U.S. GDP slows to 1.1% rate in fourth quarter

[UpInArms]

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38744.354567419-858625624&siteID=mktw&scid=0&doctype=806&

WASHINGTON (MarketWatch) - Growth in the U.S. economy slowed dramatically to a 1.1% annual rate in the fourth quarter, the weakest growth in three years, the Commerce Department estimated Friday. The slowdown in real gross domestic product from 4.1% in the third quarter to 1.1% in the fourth was largely due to weak auto sales, slower business investment, a rise in imports and a large drop in federal spending. Inventory building was the main engine of growth in the quarter. Final sales fell 0.3%, the first decline since 2001. The core personal consumption expenditure price index rose at a 2.2% annual rate in the quarter. For all of 2005, the economy grew 3.5%, down from 4.2% in 2004. The personal savings rate was negative for the first year since 1933.

...short blurb...

[Deja Q]

1. Trickle-down economics working as usual.

[VegasWolf]

11. Yes, and it worked so well last time too. /sarc nt

[shaniqua6392]

2. But wait! I don't understand.

Bush says repeatedly that the economy is growing stronger every day! :sarcasm:

[Deja Q]

5. Offshoring and offpeopling and trading with the enemy...

THEIR economies are growing stronger. By using our hearts to pump their lifeblood.

Fortunately, it's like you at age 12 showing your 9 year old nephew how to turn on and use the garden hose... he'll turn it on behind your back and drown you with it.

So when's China (and India, whose insults against American citizens would otherwise be treated as an act of aggression) going to turn the water on full blast?

[liberal N proud]

3. Another fine example of just how rosy our economy ISN'T

How will the repukes and their media whores spin this?

[Zynx]

4. If we see anything like that performance continuing into the first quarter

watch out. That was a very weak number. If we see continued sluggishness in consumer spending driven by continued weak home and auto sales in the reports of the next few months, a recession is a possibility by the end of the year.

[Deja Q]

7. Right on time for every other "peak oil" prediction.

So live life in a state of happiness when possible. We only have 2~20 months left.

[John Q. Citizen]

6. The only thing keeping us out of a recession for the last few years

has been government expenditures on the wars.

[Deja Q]

8. and since * will not attack Iran, or Axis #4 known as Pakistan...

we're boned.

[leftchick]

9. since 1933???

that is the year my grandfather committed suicide over his financial loss in the Depression. This is ominous.

[1932]

12. Yeah. America is a now a net debtor nation over the last quarter even

after considering all the wealth accumulating to a very small number of people.

Our government has been borrowing at unprecendented levels the last few years, and what has it bought? Has it been an investment in infrastructure that has been paid back by accumulation of wealth in the form of personal income? Nope. It has purchased a nation that is also borrowing more than it spends, and I'm pretty sure that, on an individual level, that money isn't being invested in people's futures. I bet it is mostly interest on existing debt and spending on the bare essentials (like transportation, heat, health care, and food) and on consumer goods that don't pay back very much on the investment.

[1932]

10. "inventory building was main engine of growth"

Interesting.

If consumer spending doesn't buy up that inventory, there's going to be a whiplash with that number next quarter when there's no inventory building because the warehouses are filled with unsold products.

Maybe Republicans will tell businesses to finally give people the raises they've been waiting for for 5 years? But even if they do, will the money go to consumption, or to paying down debt?

[enid602]

13. growth

This growth rate is not too impressive when you consider how much the government is spending. You'd think we'd be going full barrel right now. What happens if we go into a recession? Traditionally, we would have to start priming the pump and cut taxes, but those two options have already been played to death.

[1932]

14. So true. The other option is monetary policy, and that doesn't leave

much room either. We could go back down to 1% rates I guess. It would be interesting to see what happened to the dollar in that case.


And this all suggests that America's real problem is polarization of wealth, just like it was before the great depression.

We have shifted all the burdens of society on to people who work for a living, and taken them off the very wealthy, and the economy is going to stagnate as a result.

It probably doesn't help us that there are now enough countries in the rest of the world who are doing the opposite -- who are much more Keynesian. They will siphon off all the economic energies from the US, further compounding our problems.

There's only one solution. It is a radical shift back to the New Deal -- a serious committment to Keynesian policies, and NOT military, pro-corporate Keynesian economics, but pro-people Keynesian economis.

