Recession, what stinking recession?

[kinggovernor]

Economy rebounds in 2Q, mostly spurred by exports
Thursday August 28, 12:14 pm ET
By Jeannine Aversa, AP Economics Writer
Economy rebounds at better-than-expected pace in the spring, mostly spurred by exports

WASHINGTON (AP) -- The economy shifted to a higher gear in the spring, growing at its fastest pace in nearly a year as foreign buyers snapped up U.S. exports and tax rebates spurred shoppers at home.

The Commerce Department reported Thursday that gross domestic product, or GDP, increased at a 3.3 percent annual rate in the April-June quarter. The revised reading was much better than the government's initial estimate of a 1.9 percent pace and exceeded economists' expectations for a 2.7 percent growth rate.


The rebound comes after two dismal quarters. The economy actually shrank in the final three months of 2007 and limped into the first quarter at a feeble 0.9 percent pace. The 3.3 percent growth in the spring was the best performance since the third quarter of last year, when the economy was chugging along at a brisk 4.8 percent pace.

Still, the growth pickup is not likely to be seen as a lasting sign that the fragile economy is back on solid ground.

Federal Reserve Chairman Ben Bernanke recently warned the economy will be weak through the rest of this year. A growing number of analysts fear that the country will hit another economic pothole in the fourth quarter, as the bracing impact of the tax rebates disappears. And there are concerns exports could tail off as other countries' economies slow down.

GDP measures the value of all goods and services produced within the U.S. and is the best barometer of the country's economic health.

The economy is the top concern for Americans. Democratic presidential contender Barack Obama favors a second government stimulus package, while Republican rival John McCain supports free trade and other business measures to energize the economy.

The White House said the latest GDP report shows the economy's resilience in the face of many challenges.

"We're pleased with the numbers" said White House press secretary Dana Perino. But she added: "No one is doing a victory dance."

On Wall Street, the GDP report lifted stocks. The Dow Jones industrials were up more than 180 points in afternoon trading.

"Many people thought the sky was falling this spring ... but the economy actually expanded quite solidly," said Joel Naroff, president of Naroff Economics Advisors in Holland, Pa.

Still, housing, credit and financial troubles have pounded the economy.

In turn, employers have clamped down on hiring, driving the nation's unemployment rate up to 5.7 percent in July, a four-year high. The Labor Department said Thursday that the number of people signing up for jobless benefits declined last week for the third straight period, but claims remained above 400,000, an indicator of a slowing economy.

Employers have cut jobs every month this year and wage growth is trailing inflation. That combination raises concerns about the future of consumer spending, one of the pillars underpinning the economy.

The biggest factor in the second-quarter's rebound was robust sales of U.S. exports to other countries. The weaker value of the U.S. dollar has bolstered those sales. Exports grew at a 13.2 percent pace in the spring. That was much stronger than the government's initial estimate of a 9.2 percent growth rate, and more than double the 5.1 percent growth rate logged in the first quarter.

Imports, meanwhile, fell at a 7.6 percent annualized pace in the spring, as economic troubles in the U.S. crimped demand for foreign-made goods.

The improved trade picture added 3.1 percentage points to second-quarter GDP, the most since 1980.

U.S. consumers boosted their spending at a 1.7 percent pace in the second quarter. That was slightly better than the 1.5 percent growth rate initially report and marked the best showing in nearly a year. Government stimulus checks of up to $600 a person helped energize shoppers who had hunkered down amid the economy's problems.

One of the country's biggest problems -- the housing collapse -- was evident in the GDP report.

Builders cut back at an annual rate of 15.7 percent in the second quarter-- although that was a better showing than early this year and late last year.

Businesses trimmed spending on equipment and software in the spring. And, they reduced investment in inventories, but not as much as initially estimated by the government. That was another factor contributing to the improved GDP reading.

One measure of corporate profits showed companies losing ground in the second quarter. After-tax profits fell 3.8 percent in the spring, compared with a 1.1 percent increase in the first quarter.

An inflation gauge tied to the GDP report showed all prices rising at a rate of 4.2 percent in the second quarter, the same as initially estimated.

Taking out energy and food, prices rose 2.1 percent. That also was unchanged from the government's previous estimate but remained outside the Federal Reserve's comfort zone.

With the economy still coping with fallout from housing and credit problems, the Fed is expected to hold interest rates steady at its next meeting on Sept. 16, and probably through the rest of this year.

Economy rebounds in 2Q, mostly spurred by exports: Financial News - Yahoo! Finance

So things aren't great but they aren't as bad as the 1930s like some Democrats have tried to insist this week.

