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The Economy Is Fine (Really)
Wall Street Journal ^ | January 28, 2008 | BRIAN WESBURY

Posted on 01/29/2008 7:52:47 AM PST by Toddsterpatriot

It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble.

True, retail sales fell 0.4% in December and fourth-quarter real GDP probably grew at only a 1.5% annual rate. It is also true that in the past six months manufacturing production has been flat, new orders for durable goods have fallen at a 0.8% annual rate, and unemployment blipped up to 5%. Soft data for sure, but nowhere near the end of the world.

It is most likely that this recent weakness is a payback for previous strength. Real GDP surged at a 4.9% annual rate in the third quarter, while retail sales jumped 1.1% in November. Snip...

A year ago, most economic data looked much worse than they do today. Industrial production fell 1.1% during the six months ending February 2007, while new orders for durable goods fell 3.9% at an annual rate during the six months ending in November 2006. Real GDP grew just 0.6% in the first quarter of 2007 and retail sales fell in January and again in April. But the economy came back and roared in the middle of the year -- real GDP expanded 4.4% at an annual rate between April and September.

With housing so weak, the recent softness in production and durable goods orders is understandable. But housing is now a small share of GDP (4.5%). And it has fallen so much already that it is highly unlikely to drive the economy into recession all by itself. Exports are 12% of the economy, and are growing at a 13.6% rate. The boom in exports is overwhelming the loss from housing.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy
KEYWORDS:
But I heard we're doooomed!
1 posted on 01/29/2008 7:52:47 AM PST by Toddsterpatriot
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To: 1rudeboy; Mase; expat_panama; Rusty0604; Jim 0216; xjcsa; VegasCowboy

Ping!


2 posted on 01/29/2008 7:53:27 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot

Your typical doomer on this website has correctly predicted 12 of the last 3 recessions.


3 posted on 01/29/2008 7:54:18 AM PST by 1rudeboy
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To: Toddsterpatriot
So why is the Fed cutting rates to below inflation and the congress passed a “stimulus” package in record time?
4 posted on 01/29/2008 7:54:32 AM PST by 2banana (My common ground with terrorists - they want to die for islam and we want to kill them)
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To: 2banana

Reading the article might help answer your questions.


5 posted on 01/29/2008 7:56:58 AM PST by 1rudeboy
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To: Toddsterpatriot

Wow, great article, and good to hear.


6 posted on 01/29/2008 7:59:46 AM PST by Vanbasten
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To: Toddsterpatriot

It’s 1992 all over again. with the success of the surge demos needed a new crisis, so they drag out the big lie that the economy is terrible. It worked for them in ‘92, remember?


7 posted on 01/29/2008 8:01:47 AM PST by weezel
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To: weezel
It’s 1992 all over again. with the success of the surge demos needed a new crisis, so they drag out the big lie that the economy is terrible. It worked for them in ‘92, remember?

Looks very similar to me.

8 posted on 01/29/2008 8:03:45 AM PST by frogjerk
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To: 2banana
Willie Nelson said that a leader is a guy who figures out which way the crowd is going and jumps in front of it. The cut and stimulus package are more emotional than factual stimulus packages (cut is IMHO more important than stimulus, but also more inflationary). The press is trying to talk the economy down to hurt the party in power (pubbies), but the problem is that since the Dems have congress, they'll catch part of the flak, too. When the stock market fell and fears of a recession started, the oil prices dropped, which was one of the big reasons for the slowing of the economy, anyway.

As an aside, when the market was falling, the price of oil was also falling, having gone from $100 to $85 a barrel in a relatively short period of time. The .75 rate cut stopped the market slide, but also IMHO stopped the oil price slide. Other Freepers disagree and think the oil price went up because of China and India increased usage, but I think speculation played a big part. Oil has rebounded to 90. I suspect that if the Feds had let the market shake out naturally, after the oil prices dropped to market, rather than speculative levels, say around $75, the market would have rebounded naturally. Course, what do I know? I'm not even a politician.

9 posted on 01/29/2008 8:04:30 AM PST by Richard Kimball
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To: 2banana
So why is the Fed cutting rates to below inflation

Fed Funds is 3.5%. I'm not sure inflation is above that.

and the congress passed a “stimulus” package in record time?

Politicians pander.

10 posted on 01/29/2008 8:05:46 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: frogjerk

It tends to work for politicians of all stripes, generally. The primary difference is, when Republicans do it, the MSM allows them to be accused of “talking down the economy.”


11 posted on 01/29/2008 8:06:00 AM PST by 1rudeboy
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To: weezel
...so they drag out the big lie that the economy is terrible...

They and their willing MSM accomplices.

12 posted on 01/29/2008 8:06:17 AM PST by polymuser (Just darn)
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To: Toddsterpatriot

I think the food-and-energy-included number (the one that’s allegedly kept secret) is running just over 4%.


13 posted on 01/29/2008 8:08:00 AM PST by 1rudeboy
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To: polymuser

According to the Dec. 6-9, 2007, poll, 84% of Americans say they are satisfied with the way things are going in their personal life at this time, while 14% are dissatisfied. These results have been fairly stable since Gallup first started tracking Americans’ personal life satisfaction in 1979. The percentage of Americans who say they are satisfied with their personal life has averaged 82% over this period, with a low of 73% in July 1979 and a high of 88% in December 2004. (It is worth noting that in the same Dec. 6-9 survey only 27% of Americans said they were satisfied with the way things are going in the United States at this time, providing a vivid contrast between Americans’ view of things “out there” across the country and their view of their own personal lives.)

http://www.gallup.com/poll/103483/Most-Americans-Very-Satisfied-Their-Personal-Lives.aspx

Therte can only be one explanation. Just like ‘92, the big lie is being drug out to elect demos. They better hope it dont get away from them though, and turn into true hard times and with a newly elected demo prez. demos have never taken an economy in trouble and made it better.


