GDP Growth Revised to 2.8%

Off Topic Politics and World Issues
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http://news.yahoo.com/s/nm/20091124/bs_nm/us_usa_economy_gdp

WASHINGTON (Reuters) â?? The U.S. economy grew more slowly than initially thought in the third quarter, held back by strong imports and weak investment in nonresidential structures, according to data on Tuesday that hinted at a lackluster recovery.

In its second reading of third-quarter gross domestic product, the Commerce Department said the economy grew at a 2.8 percent annual rate, rather than the 3.5 percent pace it estimated last month.

It was still the fastest pace since the third quarter of 2007. The return to growth after four straight quarters of decline in output probably ended the most painful U.S. recession in 70 years. The economy contracted at a 0.7 percent rate in the April-June period.

The growth pace in GDP, which measures total goods and services output within U.S. borders, was a touch below market expectations for a 2.9 percent rate.

Surging imports, which outpaced the growth in exports, restrained the economic growth rate in the third quarter. Imports jumped 20.8 percent, the biggest gain since the second quarter of 1985, instead of 16.4 percent. They knocked 2.53 percentage points off real GDP, the department said.

Another drag on GDP came from the construction of nonresidential structures, which dropped 15.1 percent in the last quarter rather than 9.0 percent, highlighting the problems in the commercial property market. That shaved just over half a percentage point off GDP.

Businesses reduced accumulated stocks of unsold goods in the last quarter at a slightly faster rate than had been anticipated. Business inventories fell $133.4 billion rather than the $130.8 billion the government estimated in October.

The decline was still a slowdown from the record $160.2 billion plunge in the second quarter. The change in inventories added 0.87 percentage points to real GDP in the third quarter.

Excluding inventories, GDP rose at a 1.9 percent rate instead of 2.5 percent. Final sales increased at a 0.7 percent pace in the second quarter.

The GDP report also showed after tax corporate profits grew 13.4 percent in the third quarter, the largest gain since the first quarter of 2004. It was faster than market expectations for 6.2 percent. The strong profit growth was largely a reflection of deeper cost-cutting by companies, mostly headcount reduction, to deal with insipid demand.

Consumer spending was not as robust as the government had estimated last month, the report showed.

Consumer spending, which normally accounts for more than two-thirds of U.S. economic activity, rose at a 2.9 percent rate instead of the 3.4 percent pace reported by the government last month. It was still the biggest rise since the first quarter of 2007. Spending fell at a 0.9 percent rate in the second quarter.

Home building activity rose at a 19.5 percent rate in the third quarter, below previous estimates of 23.4 percent. Home construction still contributed to GDP for the first time since 2005. Residential investment declined 23.3 percent in the April-June period.

Consumer spending and residential investment were supported by government stimulus programs.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

3

[quote]BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.[/quote]

you do realize that the GDP growth was strictly government spending right?

4

[quote]BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.[/quote]

We had much lower public debt back then. We need the economy to grow at a certain rate to keep up with the interest payments on our debt.

Heckuva job, Obama!

5

[quote]PRCalDude wrote:
BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

We had much lower public debt back then. We need the economy to grow at a certain rate to keep up with the interest payments on our debt.

Heckuva job, Obama![/quote]

Actually during the 50’s we had very high public debt as a percentage of GDP. We were paying down the cost of WWII. I am not sure the 70’s debt numbers, but would assume that defense spending fro Vietnam spiked those numbers as well. Another argument for the libertarian principle of peace–less public debt.

Not here to defend Obama, but he did inherit an economy in absolute free fall. To say he or Geitner is any different than Bush or Paulson in this regard is wrong, generally both presidents and their advisors have had equally poor performance on this issue.

6

[quote]John S. wrote:
BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

you do realize that the GDP growth was strictly government spending right? [/quote]

Yes, I agree with that for the most part. I am assuming a chunk of the invetory numbers was cash for clunkers. I doubt much of the stimulus package has hit the streets yet, we are going to see a trickle of government funds that will equal 1% of economic growth for at least a few quarters. Just looking at it I think there is 1%ish of private sector growth.

7

[quote]BigJawnMize wrote:
PRCalDude wrote:
BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

We had much lower public debt back then. We need the economy to grow at a certain rate to keep up with the interest payments on our debt.

