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Economy Grows at 2.5 GDP in Third Quarter

Guest Blogger: Mike Sax

This time the consensus was right. While we had worried earlier that such optimism could be dashed, I had concluded that the trend in data lately has unquestionably been up.

For my earlier piece-that I wrote before dawn-please go here.

As it turns out GDP growth increased by exactly the 2.5 percent predicted. At the moment it seems that while we haven’t felt confident-recent consumer confidence is at its lowest level since the 2007-2009 recession-things have been getting better. Consumer spending, which accounts for 70 percent of economic activity, grew by 2.4 percent as opposed to only .7 percent in the second quarter.

Similarly, business investment picked up:

‘Similarly, while some business surveys have pointed to a contraction in factory output, there is little sign corporate America is cutting back spending. Indeed, recent data has suggested business spending is picking up. Business spending rose at a 16.3 percent pace as companies splurged on equipment and software, and invested in nonresidential structures. “

Like consumers it seems that business spending exceeds confidence. Unemployment claims were down 2,000 to 402,000 and have clearly shown a downward bias in recent months though sustained job growth is only indicated when they are able to consistently dip beneath 375,000 a week.

“Apart from consumer and business spending, growth in the third quarter was also supported by a smaller U.S. trade deficit, and the careful management of business inventories bodes well for fourth-quarter production.”

“The GDP report also showed a moderation in inflation pressures, with the personal consumption price index (PCE) rising at a 2.4 percent rate in the third quarter, slowing from the April-June quarter’s 3.3 percent pace. Core PCE, which excludes food and energy, rose at a 2.1 percent rate after increasing 2.3 percent in the second quarter.”

[via CNBC]

Also found at Diary of a Republican Hater

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October 27, 2011 - Posted by | Economy, Jobs, Politics, President Barack Obama |

7 Comments »

  1. How much of the BAD ECONOMY is Republican and media HYPE? Everyday it’s doom and gloom on our TV and radio stations. Born in 1939, and growing up with parents and all of their friends telling their Great Depression stories, today’s generation doesn’t realize how bad a REAL depression really is. Spending part of my youth during WWII in a family of an Army Private, I too remember only ONE cheap dollar toy at Christmas and Thanksgiving 1944 when my Mother “carved” some hot dogs at our dinner. Yes there are pockets of high unemployment and foreclosures around the country but is it as bad “everywhere” as we are being led to believe. My stock portfolio had once lost 3/4 of its value under George W. Bush and now back up to near the prices I initially invested.

    Living in Texas with thousands of want-ads for jobs available, a whole section of the Sunday Houston Chronicle devoted to jobs every week, we don’t feel the pinch here. Hewlett-Packard had talked of closing down it’s PC operation here (the old Compaq factory) but are going to stay in the PC business now (only discontinuing the Palm tablet which is being outsold by iPad and Android). I recently noticed HP was running an ad for 136 jobs here. Sure they are high-tech positions going available and sadly we have too many poorly educated or unskilled American workers. They will probably be filled by Houston’s growing Indian and Asian immigration.

    I fear our outsourcing to China means factory jobs are never going to return. Onion farmers in Colorado and Georgia cannot get Americans to work in their fields and with current racist attitudes driving away Mexicans, their crops including tomatoes and blueberries now are rotting in the fields. Americans just won’t work on farms where the work is “too hard” and wages are too low. A Colorado farmer even offered $10.80 an hour to white Americans to pull onions and most only worked till noon their first day, never returning after lunch.

    Comment by grantinhouston | October 28, 2011 | Reply

    • Well no question Grant, there are other ways of looking at it. The economy has been rough for many of us but we’re comparing it to the better times we have known during the postwar era. If you look back to the Depression things were much worse then.

      Even though wages are down right now-unemployment will drive down wages by definition-it’s also true that we have much more “consumer wealth” now than then. The median family certainly lives much better than the era you talk about.

      However the numbers for the first part of the year were weak-1.0 GDP for the first half. This was caused by some stuff we had no control of like Japan, worries over Europe, etc.