[7960]

Originally Posted by kinggovernor

Economy rebounds in 2Q, mostly spurred by exports: Financial News - Yahoo! Finance

So things aren't great but they aren't as bad as the 1930s like some Democrats have tried to insist this week.

just wait, they're going to spin it that bush is managing the economy to make it look better in an attempt to take away one of obama's talking points.

[kinggovernor]

Originally Posted by 7960

just wait, they're going to spin it that bush is managing the economy to make it look better in an attempt to take away one of obama's talking points.

that stupid bush slowed down the economy with his economy lever the last two quarters, now that we have put all our eggs in that basket he has sped up the economy lever. He is so stupidly diabolical.

[7960]

Originally Posted by kinggovernor

that stupid bush slowed down the economy with his economy lever the last two quarters, now that we have put all our eggs in that basket he has sped up the economy lever. He is so stupidly diabolical.

they had the DNC in denver to get away from his diabolical tools, but he still fired up his weather-maker and got them all the way in the middle of the country!

Democrats have run into some bad weather as they gather in Denver for their national convention.

Two weak tornadoes touched down between Castle Rock and Parker, Colo., Sunday afternoon, roughly 20 miles away from the cite of the Democratic National Convention, reported Denver TV station KMGH.

The first tornado was reported at 5:50 p.m. and the second touched down about 10 minutes later. Both tornadoes dissipated by 6:15 p.m.

[kinggovernor]

Originally Posted by 7960

they had the DNC in denver to get away from his diabolical tools, but he still fired up his weather-maker and got them all the way in the middle of the country!

that is more evidence of human caused global warming

[7960]

Originally Posted by kinggovernor

that is more evidence of human caused global warming

but seriously, you're going to hear claims that bush (bush's administration) is making the numbers look good to favor mccain.

wait for it.........

[Swift]

Isn't it amazing?! Bush is so stupid, he can control the economy at will whenever he wants. Man I mean, he orchestrated 9/11 and now he can control the weather and the economy. I'm just glad a stupid person is doing it. Could you imagine what would happen with a genius democrat in the white house?

[kinggovernor]

Originally Posted by 7960

but seriously, you're going to hear claims that bush (bush's administration) is making the numbers look good to favor mccain.

wait for it.........

no it will be the government stimulus checks shit that Obama wants more of, even though it was our Exports (Free Trade, son) that was the source of this quarter's growth

[Stylerod]

Originally Posted by 7960

they had the DNC in denver to get away from his diabolical tools, but he still fired up his weather-maker and got them all the way in the middle of the country!

[WickedLou9]

It doesn't really change the banking crisis and housing downturn. I also wonder how much of that was due to the stimulus package, and will this rate of growth continue now that the stimulus checks have been spent? Probaby not. Anyone who thinks our economy is A-OK should be kicked in the head. We have falling home values, the stock market in the toilet, small banks failing all over the country, the fed might have to bail out the FDIC, high fuel prices are cutting into profits for many industries, people are cutting back spending. If the GOP tries to spin this GDP growth rate as proof that somehow the economy is fine, they will just prove to independant voters how out of touch they really are.

[Ardentfrost]

GDP increase of 3.3% with inflation of 5% = overall loss

EDIT: PS, 5% was a number out of my ass. The article says 4.2%, but those numbers are provided to us by the government and who knows if they're really right or not.

[DosEquis]

Colbert had a great bit on this last night. Basically started like the thread title, one gentleman was cleaning up...and as it turned out he was a repo man.

[WickedLou9]

Originally Posted by Ardentfrost

GDP increase of 3.3% with inflation of 5% = overall loss

EDIT: PS, 5% was a number out of my ass. The article says 4.2%, but those numbers are provided to us by the government and who knows if they're really right or not.

And either way, these are historical numbers. It may simply be indicating that we are finally starting to climb back out of the hole, although we still have a long way to climb.
Another but: Europe is starting to have econmic worries of it's own and the EU economy is not as resiliant as is ours. That could have impact here.

