Economy Growth Is Best in a Year

[MiniMe]

Please tell me this is a joke article. I guess not, but I can hope that people aren't this deluded.

http://www.comcast.net/news/index.jsp?cat=GENERAL&fn=/2007/07/27/725099.html

Economy Growth Is Best in a Year
By JEANNINE AVERSA, AP Economics Writer
46 minutes ago

WASHINGTON - The economy snapped out of a lethargic spell and grew at a 3.4 percent pace in the second quarter, the strongest showing in more than a year. A revival in business spending was a main force behind the energized performance.

The new reading on gross domestic product, released by the Commerce Department on Friday, marked a big improvement from the first three months of this year, when economic growth skidded to a near halt at just a 0.6 percent pace, the slowest in more than four years.

Stronger spending by businesses and government powered the rebound in the April-to-June quarter. Individuals, however, tightened their belts as they coped with high gasoline prices and the ill effects of the housing slump. The sour housing market continued to weigh on national economic activity in the spring but not nearly as much as it had in previous quarters.

-snip

However, consumers, whose spending largely prevented the economy from stalling out in the first three months of this year, lost energy in the second quarter. They boosted spending at a pace of just 1.3 percent, the smallest since the final quarter of 2005.

High gas prices _ past $3 a gallon _ and ill effects of the housing slump are beginning to take their toll on peoples' appetite to spend. Still, a solid jobs climate _ the nation's unemployment rate is at a relatively low 4.5 percent _ should help cushion some of these negative forces.

[Gman]

1. Need to read this too

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x1450803

[MiniMe]

3. Thanks, that explains a lot

I also don't believe the low 4.5% unemployment rate they use. Another fake stat.

[VP505]

16. Prolly not

fake just "fuzzy math" those unemployment numbers are based on how many are drawing unemployment insurance, doesn't consider those who's insurance has run out, and a few other categories that make the number misleading to take on its face. If those numbers came out of the Bu$h admin you can bank on them having been run through the spin cycle several time over.

[MetaTrope]

2. "A revival in business spending was a main force behind the energized performance"

In other words, CEO compensation is WAY UP! Woohoo!

[ProfessorGAC]

4. A Few Problems

First, 3.4% growth is not that good. It's not officially recessionary, but it's not good. Secondly, the growth is propelled by high gas prices and by excessive governmental spending with borrowed funds.

Lastly, since total inflation (including direct energy and food) is almost 4% annualized, then the growth is fueled also by inflation. (Consumption is about 70% of GDP, so 4% of 70% is 2.8%, or 82.35% of this growth number.)

The focus on the wrong metrics has become so ingrained in economic observers and reporters, and in many economists (although not the econometricians and economic modelers) that these statistics, unconverted to parameters and lacking dimension or context, are accepted as critical values.

They're not.
The Professor

[Gman]

9. Thanks for the lesson..

I posted this in #1, but be sure to read this. The numbers would be even lower than what you state.

[ProfessorGAC]

15. A Few Weird Things There

The author says the problem is worse than the numbers state, and then uses the numbers to state why. Huh?

In fact, he's reinforcing what i'm talking about. Statistics without context and dimension are not useful. Once, they're properly framed and put in context, they tell completely different stories.

I'm not sure what you meant about "even lower than what you state." I thought i painted a fairly bleak picture. I don't think the article paints a bleaker picture. Did i miss something?
GAC

[Gman]

18. No, it's the "bleaker picture"

that I was referring to. I only skimmed the article this morning but it seemed to make sense. My point is that according to the article the actual GDP is lower than stated today, but for different reasons than you use. When your points are considered, the actual GDP is even lower than stated today.

[ProfessorGAC]

20. I Get It

Sorry. Had a brain cramp. I should have grasped that right away.

GAC

[blondeatlast]

5. "Inflation _ outside a burst in energy and food prices_ moderated."