Heckuva job, Obama!

Not here to defend Obama, but he did inherit an economy in absolute free fall. To say he or Geitner is any different than Bush or Paulson in this regard is wrong, generally both presidents and their advisors have had equally poor performance on this issue.
[/quote]

I agree. But I’ve been criticizing Bush for years on this forum, so I didn’t think it necessary to say “Heckuva job, Bush!” also.

But Obama has had 9 months to reverse Bush’ fiscal policy. He was supposed to give us Hopenchange.

8

While Bush is responsible too, Obama bought the economy with his stimulus package. He was the one saying sun shine and rainbows would follow if we passed his stimulus.

9

[quote]PRCalDude wrote:
BigJawnMize wrote:
PRCalDude wrote:
BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

We had much lower public debt back then. We need the economy to grow at a certain rate to keep up with the interest payments on our debt.

Heckuva job, Obama!

Not here to defend Obama, but he did inherit an economy in absolute free fall. To say he or Geitner is any different than Bush or Paulson in this regard is wrong, generally both presidents and their advisors have had equally poor performance on this issue.

I agree. But I’ve been criticizing Bush for years on this forum, so I didn’t think it necessary to say “Heckuva job, Bush!” also.

But Obama has had 9 months to reverse Bush’ fiscal policy. He was supposed to give us Hopenchange. [/quote]

No doubt man. I do think 8 years Bush’s Foreign Policy, Tax/Fiscal Policy, and Energy policy has hurt this economy much more than the 9 months that Obama has had. Shit, if Obama can get us to some resolution in Iraq and Afganastan that lessens our involvement there we are going to be saving a good chunk of cash. Now if he just wouldn’t spend it on the insane Health Care Reform package that is proposed.

10

[quote]John S. wrote:
BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

you do realize that the GDP growth was strictly government spending right? [/quote]

Thats the thing right there…This is ALL debt.

11

[quote]BigJawnMize wrote:
PRCalDude wrote:
BigJawnMize wrote:
PRCalDude wrote:
BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

We had much lower public debt back then. We need the economy to grow at a certain rate to keep up with the interest payments on our debt.

Heckuva job, Obama!

Not here to defend Obama, but he did inherit an economy in absolute free fall. To say he or Geitner is any different than Bush or Paulson in this regard is wrong, generally both presidents and their advisors have had equally poor performance on this issue.

I agree. But I’ve been criticizing Bush for years on this forum, so I didn’t think it necessary to say “Heckuva job, Bush!” also.

But Obama has had 9 months to reverse Bush’ fiscal policy. He was supposed to give us Hopenchange.

No doubt man. I do think 8 years Bush’s Foreign Policy, Tax/Fiscal Policy, and Energy policy has hurt this economy much more than the 9 months that Obama has had. Shit, if Obama can get us to some resolution in Iraq and Afganastan that lessens our involvement there we are going to be saving a good chunk of cash. Now if he just wouldn’t spend it on the insane Health Care Reform package that is proposed.[/quote]

I dont know that Obama has spent more than Bush did in 8 years…but he sure is trying.

12

[quote]John S. wrote:
While Bush is responsible too, Obama bought the economy with his stimulus package. He was the one saying sun shine and rainbows would follow if we passed his stimulus. [/quote]

Again I don’t disagree. It was insane to propose the type of stimulus package (infrastucture projects and inventory reduction) would hit the streets quickly and turn things around. That said his package is just a different style than the quick hit tax cuts that the Republicans have done in the past. The money from his stimulus is going to linger in the economy much longer. My personal preference as a more libertarian thinker is no government intervention. That said though it is too soon to tell if this idea was a decent choice.

13

[quote]BigJawnMize wrote:
John S. wrote:
While Bush is responsible too, Obama bought the economy with his stimulus package. He was the one saying sun shine and rainbows would follow if we passed his stimulus.

Again I don’t disagree. It was insane to propose the type of stimulus package (infrastucture projects and inventory reduction) would hit the streets quickly and turn things around. That said his package is just a different style than the quick hit tax cuts that the Republicans have done in the past. The money from his stimulus is going to linger in the economy much longer. My personal preference as a more libertarian thinker is no government intervention. That said though it is too soon to tell if this idea was a decent choice. [/quote]

I also demand no government involvement. In fact the only thing the government should be doing is eliminating taxes and drastically reducing spending. This stimulus just pumped in a bunch of phantom dollars that is causing inflation.