[bananas]

15. "Want to see something *really* scary?? (the Truth about our GDP)"

I hope everyone's seen this:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=364&topic_id=243843&mesg_id=243843
Want to see something *really* scary?? (the Truth about our GDP)
5. Here's the full article at calculatedrisk.blogspot.com >>>>
http://calculatedrisk.blogspot.com/2005/12/gdp-growth-with-and-without-mortgage.html
http://www.financialsense.com.nyud.net:8090/Market/cpuplava/2006/images/0125.a.gif

[NoAmericanTaliban]

16. Thanks for the info..

Housing market is what is propping up the GNP. Once the interest rates go up on equity loans we will be in a world of hurt, especially considering the low savings amount. Similar situation as with the dot com bubble which was propped up by inflated stocks & stock market schemes.

[kineneb]

19. only real job growth has been in construction/related fields

All other jobs created were in service sector. I don't have stats offhand, but Paul Craig Roberts (of all people) has been documenting this in his columns since last summer.

[wicket]

18. What is Mortgage Equity Withdrawal?

Pardon my ignorance- is that when people draw money from their equity line to pay other bills?

[bananas]

21. yes - refinancing

if local house prices increased by $100k,
refinance at the new value and get $100k in your pocket.

[AX10]

29. The housing market is what is keeping the economy out of recession.

Once, that goes downward, the economy will follow suit.

[Festivito]

31. It's the BORROWING on the housing market, not housing itself.

The borrowing has stopped now that the housing bubble has stopped, and will soon pop.
Much fewer home improvement loans.
Why improve if you cannot sell the house, certainly not for as much as an upgrade will yield on final sale.

[wicket]

17. "The personal savings rate was negative for the first year since 1933."

My god, this is going to be a disaster. :wow:

[AX10]

20. The recession is coming.

[SupplyConcerns]

22. They could easily lie about the GDP

Just like they lied about how much the health care bill would cost so congress would pass it. Or how, in plain view, the numbers for unemployment are v

[greiner3]

23. It seems that they forgot Katrina and Rita.

In the fall, I remember that GDP was predicted to fall 3/4 % in the 4th quarter. Well, I guess it did, it fell 4 3/4%'s. Amazingly, the market is up most of a percentage point on the bad news. The only people who are not rejoicing are the poor, the near poor and the people too poor to give a damn!

[brentspeak]

24. But Halliburton recorded a record profit!!! We're all saved!

:banghead:

[OKNancy]

25. kick

[BR_Parkway]

Growth pace weakest in three years

http://news.yahoo.com/s/nm/20060127/bs_nm/economy_gdp_dc
By Glenn Somerville
31 minutes ago

WASHINGTON (Reuters) - The U.S. economy ended 2005 on a surprisingly soft note as consumer spending grew at the slowest rate since 2001 and businesses were less eager to boost investment, a government report on Friday showed.

The Commerce Department said gross domestic product, the broadest measure of economic activity within U.S. borders, expanded at a weak 1.1 percent annual rate in the October-December period -- little more than a quarter of the third quarter's 4.1 percent rate.

It was the weakest growth rate for any three months since 0.2 percent in the fourth quarter of 2004, much below what Wall Street had anticipated, and initially sent stock futures and the dollar tumbling and bond prices soaring.

<snip>

The Bush administration has been on a campaign to seek credit for an expanding economy and clearly did not welcome the tepid GDP data.

Happy SOTU there Shrub - you're doing a heckuva job

[ClintonTyree]

26. Looks like his economic propaganda tour.............

will go the way of his "strengthen social security" tour. The cement-head just doesn't get it. His agenda is all fucked up. It's pretty hard to sell the American people on what a great economy we have when everyone is just eking by. Except the rich, of course. The "bush economic miracle" has only worked for them, everyone else has been left out.

[jackbourassa]

27. You know what...

Considering that inflation hit 3.8% in the same quarter, that means that the rate of growth actually declined in real terms.

And if you add to that:

1) The fact that even when growth was stronger - it was highly concentrated at the top.

2) Oil prices are spiking again.

3) The housing market is deflating.

4) The auto industry is in free fall.

I think it's going to be a long cold winter (and beyond).

[OneBlueSky]

28. and then there's this . . .

http://www.financialsense.com.nyud.net:8090/Market/cpuplava/2006/images/0125.a.gif

[hatrack]

30. And, of course, five or six yield-curve inversions in the last month?

However many it's been . . .