US GDP rise gives false recovery hope - Times Online

The American economy was more robust in the second quarter than previously reported, according to revised figures that show growth of gross domestic product for the period was 3.3 per cent, ahead of previous estimates of 1.9 per cent.
The revised figures from the Commerce Department compared with a 0.9 per cent increase in the economy in the first quarter.
However, analysts cautioned that much of the GDP growth was driven by the weak dollar, which boosted exports by making America's goods and services cheaper for foreign buyers.
The impact of more than $100 billion (£54.7 billion) worth of tax rebates, made by the US Government to its citizens, also helped to offset the impact of the US housing slump and high energy costs, analysts said.
The US will benefit less in the second half of the year from exports, as the economies of Europe and Japan slow and the dollar continues to gain value.
In addition, as many of the tax rebates have been spent, the economy will not continue to benefit from the fiscal stimulus in the second half.
Lou Crandall, chief economist at Wrightson Icap, said: "The revised GDP figure is certainly not a bad thing, but it is an imprecise estimate of the true health of the economy. It is still the case that GDP could turn negative in the second half."
Brian Fabbri, chief US economist at BNP Paribas, added: "The GDP figure may not say it but this country is still in trouble. Corporate profits have fallen for four consecutive quarters, companies have fired 60,000 workers a month in the past seven months and the outlook for the economy is pretty grim."
Separately, the Labour Department released new figures showing that the number of initial unemployment benefit claims fell by 10,000 to 425,000 in the week ended August 23, marking its third successive weekly decline.
But the jobless figures were in line with expectations and did not reflect a significant change in the underlying economy, analysts said.

[Swift]

It's very obvious the economy is not great right now. But it's not horrible, not even early 90's horrible. So what's the deal? Why is everyone crying so much? Gas prices are raising the price of almost everything else. Democrats are blocking the only way to bring down the prices. In all honesty, what can we do other then drill to bring down the price of gas?

If the price of gas goes down the economy will most likely settle out. As people will for more confident in spending their money. But when you have to worry about 75$ per tank, it tends to make one sensitive to spend "disposable" income.

[7960]

Originally Posted by Swift-Bass

If the price of gas goes down the economy will most likely settle out. As people will for more confident in spending their money. But when you have to worry about 75$ per tank, it tends to make one sensitive to spend "disposable" income.

i saw a comedian not too long ago and he said "remember when you used to pull up and say 'just give me $10'? the other day I pulled up and said 'just give me $70'."

I think he expected a laugh. Nobody laughed.

[kombayn]

It's time to drill, and Congress needs to stop being pussies about it. Once drilling is announced, it'll make the stock market start selling their stocks in oils. That'll bring relief, right now gas is $3.79/gal in Los Angeles, which not great is better than last month when it was $4.59/gal. Oil's stock has been declining for a couple months now, which is helping our pockets. I'm hoping by the end of the year, some legislations pass to get drilling done. We do it on our beaches in Southern California, no one complains here except the hippies.

[WickedLou9]

Originally Posted by kombayn

It's time to drill, and Congress needs to stop being pussies about it. Once drilling is announced, it'll make the stock market start selling their stocks in oils. That'll bring relief, right now gas is $3.79/gal in Los Angeles, which not great is better than last month when it was $4.59/gal. Oil's stock has been declining for a couple months now, which is helping our pockets. I'm hoping by the end of the year, some legislations pass to get drilling done. We do it on our beaches in Southern California, no one complains here except the hippies.

It's funny because everyone was saying that speculators had nothing to do with the current high price. As it would seem, they had quite a bit to do with it. Drilling for oil , or atleast saying that we plan to drill for oil is entirely aimed at speculators. The supply of oil right now will not change if we allow offshore drilling, yet the price of oil, right now, would go down because of speculation about future supply. The fact is we are well supplied right now and the price is high now because people are speculating that we won't be well supplied in the future. Supply and demand? Not really at work here. The price has fluctuated wildly in the past year, and neither supply nor demand has changed very much in that time.

[Rouger2]

The economy should stay in a slow down. If it heats up we will just buy more chinese and foreign stuff running up the trade deficit that is so huge right now one cannot believe the numbers, and it continues billions and billions of dollars into the distance future putting all those dollars in chinese and other foreigners hands. Then we just have to borrow more and more money from them to cover our debt paying interest. We have allowed this trade deficit to happen or congress has because we didn't know what was happening. For our over indulgence we must pay with the economy we have. Lets just survive it but I'm afraid it will last a long time. I think it will go on like this never getting to bad that it cannot be handled until the trade deficit goes away.

[Donkey®]

I really think it's somewhere in the middle. The economy is far from great but it's also far from destroyed.

Ok guys, a couple things...

1) As I have said for awhile we're probably NOT in a recession. Been saying this since last year, that we'd probably teeter on the brink without actually falling into a recession.

2) As I've said for awhile if we go into recession I do not expect a long protracted recession overall fundamentals are strong. The big question mark is financials which have the potential to send us into a major recession but that seems unlikely.

3) I think the numbers published today are downplaying the current situation. A MASSIVE jolt of government stimulation (see stimulus checks and fed injections) have produced a very solid growth number for the 2nd quarter. Take away the stimulus and take away the fed injections and the real growth number is much closer to .8% instead of 3.3%.

Still growth, still not a recession but very tepid growth. Hate to bust the bubble of enthusiasm, but I'm just trying to bring a bit of a reality check to the party, thats all