      I don’t know that I agree it’s been all propaganda but I do think the GOP saw the tough economy as their trump card. With the economy showing clear sings of snapping back from these exogenous shocks what do they have to say now?

      Comment by Mike L Sax | October 28, 2011 | Reply

      • GDP just grew by 2.5% in this past quarter of the year. October may be the best month EVER for Wall Street with the Dow Jone, S&P, and NASDAQ not looking this good in a long time. The movement now is TOWARDS a better economy which if often not reported nor emphasized by the media which seem to go along with GOP faux “doom and gloom” talking points. It’s the direction of the economy that is important except to all of the the “I want it all and I want it all now” crowd. All graphs have been looking up since Bush.

        http://abcnews.go.com/Business/gdp-grew-25-percent-boosted-consumer-spending-double/story?id=14821833

        My parents graduated from high school in 1932, the year that voters dumped President Hoover and the GOP. Since only ONE student in their class could even afford a cap and gown, she declined to in solidarity and everyone walked across the commencement stage in their best clothes. These students could not afford a yearbook nor a prom. Some bought 10-cent notebooks at the “five and dime” and exchanged wishes/autographs with each other. Their graduation “party” was my father driving his “steady”, my mother, and another couple to a state park in his family’s Model T Ford for a picnic dinner, potato salad and chicken the girls had fried ahead of time. Now even in poor communities, high school seniors rent stretch limos to take them to fine restaurants and the dance, all decked out in fine formal wear complete with flowers all caught by professional photographers. Some kids have parents who even rent hotel rooms with hot tubs for their kids’ “shack up” complete with a chilled bottle of champagne. My parents, who passed away two decades ago, once said they wished the pampered younger generation had to experience the Great Depression for only ONE day.

        Comment by grantinhouston | October 28, 2011 | Reply

        • hear hear

          Comment by hockley | October 29, 2011 | Reply

  2. No, I hear you grant. Again what you’re describing is an increase in “consumer wealth” as they put it in economics. By consumer wealth you can point out that even the poorest people have access to things like cell phones, the internet, etc, which are also a kind of wealth. In this sense you can argue that the most poor of today are in significant ways richer than even the wealthy of previous generations.

    Nevertheless we have been struggling-high unemployment even if not as high as the depression.

    I agree the news we just got is good and I think the economy may be coming back though the proof is in the pudding.

    Comment by mike sax | October 29, 2011 | Reply

  3. Consumer spending is UP, too. Just heard that Americans will spend $2.5 BILLION just for Halloween costumes for this weekend! Savings is down as many don’t feel leaving their money in banks for a measly 0.1% interest is worth the return.

    http://www.time.com/time/nation/article/0,8599,2098116,00.html

    BTW, today is the 82nd anniversary of the Black Tuesday, October 29, 1929 stock market crash. Let’s hope we never see another such day:

    http://mugsysrapsheet.com/2011/10/29/a-brief-history-lesson-the-great-stock-market-crash-of-1929-82-years-ago-today/

    Anyone who bought stocks in mid-1929 and held onto them saw most of his or her adult life pass by before getting back to even. I inherited stocks from my maternal grandparents who did hold onto their stock portfolio rather than sell what were essentially worthless certificates by October 30 of that dark year. My great grandfather, a physician had just passed on his section of farmland and homestead to my grandfather upon his death. My grandfather tried to borrow from his bank to buy out his two sisters’ portion of the estate since both were married to well off farmers and wanted no more land. That bank failed and my grandfather lost everything including the family homestead and 3 other farms. But he did hold onto the stocks which some 45 years later did recover by the time of his death. I never understood that grandfather, a die-hard Republican, never having a good word for FDR whereas my paternal grandfather, son of a poor German immigrant, was able to borrow from FDR’s “farm relief program” and thus saved his 180 acre farm. So I heard nothing but praise for FDR from that grandfather for saving his farm.

    Comment by grantinhouston | October 29, 2011 | Reply

  4. If people are spending rather than saving that’s great, cause that’s what we want. The trouble unti lately was hoarding, saving, etc. Spending is what will get us out of it.

    Comment by Mike L Sax | October 30, 2011 | Reply


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