Yeah--great news for the REAL economy--prices on the essentials EXPLODED. :eyes:

And for what it's worth, retail buying from wholesalers and distributors always picks up in spring when retailers start buying for back-to-school and the holidays.

[MiniMe]

6. Thank You. I know the economy looks like crap from where I stand

I wondered if I was standing in the right place. How can they think that people will believe this? Are there really people out there that are that gullible?

[blondeatlast]

13. Yes. They are called "major stockholders."

They are endowed with many pieces of parchment possessed of magical powers that create money out of thin air. These magical papers are unavailable to us mere humans.

I have seen these mythical creatures. They wear grey or black exclusively, they are transported in long black carriages and seem to breathe through cylindrical shaped brown paper oral protuberances that emit smoke.

Every four years, they gather in frightening numbers at a tribal ritual where they celebrate these magical papers, acquire unfortunate women while their wives change these magical papers into costumes marked with St. John, Ferragamo, and "LV".

Beware if this tribal ritual comes to your locale. Many locales eagerly anticipate this ritual, the evil of it clouded by those magical papers.

It is known as the Republican National Convention, and it is a horror to be witmessed...

[MiniMe]

14. ROFL

:rofl:

[ProfessorGAC]

17. Also, Simply Untrue

Taken as a fraction of spendable income, that inflation number is FAR more impacting than a sentence like that suggests. It's utterly irresponsible to suggest that inflation is under control, when food and direct energy costs, which generally eat up more than 40% of people living +/- one sigma from the median household income, go up to the degree they have.

The problem, as i mentioned in another post, is context. Macroeconomic systems do not operate in a vacuum. The influence on the population that makes up that macroeconomy, and vice versa, are what is important, not some simple perusal of numbers vs. a two dimensional abstraction.

Idiotic.
The Professor

[blondeatlast]

19. And in the meantime, Chevron's 2nd quarter progits increase by TWENTY-FOUR percent...

http://money.cnn.com/news/newsfeeds/articles/djf500/200707270905DOWJONESDJONLINE000603_FORTUNE5.htm

[LiberalEsto]

7. My daughter the waitress

is making far less in tips than she did a year ago. A couple of days ago she made only $20 on her shift. She used to make $80 or $90 per shift.

People obviously can't afford to eat out as much as they used to. They're ordering less, and tipping a lot less. She got a $5 tip on a $90 order recently.
And this is in relatively affluent Montgomery County, MD, about 15 miles from Washington DC. I hate to think what's happening in other parts of the country.

The economy may be great for Exxon CEOs and people like that. But it totally sucks for working people.

[MiniMe]

8. Or the people were cheap. I can't imagine only leaving a $5 on a $90 tab

I live in Gaithersburg, where does your daughter work?

[LiberalEsto]

11. Ruby Tuesday

at Lakeforest Mall in Gaithersburg. We live in Derwood.


She's worked there for 2 1/2 years and says business is definitely down this summer.

[MiniMe]

12. I go there all the time

:hi: neighbor. Gaithersburg is a mixed bag, and is not really the wealthy part of the county. It is the closer in suburbs that make the wealth in the county. Like Bethesda and Chevy Chase.

[LiberalEsto]

21. Gaithersburg

is definitely not like Potomac or Chevy Chase. I'd much rather live in Gaithersburg than in CEO la-la land.

People in Gaithersburg and other parts of the US are doing much worse than they were a couple of years ago, and I think the fact that my 20-year-old daughter is making far less money is indicative of the crummy economy for us folks. By the way, she's the waitress with a blond ponytail.

I've never eaten at Ruby's myself -- we can't afford restaurant meals very often.

[shireen]

10. it's true

in a parallel universe where Gore is in his 2nd term, we've significantly curbed greenhouse emissions, a solar panel on every roof, housing is affordable, huge budget surplus that allows us to make investments in the future generations, universal health care just implemented, and Iraq is governing itself peacefully after a peoples' coup deposed Saddam.

A lovely dream. I wish our reality was just a bad nightmare.