Commerce Secretary Gutierrez Praises Robust Third Quarter GDP Growth (4.9% !? We`re Doomed!)

http://www.commerce.gov ^ | 11/29/07 | OFFICE OF PUBLIC AFFAIRS

[Para-Ord.45]

Commerce Secretary Carlos M. Gutierrez today released the following statement on the revised third quarter real gross domestic product (GDP) report, which showed that the American economy grew at 4.9 percent in the third quarter of 2007, the highest rate of GDP growth in four years:

“In the face of real challenges, our resilient economy has now experienced six years of uninterrupted growth. As the holiday shopping season begins, I am pleased with today’s strong GDP report, coupled with the 1.68 million jobs added over the past year and low unemployment. President Bush’s pro-growth policies are moving our economy forward. I’m encouraged by what we’re seeing in business investment and the 28 percent of GDP growth that is due to trade. Exports contributed greatly to the third quarter’s strong growth...

[Para-Ord.45]

The horror, the horror.

[WVNan]

I’m looking forward to seeing the front pages of the MDM, as I know they will feature this great news /s.

[Jeff Chandler]

the front pages of the MDM: WORST ECONOMY IN 50 YEARS!!!!

[gov_bean_ counter]

Would be interesting to know what the models would have been projecting if the AMT had come back. Years ago when I worked in public accounting if something this drastic had hit folks would have started shifting their portfolios. Bad things would have otherwise happened to the economy. Immediately.

I wonder if that was what the Dems were really hoping for.

[NVDave]

Y’know, what I see here on FR is far too many people made (justifiably) cynical of the mainstream media making simplistic and dismissive comments about economic and financial news.

This sort of non-analysis could help the GOP whistle their way straight to the graveyard next year.

The GDP report is a rearward looking stat. Do you drive your car by looking at how you’re lined up on the road in the rear view mirror? Of course you don’t.

So what do the forward-looking indications show us? Trouble. Plenty of it.

The LEI (leading economic indicators) fell again for the second straight month, 0.4%, which was more than expected. This comes after a fall of 0.5% in October:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUi7bpAXii1c&;

And just today, Yet Another Bank is having to bail out a money market fund:

http://www.bloomberg.com/apps/news?pid=20601087&refer=&sid=azfpKie5E_bs

Money market funds are thought by people to be the modern-day equivalent of the old savings account. The fact that money market funds need to be bailed out to “not break the buck” net asset value is very troubling indeed. All it would take is one or two even semi-large money market funds to “break the buck” to start a run on a bank. Or banks.

The Bush administration has continued to be asleep at the wheel on the current credit markets crisis, allowing the Fed to take the lead, and (worse) allowing the Democrats to start owning the issue in the press. Bad, bad move.

[jrooney]

The greatest story never told by our lame stream media. History will though. Clinton’s econmy could not lick the boots of GW’s.

[Russ]

MSM headline: "Third Quarter GDP Growth 4.9% but.............(fill in the negative part).

[Prokopton]

This sort of non-analysis could help the GOP whistle their way straight to the graveyard next year

I agree. For most people, a good economy is determined by their spendable income. Has the increase in their wages offset the increase in their expenditures caused by higher taxes and higher costs for goods and services, and this includes the higher costs of health care, energy and food. If it has not, people will consider the economy poor no matter what the Feds or Wall Street believe.

[ex-snook]

Great - the Fed should not be reducing interest rates.

[bpjam]

yes, the horror.

Bring on the viking kitties and lets just get this over with. All is lost anyway........

[UCFRoadWarrior]

I agree. For most people, a good economy is determined by their spendable income. Has the increase in their wages offset the increase in their expenditures caused by higher taxes and higher costs for goods and services, and this includes the higher costs of health care, energy and food. If it has not, people will consider the economy poor no matter what the Feds or Wall Street believe.

---

This is a good point. What the government says and what really is happening are two different things

[NVDave]

Exactly.

Much of this GDP increase comes from currency advantage for US exporters. Most of that GDP increase will in no way make it into the pockets of Joe and Jane Lunchbucket. What they see are high gas prices, food prices going up, the housing market cratering, their ARM’s adjusting upwards, etc.

[Para-Ord.45]

Feelings and opinion aside,

last years inflation rate was about 3.5%,

so far this year the infaltion rate is 2.74%.

[Para-Ord.45]

“Much of this GDP increase comes from currency advantage for US exporters.”

Uh, fill me in, if exports are up then that usually
means factory orders go up which means adding hours
worked or hiring new employees.

Are you contending that factory orders go down when
exports increase?

[NVDave]

Factory orders going up does not necessarily mean that more workers need to be hired or paid more. Factory orders are measured in dollars, jobs are measured in people. As long as there is slack capacity in manufacturing, they can increase orders without hiring more people or booking overtime. The FRB’s Beige Book in November showed that most manufacturing sectors are operating just about long-term average capacity.

I’m contending that the number of dollars used to measure US factory orders is going up in part because the value of the dollar is going down. Another part is the cost of raw materials going up and inflation starting to ripple through into the cost of some finished goods.

The stats show that wages aren’t growing anywhere near as well as exports and factory orders for export-heavy industries; most of this increased revenue is captured on corporate balance sheets and cash flows; ie the investors are reaping the rewards.

Most jobs in the economy are in the service sector, and the ISM for non-manufacturing sector is dropping; it is still over 50, but dropped from 55.8 in October to 54.1; it had been predicted to be 54.8. The four-week moving average of jobless claims is going up.

The rear view mirror looks pretty good; the GDP report was for the quarter ending in September. The stats more recently aren’t quite so bright. The leading indicators aren’t looking anywhere near as bright as the Q3 GDP report. And just today, the Philly Fed Survey came in way under expectations:

http://www.phil.frb.org/files/bos/bos1207.pdf

NB the six-month outlook line — a radical downward shift.

The content of the report isn’t anywhere nearly as positive as a 4.9% increase in GDP would suggest.

[Prokopton]

Feelings and opinion aside, last years inflation rate was about 3.5%, so far this year the infaltion rate is 2.74%.

That's my point. These "official" inflation numbers often have little relationship to the actual increase in costs to an average citizen. I can tell you, without a doubt, that the almost 50% increase in gasoline prices, the 9% increase of my medical insurance, the 18% increase in heating costs, and the substantial increase in food costs works out to significantly more than 2.74%. I know I am not alone in this position of having actual costs rise considerably faster than my wages.