup in business investment, the bulk of last quarter's growth came from a huge surge in consumer spending, with a further boost from housing. These components of spending stayed strong even when the economy was weak, so there shouldn't have been any pent-up demand. Yet housing grew at a 20 percent rate, while spending on consumer durables (that's stuff like cars and TV sets) which last year grew three times as fast as the economy rose at an incredible 27 percent rate last quarter.

This can't go on in the long run, consumer spending can't outpace the growth in consumer income. Stephen Roach of Morgan Stanley has suggested, plausibly, that much of last quarter's consumer splurge was "borrowed" from the future: consumers took advantage of low-interest financing, cash from home refinancing and tax rebate checks to accelerate purchases they would otherwise have made later. If he's right, we'll see below-normal purchases and slower growth in the months ahead.

The big question, of course, is jobs. Despite all that growth in the third quarter, the number of jobs actually fell. And new claims for unemployment insurance, a leading indicator for the job market, still show no sign of a hiring boom. (By the way, for the last month there's been a peculiar pattern: each week, headlines declare that new claims fell from the previous week; a week later, the past week's number is revised upward, and the apparent decline disappears.)

And unless we start to see serious job growth by which I mean increases in payroll employment of more than 200,000 a month consumer spending will eventually slide, and bring growth down with it.
eviljonhunt81
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#6 Posted on 31.10.03 1158.51
Reposted on: 31.10.10 1159.02
It would seem to me that house sales/refinancing just dropped off a lot. I lost my job due to a sharp drop in business in the past two weeks.
Grimis
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#7 Posted on 31.10.03 1200.25
Reposted on: 31.10.10 1202.45
    Originally posted by godking
    Krugman on the quarter:

You picked the one economist who couldn't possibly have less credibility....
godking
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#8 Posted on 31.10.03 1314.14
Reposted on: 31.10.10 1315.24
You picked the one economist who couldn't possibly have less credibility....

Yeah, that Clark Medal he's got - that's the sure sign of a knownothing. Or maybe you refer to the inane "Krugman Truth Squad" columns by Donald "let's go sue an anonymous blogger" Luskin?

And more to the point, it's not like Krugman is stating anything particularly controversial in his column. His basic points in this one are practically irrefutable:

1.) The quarter's boost came at least partially as a result of increased consumer spending.

2.) Consumer spending can't continually outpace consumer income, which didn't grow during the quarter.

3.) If consumer income - and its related statistic, number of employed - doesn't increase dramatically over the next quarter, the boom almost certainly won't be sustainable.

That's pretty basic economics. I didn't even quote the portion of the column where Krugman pointed out that first-quarter GDP growth in 2002 was 5.0%, and then that followed with a 1.3% growth Q2, or that a small boomlet in Q3 (4%) was followed by another job-loss quarter of 1.4% - evidencing that the current economic situation seems to defy quick fixes.

(I also didn't quote the only part of the column which could properly be called editorializing, where Krugman argued that the economic boom of Q3 is almost entirely manufactured by a combination of increased domestic spending and tax cuts, and the government simply can't keep doing that forever.)
Grimis
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#9 Posted on 31.10.03 1352.41
Reposted on: 31.10.10 1352.43
What's funny about Krugman is that he can acknowledge the same facts that other economist do(the three points you mentioned) and somehow, regardless of where we started, bring it all back to : 1) we have to raise taxes and 2) it's Bush's fault.

    Originally posted by godking
    the economic boom of Q3 is almost entirely manufactured by a combination of increased domestic spending and tax cuts, and the government simply can't keep doing that forever

True, but the only way we can sustain continued stabilization if not growth is if we reduce spending on social services. And we all know that the libs in the Senate will filibuster it until the cows come home...
godking
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#10 Posted on 31.10.03 1417.35
Reposted on: 31.10.10 1417.50
What's funny about Krugman is that he can acknowledge the same facts that other economist do(the three points you mentioned) and somehow, regardless of where we started, bring it all back to : 1) we have to raise taxes and 2) it's Bush's fault.

He never says "raise taxes". He says "you have to equalize spending with income." You can drop spending or you can raise taxes, and given that Social Security alone is never going to be taken away due to massive public support for it, the first of the two seems the less plausible option.

As for it being Bush's fault - um, who else cut taxes and raised spending?
Grimis
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#11 Posted on 31.10.03 1440.59
Reposted on: 31.10.10 1443.43
    Originally posted by godking
    He says "you have to equalize spending with income."

Um...we're talking about a Democrat here. That means raise taxes because I have never ever heard a liberal Democrat take cutting spending over raising taxes. Of course, this is what you get when you get economic advice from a former Enron advisor.
Jaguar
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#12 Posted on 31.10.03 2127.11
Reposted on: 31.10.10 2128.19
    Originally posted by Rush Limbaugh
    I think what we've had here is a little social concern in the NFL. The media has been very desirous that a black quarterback do well. There is a little hope invested in McNabb, and he got a lot of credit for the performance of this team that he didn't deserve. The defense carried this team.



Umm... we're talking about a Republican here. That means that McNabb should be lynched for daring to rise above his station.

/Stupidity

Please try not to put words into other people's mouths. Unless of course, you'd like to stop complaining when other people do it?

-Jag
redsoxnation
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#13 Posted on 31.10.03 2150.42
Reposted on: 31.10.10 2151.41
If this continues for another 2 quarters, Bush wins in a virtual walk next November. However, the worst thing that could happen is this being an abberation, which would make even a modest rise look bad by comparison, and leave Bush vulnerable.
godking
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#14 Posted on 2.11.03 1351.46
Reposted on: 2.11.10 1354.06
Um...we're talking about a Democrat here. That means raise taxes because I have never ever heard a liberal Democrat take cutting spending over raising taxes.