It is not too soon to tell, he said unemployment would not go above 8%. In his own chart he said that if we did nothing unemployment would just barely go over 9%. We can call the stimulus an epic failure.

14

[quote]BigJawnMize wrote:
PRCalDude wrote:
BigJawnMize wrote:
PRCalDude wrote:
BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

We had much lower public debt back then. We need the economy to grow at a certain rate to keep up with the interest payments on our debt.

Heckuva job, Obama!

Not here to defend Obama, but he did inherit an economy in absolute free fall. To say he or Geitner is any different than Bush or Paulson in this regard is wrong, generally both presidents and their advisors have had equally poor performance on this issue.

I agree. But I’ve been criticizing Bush for years on this forum, so I didn’t think it necessary to say “Heckuva job, Bush!” also.

But Obama has had 9 months to reverse Bush’ fiscal policy. He was supposed to give us Hopenchange.

No doubt man. I do think 8 years Bush’s Foreign Policy, Tax/Fiscal Policy, and Energy policy has hurt this economy much more than the 9 months that Obama has had. Shit, if Obama can get us to some resolution in Iraq and Afganastan that lessens our involvement there we are going to be saving a good chunk of cash. Now if he just wouldn’t spend it on the insane Health Care Reform package that is proposed.[/quote]

Bush’s policies were “Invade the world/Invite the World/In Hoc to the world.” Reversing these policies would lead Obama to be so wildly popular he’d be re-elected in a landslide.

Unfortunately, he is basically GWB II, or Bush III. Same thing. There’s little difference between this guy and the last. Sure, we can bitch and moan about public healthcare, but we’ve essentially had it since the 1960s. Bush increased medicare entitlements by billions with his Rove-inspired “prescription drug benefit.”

Whether we stay in Iraq and Afghanistan 20 years or 100 years, the Pashtuns and Arabs will still be stone age Islamic savages, just richer savages for having bamboozled us out of trillions of “aid.”

None of Bush’s policies have been popular, hence his dismal approval rating. Obama is not changing any of those policies which is why his approval/disapproval ratings are starting to track along Bush’s numbers.

Weeeeeeeeee!

15

[quote]Valor wrote:
BigJawnMize wrote:
PRCalDude wrote:
BigJawnMize wrote:
PRCalDude wrote:
BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

We had much lower public debt back then. We need the economy to grow at a certain rate to keep up with the interest payments on our debt.

Heckuva job, Obama!

Not here to defend Obama, but he did inherit an economy in absolute free fall. To say he or Geitner is any different than Bush or Paulson in this regard is wrong, generally both presidents and their advisors have had equally poor performance on this issue.

I agree. But I’ve been criticizing Bush for years on this forum, so I didn’t think it necessary to say “Heckuva job, Bush!” also.

But Obama has had 9 months to reverse Bush’ fiscal policy. He was supposed to give us Hopenchange.

No doubt man. I do think 8 years Bush’s Foreign Policy, Tax/Fiscal Policy, and Energy policy has hurt this economy much more than the 9 months that Obama has had. Shit, if Obama can get us to some resolution in Iraq and Afganastan that lessens our involvement there we are going to be saving a good chunk of cash. Now if he just wouldn’t spend it on the insane Health Care Reform package that is proposed.

I dont know that Obama has spent more than Bush did in 8 years…but he sure is trying.[/quote]

The difference is Obama is trying to do it in 1 year instead of 8 years.

16

The government is only good for a few things. Protecting and Infrastructure. Bush decreased taxes, but he forgot to cut government spending. Once someone is in power they think they need to help the poor. This is what happened to Bush. His morals just could not let him push the poor under the bus. Contradicts what he said on the campaign trail, but maybe or maybe not right.

Over the course of time Democrats are becoming more left and Republicans are becoming more moderate. I think Republicans of today are more like 1940-1950 Democrats. The libertarians are now filling in the void on the right. Libertarians are more like 1940=-1950 Republicans. A politician can say what they want, but until the work shows fruit you are doing nothing but speaking words. Bush spoke words and did nothing to really make change. Obama is now doing the same thing. We need our leaders to make some very tough decisions, and quit worring about loosing their job. We really have not had a leader in a long, long time.

