NYT: U.S. Economy Still Expanding at Rapid Pace

[DeepModem Mom]

U.S. Economy Still Expanding at Rapid Pace
By DAVID LEONHARDT and VIKAS BAJAJ
Published: April 28, 2006

Gas prices are rising, as are mortgage rates. House prices in many once-hot markets have started slipping. The American automobile industry shows no sign of recovery. And the paychecks of most workers have not even kept up with inflation over the last four years.

Yet the national economy continues to speed ahead, with families and businesses spending money at an impressive pace. Forecasters expect the Commerce Department to report this morning that the economy grew at a rate of around 5 percent in the first quarter, the biggest increase since 2003.

The industries leading the way are ones that have been receiving far less attention than cars or real estate, though they have been adding thousands of new workers each month. In the last year, hospitals, doctors' offices and other health care employers have created almost 300,000 jobs; restaurants have added 230,000; and local governments — including schools — have added 170,000.

"The good news for the U.S. is that growth has diversified," said Nariman Behravesh, chief economist at Global Insight, an economic research firm. "We aren't just relying on the consumer and housing."

Testifying before Congress yesterday, Ben S. Bernanke, the chairman of the Federal Reserve, suggested that the Fed would soon take time out from steadily raising its benchmark short-term interest rate to weigh the impact of its two-year money-tightening campaign....

http://www.nytimes.com/2006/04/28/business/28econ.html?hp&ex=1146283200&en=de2215ef6fb631ab&ei=5094&partner=homepage

[1932]

1. Thank heaven...

...for credit cards...and corporate bonds...and government bonds...and the Chinese.

[TomInTib]

One must keep these pronouncements in perspective.

"with families and businesses spending money at an impressive pace"

That just means that families and small businesses are spending themselves into oblivion.

The "expanding economy" has no positive impact for you and me.

[oscar111]

3. If GDP is up, but wages down, the economy is down

If the boss gets all the extra production shown by the GDP,
and we get none of it,

the economy is down .

[still_one]

2. It is all B.S.

The so-called business gurus are implying that everything is fine, ignoring the increasing debt load, forclosure rate, and "true unemployment".

They have been notoriously wrong, and they are trying to feed the line that inflation is under control, except they always exclude food and energy from their figures.

This economy is hanging by a thread, and it won't take much for us to go into a deep recession

[peanutbrittle]

4. Just curious how most feel about "rank & file" wages?

avg. $16.49 for skilled employees, which sounds about right for what I'm seeing out there as to what businesses want to pay and can almost be considered the glass ceiling in some industries. Do most feel this is enough or...? What category would this be considered..lower middle class? middle class? Is it enough to sustain a decent lifestyle for most?

For me it's not enough and seems to be the glass ceiling. 28yrs experience architectural woodworker.
Hard to find work in this industry for much more than $15 to $20 per hour.
THoughts

[seriousstan]

8. My wife and I have managed that income into a few investment properties and

have done quite well.

[peanutbrittle]

10. Good for you! Sounds as if you are managing it well.....

I seem to have a hard time saving any money...always bills due. Mortgage,vehicle payments, insurance, utilities, groceries, fuel etc always seem to chew it up and not much left.

Sometimes experience a little downtime between projects doesn't help at all.

If I want to take a vacation either no time or no money...never can get the two to coincide...lol

[seriousstan]

11. Explain this "vacation" thing.

[peanutbrittle]

13. Sorry..can you be a little more specific?

Not sure I understand what you're saying...

Although, if what I think you are saying is that a vacation seems to be out of the equation...I agree!

Thanks

[Digit]

5. You could have fooled me!

I am unemployed and every single week I look for jobs.

I had decided earlier today that I was going to apply for every job in my town even if it paid only $10/hr, as long as they offered benefits. I am disabled (knee), so it had to be a desk job of some sort and I am of course prevented from doing heavy lifting.

I was unable to find ANY jobs I had not already applied for. What I did notice was more part-time jobs than usual. I do not know whether this is a trend, but it is troubling.

I am recalling that I have a partial bridge that belonged to my deceased mother. I believe it has some gold content, so I am taking it to find what I can get for the gold.

Yeah, great economy....

[area51]

15. I hear you.

"What I did notice was more part-time jobs than usual."

Yes, and it seems to me that the majority of jobs I see are part-time or short-term contract only. Obviously not the sign of a booming economy. :mad:

Here's a link to a pdf interview w/an economist who says our unemployment rate is at least 12%.

[TexasLawyer]

18. Really interesting-- thanks

"If the numbers don't seem real to the man in the street, they probably aren't." Good advice.

[bluestateguy]

6. It must be nice to control the govt. agency that keeps these statistics

nt

[Whoa_Nelly]

7. Prices paid for goods and services are UP because fucking gas is UP n/t

[otohara]

9. No Raise @ My House for 5 Years

health care costs way up, gas, and food is really creeping up in price lately.

[Buns_of_Fire]

12. It expanded so fast, it expanded right into India and China

Like a kid's backyard pool, when you pop the liner. It expands, all right -- in all directions. So now the economy is a mile wide and a millimeter deep.

Hardly "making the pie higher"... :eyes:

[Demeter]

14. INFLATION Isn't Growth!!!

Inflation may look like growth at first, may even feel like growth, but it isn't. Where's the increases in units built and sold? Where's the Trade Imbalance, these days? What about capital flows? This isn't growth, and no amount of saying so is going to make it so.

[MissMillie]

16. Lots of natural disasters

which fuel the economy.

As does military action.

[TexasLawyer]

19. Yes--

I could make myself look awfully rich if I borrowed enough money to do it.

[Tempest]

17. Federal government spending reason for increased activity

First-quarter GDP performance was boosted by increased government spending on reconstruction in the wake of last year's devastating hurricanes on the Gulf Coast. Federal government spending shot up at a 10.8 percent rate, a sharp contrast to the 2.6 percent rate of decline in the fourth quarter. It was the strongest government spending since a 22.1 percent jump in the second quarter of 2003.

http://abcnews.go.com/Business/wireStory?id=1900923&business=true&business=true

[TexasLawyer]

20. On the demand side

there are a lot of tax give-aways that have influenced equipment and software purchasing.

From the article: "Spending on equipment and software alone increased at a 16.4 percent rate in the first quarter - the strongest in six years - after a 5 percent fourth-quarter rise. The strong spending implies that corporations remain optimistic about their sales prospects and are willing to make the investments to expand their businesses. "



No, it does not imply this when many equipment and software purchases are now allowed as direct business deductions (instead of depreciating the purchase price over the years). If something is "free" I'm going to "buy" a lot of it.


http://www.startupnation.com/pages/articles/AT_Computer-Tax-Deductions.asp?bhcp=1