The temporary blip in the economy is over

[Woodstock]

http://www.washingtonpost.com/wp-dyn/articles/A48996-2003Oct31.html

Personal income rose a modest 0.3 percent in September, and consumer spending, after three strong monthly gains, dipped by the same 0.3 percent, the Commerce Department reported yesterday. Adjusted for inflation, the drop in consumer spending was even sharper, 0.6 percent, which some economists said was an indication that some of the spending momentum that helped power the economy to a 7.2 percent annual rate of growth in the third quarter was not continuing into the final months of the year.

The personal income figure, which includes not just wages but also rents, interest and other types of income, has been rising modestly for some time. Wage and salary income has increased particularly slowly because of a lack of growth in jobs or in the number of hours worked. In September wage and salary income was up only 0.1 percent after a 0.2 percent gain in August and virtually no change in July, according to the Commerce report.

"Today's data extends the trend of weak or tepid income growth, which has become a very worrisome problem now that the joint stimuli of tax cuts and mortgage refinancing have played out," said economist Joe Liro of Stone & McCarthy, a financial markets research firm. The tax cuts and the refinancings gave consumers more money to spend and have been credited with sparking the quarter's sizzling growth.

For the July-September period, private wage and salary income rose to an annual rate of $4.22 trillion, only about 1.6 percent above the level in the same quarter a year ago. That increase is less than the 1.9 percent rise in the personal consumption price index over the same period. In other words, inflation-adjusted wage and salary income was lower in the third quarter than it was a year earlier. ..

[FloridaPat]

1. There has to be something wrong with the Government's

numbers. GDP does include military spending, which soared. The only other thing I can think of is spending for the new school year. I have been looking for the details of the GDP, but they are very hard to find. After 9 months of unemployment I am making half of what I did last year. Everyone else I know is still unemployed or making way less then they did last year. Who has all this money to spend?

[izzie]

4. Yes we are building arms. It means alot in that data.

I read that some place that makes bombs hired 6000 people. Two in my family work in this field, arms, and they are not worried about their jobs. And every one spent their tax refund.

[leesa]

5. The ultra-rich who will spend in an effort to get their boy looking

halfway decent so they can make the theft of the 2004 election somewhat plausible, like last time. Are they willing to keep it up for four more quarters? They have invested a lot in this attempt to take over the country/world.

[Skittles]

8. Here is one big detail, FloridaPat

IT'S A BIG F***ING LIE.

[Nobody]

9. We need to increase the unemployment figures by 1

and toss Little Boy George out on the street next November.

[NoMoreRedInk]

16. Military spending had very little (if any at all) effect on the 3Q GDP....

bump.

The best site I know about is www.dismal.com to break down the components of GDP.

It shows that all government spending (including military spending) was mostly flat in the 3rd Quarter.

[radfringe]

19. spending for the new school year

this was probably up due to the one-shot child-credit checks that went out

there is typically some rise in the GDP in March-April when people get their income tax refund checks... so the one-shot child-credit checks had the same effect. We saw a similar occurance back when the "rebate-tax-advance" checks were mailed.

regarding military spending - yes this has increased and thereby "increased" the GDP....unfortunately all of this has also increased the federal deficits too, decreased fed-aid to states which in turn is increasing local/state taxes

there's alot of money floating around in the economy - but it's not floating in the consumers pockets

[JackSwift]

2. Krugman reported that there is a lot of

home refinancing, consolidating debts and purchases based on that borrowing. From what I've seen, I agree. Let's hope it goes somewhere.

But I am skeptical of a longterm recovery when the nation is in a very uncertain war with no light at the end of the tunnel. Frankly, as the Iraqis do better economically, they will start joining the attacks on US troops. And our traditional trading partners are beginning to move from standardizing no the dollar to the Euro and other currencies to punish us for not joining trade and environmental agreements.

[Woodstock]

3. did you hear the Iraq war was bad for Coke and Pepsi?

So Bush even managed to mess up American capitalism with his go it alone cowboy invasion.

From Utne print edition:

"A new group of Muslim entrepreneurs are challenging American cola hegemony in Europe and the Middle East with new brands designed to capitalize on anti-American sentiment after the invasion of Iraq. Mecca Cola, Qibla Cola, Muslim Up, Zam Zam Cooa, and Arab Cola are cutting into the Coke and Pepsi empires to the tune of 20 percent in Europe and as much as 40 percent in parts of the Middle East."

[Donna Zen]

6. One word: Plywood

Actually it is probably many words in the home-school-armybase building lexicon. Living in the woods one doesn't get to witness history that often, but lately, I can tell you they are shipping truck loads of logs past my house bound for Iraq in the form of plywood. Someone told me the government is purchased millions or billions of sheets. Another person told me that they can't get anyone to cut and haul firewood because of the rush to rebuild Iraq. Finally, friends who are building a passive solar house, confirmed that the price of plywood has skyrocketed. (Has anyone tried to purchase plywood lately?)

Anyway, all of last week I waited to hear the "building of Iraq" mentioned as a factor in the 7.9 heehaw, but nada came forth from liars. It would seem to me, that even in an economy as large as ours, the infusion of billions of dollars for bullets and plywood would have to be a player.

[SharonAnn]

11. Price of plywood has nearly tripled, if you can get it at all.

That´s what I´m told by homebuilders here in East Tennessee.

[Samaka 3ajiba]

13. Houses in the Middle East are built of stone/brick....

... and not any kind of wood. Wood doesn't last in the soaring heat, or in a desert sandstorm.

[Terran]

7. The holiday buying season will be telling.

My partner and I have pretty much decided to donate all our gift-buying money to homeless shelters this year. I don't think I can be a part of the consumer orgy this year when so many people have been cut loose from the social net.

[knight_of_the_star]

17. I won't be buying anything

Aside from about a pound or so of silver to make gifts for friends and family.

[pasadenaboy]

10. As an employee of an insurance company

I can tell you we will be pumping hundreds of millions into the southern california economy to rebuild houses.

[morgan2]

12. government spending is one of the figures going into gdp

I don't know exactly how they compute it, but couldn't the big increase be do to adding the 87 billion into the books.

[GOPBasher]

14. The 7.2% is real, BUT

it's totally deceiving. As other posters mentioned, it counts military spending. ANYONE can just decide to borrow tons of money from our children and grandchildren, spend it on the military, and say, "Yeah, the economy grew a lot." But that doesn mean anything. And, if it all the profits went to about 3 companies, that would still register as economic growth, but it doesn't mean anything.

Dems need to harp on the unemployment numbers, which are harder to make look good.

[Isome]

15. I've got a great link that tells the whole story:

.::Click Here::.
Besides a link to a government source and tables, here's part of what you'll find --

These figures speak for themselves, but with investment dropping in utilities, down 18%, we shouldn't be surprised. There was a good pop in residential construction. But, take out exports, which seems to have improved a bit (we exported 432.9 in 02 and that was up to 488.6 this year, which looks like an improvement. But, the trick shot here is that a lot of that probably went to a small Middle Eastern country we presently occupy.

...The services imported is going up like crazy because of jobjacking...all those telemarketers in India and the customer service reps in the Philippines...

Now here is the whole point of the reported recovery: There hasn't been one for most people. The "recovery", if you want to call it that, has been fueled by government spending.

That link was posted by jktmr on this thread; it's a great source of information to combat the 7.2% GDP growth lie!

[Isome]

18. news u can use ... n/t

[dbt]

20. At the risk of asking a DUMB question:

Wasn't there a devaluation of the Dollar that somehow figured into this GDP jump?

:shrug:
dbt
(Clueless about High Finance)