17

[quote]dmaddox wrote:
The government is only good for a few things. Protecting and Infrastructure. Bush decreased taxes, but he forgot to cut government spending. Once someone is in power they think they need to help the poor. This is what happened to Bush. His morals just could not let him push the poor under the bus. Contradicts what he said on the campaign trail, but maybe or maybe not right.

Over the course of time Democrats are becoming more left and Republicans are becoming more moderate. I think Republicans of today are more like 1940-1950 Democrats. The libertarians are now filling in the void on the right. Libertarians are more like 1940=-1950 Republicans. A politician can say what they want, but until the work shows fruit you are doing nothing but speaking words. Bush spoke words and did nothing to really make change. Obama is now doing the same thing. We need our leaders to make some very tough decisions, and quit worring about loosing their job. We really have not had a leader in a long, long time. [/quote]

I cannot think of a time where we had a real leader, one of who wasn’t whored out to lobbyists. When was the last time we had a leader who was really in it for the best interests of this country and it’s citizens.

I do not believe that you spend money to get out of debt.

18

[quote]MaximusB wrote:

I do not believe that you spend money to get out of debt.[/quote]

Then, apparently you aren’t qualified to be president or a member of congress.

19

[quote]BigJawnMize wrote:
John S. wrote:
While Bush is responsible too, Obama bought the economy with his stimulus package. He was the one saying sun shine and rainbows would follow if we passed his stimulus.

Again I don’t disagree. It was insane to propose the type of stimulus package (infrastucture projects and inventory reduction) would hit the streets quickly and turn things around. That said his package is just a different style than the quick hit tax cuts that the Republicans have done in the past. The money from his stimulus is going to linger in the economy much longer. My personal preference as a more libertarian thinker is no government intervention. That said though it is too soon to tell if this idea was a decent choice. [/quote]

Maybe so. But the issue is really one of TRUST. No good business person will invest if all the profits are to be taken away or some new (retroactive too!) regs come along and OBAMA is just NOT trustworthy in these regards. He always figures out a way to spend our money or to pass some new anti-business policies. Would YOU expand a business in this environment and with these guys in charge?

The USA is becoming African-ized in an economic sense. No one invests because the potentate confiscates the profits. Thus the people suffer.

20

[quote]BigJawnMize wrote:
PRCalDude wrote:
BigJawnMize wrote:
There have been times in this country’s history that 3% was celebrated. Many yearly quarters of the 50’s and 70’s saw growth under 1%. Today 3% isn’t great, but a little perspective is needed before we jump to blame somebody or jump to another government stimulus.

We had much lower public debt back then. We need the economy to grow at a certain rate to keep up with the interest payments on our debt.

Heckuva job, Obama!

Actually during the 50’s we had very high public debt as a percentage of GDP. We were paying down the cost of WWII. I am not sure the 70’s debt numbers, but would assume that defense spending fro Vietnam spiked those numbers as well. Another argument for the libertarian principle of peace–less public debt.

Not here to defend Obama, but he did inherit an economy in absolute free fall. To say he or Geitner is any different than Bush or Paulson in this regard is wrong, generally both presidents and their advisors have had equally poor performance on this issue.
[/quote]

To put any of this in perspective, you have to understand GDP calculations. You also need to understand context and other factors.

GDP growth by itself is almost completely worthless. You have to understand the shortcomings of the calculation itself and the inflation calculation that are supposed to normalize it.

Comparing ratios or GDP during different periods is also a bit too simple to tell us anything. You again need to understand the shortcomings of the calculation. You also have to understand fundamental differences in the economies that are being compared and how GDP calculation may not tell the whole story. A GDP comprised mostly of american goods, made with american parts, made with american materials and paid for with savings is not the same as a GDP comprised of foreign products sold domestically and services purchased with credit card debt.

The fact is that there is very little the most popular calculations or ratios can tell us about the health of an economy. Employment, debt to income ratios, savings rates, and adherence to basic economic principals are more useful than gov’t manipulated GDP or inflation calcs.