Except for Bill Clinton. And Howard Dean. And quite a few others, really.

Of course, you could always go the Republican route and boldly pick neither...
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#15 Posted on 2.11.03 2058.37
Reposted on: 2.11.10 2059.01
Of course, this: http://www.nytimes.com/2003/11/02/national/02HUNG.html (password required)
is what truly matters. Which also provides further evidence that economics has much less bearing on the real world then economists would like to admit.

People are going to vote with whether they have jobs and food, not some vague set of statistics.
Grimis
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#16 Posted on 3.11.03 0638.48
Reposted on: 3.11.10 0639.18
    Originally posted by godking
    Except for Bill Clinton.

Now, this is the same Bill Clinton that raised taxes by $258 billion in 1994, raised the federal gasoline tax by 6.8 cents per gallon, raised taxes 49 times as Governor of Arkansas. And didn't lower taxes or spending until Republicans were in Congress.

    Originally posted by godking
The same Dean who wants to repeal the Bush tax cuts? And raised taxes on gasoline, cigarettes, beer, telephones, hotel rooms, property, and corporate income as governor of Vermont? And was only restrained in spending by the fact that Vermont has a balanced budget Amendment.


    And quite a few others, really.
Other than Zell Miller, I've got nothing...

EDIT: OK, I've got JFK too. The tax cut that launched the economy in the 60's.

(edited by Grimis on 3.11.03 0956)
DrDirt
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#17 Posted on 3.11.03 1142.18
Reposted on: 3.11.10 1143.46
    Originally posted by redsoxnation
    If this continues for another 2 quarters, Bush wins in a virtual walk next November. However, the worst thing that could happen is this being an abberation, which would make even a modest rise look bad by comparison, and leave Bush vulnerable.


You are correct and the projections for this quarter are in the 2.5 - 3% range. It is starting to look like Bush is vulnerable even if this continues unless two things happen. First, some real, meaningful jobs must be created. So far layoffs in sectors with good jobs are continuing but at a slower pace. Job creation, not seasonal retail jobs but real decent jobs with benefits must happen by early next year. Second, the abyss the states have been in must at the least stabilize and hopefully revenues will increase significantly. Next April will tell the tale for many states.

Bush is also vulnerable if the situation in Iraq doesn't stabilize and then improve dramatically. Please don't tell me that things are better than the media is reporting. While that may be true, the people who are Bush's core constituency don't like seeing their sons and daughters coming home in body bags.

Bush's core is everyday, working class Americans who think their lives are not better now than three years ago. Whether is it "W's" fault or not, the paintbrush will apply the balme liberally (pun intended).
wordlife
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#18 Posted on 3.11.03 1158.43
Reposted on: 3.11.10 1159.02
    Originally posted by messenoir
    Of course, this: http://www.nytimes.com/2003/11/02/national/02HUNG.html (password required)
    is what truly matters. Which also provides further evidence that economics has much less bearing on the real world then economists would like to admit.

    People are going to vote with whether they have jobs and food, not some vague set of statistics.


I have to agree with you on this, I majored in Economics and Accounting and applied for jobs in each discipline, guess which one I am using?

Econ isn't a bad thing but it relies on a lot of regression analysis and estimation, and then the analysis of hte person. I agree with everything that the economist posted there, but even GW himself could have figured this out. People need to remember that these economists usually work for an investment banking group (who want to make the economy look great so they can cash in on the markets) or they work for the government (who want to make the economy look in the best light so people do not get too pissed at the gov't)

There is one saying, a guy I went to school with who sold a company he built for 5 million dollars told me, which was that if he was moving his money around in the stock market he would do whatever the opposite of the economists said and he claimed it always worked. He even brought in his statements from Fidelity to prove this to me.
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#19 Posted on 4.11.03 0857.06
Reposted on: 4.11.10 0858.18
    Originally posted by wordlife
      Originally posted by messenoir
      Of course, this: http://www.nytimes.com/2003/ 11/02/national/02HUNG.html (password required)
      is what truly matters. Which also provides further evidence that economics has much less bearing on the real world then economists would like to admit.

      People are going to vote with whether they have jobs and food, not some vague set of statistics.


    I have to agree with you on this, I majored in Economics and Accounting and applied for jobs in each discipline, guess which one I am using?

    Econ isn't a bad thing but it relies on a lot of regression analysis and estimation, and then the analysis of hte person. I agree with everything that the economist posted there, but even GW himself could have figured this out. People need to remember that these economists usually work for an investment banking group (who want to make the economy look great so they can cash in on the markets) or they work for the government (who want to make the economy look in the best light so people do not get too pissed at the gov't)

    There is one saying, a guy I went to school with who sold a company he built for 5 million dollars told me, which was that if he was moving his money around in the stock market he would do whatever the opposite of the economists said and he claimed it always worked. He even brought in his statements from Fidelity to prove this to me.


Economics is great at telling us why what just happened happened, but lousy at prediction. Any science that must deal with human emotions and tendencies is dommed to being no better at predicting than flipping a coin. I am sure i am wrong, but I lump economics in with psychology and sociology. They serve a useful purpose but aren't really hard science.

(edited by CRZ on 4.11.03 0909)
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#20 Posted on 4.11.03 1454.07
Reposted on: 4.11.10 1455.33
Of course, not all the news is good... Job Cuts more than double in October, 170,000+ jobs lost (story.news.yahoo.com). From a purely political standpoint, this is a scary number for George, because no matter how well the stock market does or what GDP growth or anything else is, if people are afraid of job loss, the spending bump won't last unless he can send out tax rebate checks every month on the first.
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