14 posted on 01/29/2008 8:10:24 AM PST by weezel
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To: Toddsterpatriot

But, but,

People can’t pay for their HOMES!

.... and giant flat screen TV, and 4x4s and other toys.

Grandma is eating DOG FOOD!

It’s TRUE!

... course she likes dog food. The good kind.


15 posted on 01/29/2008 8:17:16 AM PST by Names Ash Housewares
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To: 1rudeboy

You must have a higher security clearance than me at the CFR. I don’t remember seeing that. LOL!


16 posted on 01/29/2008 8:25:08 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Vanbasten
Wow, great article, and good to hear.

Hummmm....pardon my frown but I wonder...

My husband is a car/truck salesman. Has been for going on 10 years, and these last two months -- esp. Jan.-- have been the worst since he's been in the business. We're not just talking about Dodge (which he sells) and we're not just talking about his employer/dealership. All the car dealership here in cen. Ohio have been hosed-- some worse than other but none have escaped.

The parent company that owns the dealership hubby works for also owns two mega dealerships in Mich. Their sales from mid-Dec to mid-Jan. generally run about 200+ cars/trucks in this time period. This time they've sold thirty. Yup, three-oh. Period.

The economy maybe rosy for some but not the car makers/dealership. Even with these drops in interest rates people are simply not buying.

17 posted on 01/29/2008 8:25:11 AM PST by yankeedame ("Oh, I can take it but I'd much rather dish it out.")
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To: Toddsterpatriot

I might be thinking about the (monthly) December number. I don’t carry it around written on a piece of paper, though.


18 posted on 01/29/2008 8:27:52 AM PST by 1rudeboy
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To: Toddsterpatriot

Ah, I love the smell of rationality in the morning.

Too bad its much more fun to fantasize about soup lines and dust bowls. Oh, and pimp gold, of course.


19 posted on 01/29/2008 8:38:10 AM PST by VegasCowboy ("...he wore his gun outside his pants, for all the honest world to feel.")
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To: weezel
Amen to that. Dems (and the press) seem to have a hard time suppressing glee at the soft economic numbers. The media will make the economy the number one issue. Just the fact that they basically ignored the entire positive part of this cycle is evidence.

I have never been a huge fan of Bush (as my past posts show), and as an Economics major (and a monetarist at that) I don’t believe the president influences the economy very much under usual circumstances... but the president had to provide over an inherited downturn, the terrorist attacks, corporate scandals, etc., and for six years we had a pretty good run. Nary a word about it in the press; one would think the last seven years were merely the dot-com burst, enron, war in Iraq and now the sub-prime mortgages, all back to back.

20 posted on 01/29/2008 8:39:07 AM PST by madconservative (Founding member of the Constantinople Liberation Organization.)
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To: yankeedame
Anecdotal evidence does not measure the economy as a whole.

That isn't too diminish your point. The economy as a whole does not tell anecdotes either.

Here's my anecdote that relates to yours:
My father had a small auto repair business until 2 months ago (retired). He always said that when the economy is good or bad he did well. When the economy is changing, his business suffered, and his theory over the years was that people are frugal with cars when they are uncertain.
21 posted on 01/29/2008 8:39:25 AM PST by laxcoach
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To: yankeedame

Anecdotal evidence is easy to find. That doesn’t necessarily mean the economy as a whole is in deep trouble.


22 posted on 01/29/2008 8:40:13 AM PST by Vanbasten
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To: 1rudeboy
For all of 2007, the CPI increased 4.1%, the biggest gain since 1990. Energy prices jumped 17.4% during the year, while food prices rose 4.9%.
23 posted on 01/29/2008 8:41:44 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot

Durable goods through the roof this morning. There is no recession.


24 posted on 01/29/2008 8:43:48 AM PST by montag813
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To: Names Ash Housewares
"People can’t pay for their HOMES!"

You didn't get the memo; that's been revised to read "People can’t sell their homes for what they PAID FOR THEM!"

25 posted on 01/29/2008 9:04:02 AM PST by expat_panama
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To: 1rudeboy

lol, quote of the day!


26 posted on 01/29/2008 9:22:23 AM PST by ECM (Government is a make-work program for lawyers.)
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To: ECM

I stole it from someone . . . maybe that other economist at George Mason (not Walter Williams).


27 posted on 01/29/2008 9:24:15 AM PST by 1rudeboy
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To: yankeedame
The economy maybe rosy for some but not the car makers/dealership. Even with these drops in interest rates people are simply not buying.

I empathize with you and your husband. These are unsettling times.
Do you think the problem is with people not qualifying for financing? Or, are people worried about their jobs?
In my case I can't consider buying a new $40k truck when the energy industry might be on the verge of transition. Will the country stick with ethanol or will there be a shift to hydrogen, natural gas, new battery technology, etc???
Wishing you and your husband well. ramcat

28 posted on 01/29/2008 9:33:42 AM PST by Ramcat (Thank You American Veterans)
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To: Ramcat
Will the country stick with ethanol or will there be a shift to hydrogen, natural gas, new battery technology, etc???

Your truck will be long gone before we shift to something other than gasoline.

29 posted on 01/29/2008 9:35:32 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot

We are doomed, at least according to Merrill Lynch.

http://cfcr.ml.com/GetDoc.aspx?e=9YhRnwvMzjDHV5nMTFs8bDKppVhpHO9X0%2bgMcb9D4eLNKCYm9wea%2bChrDydr6TEUnZFLbSjxykK09fOPWLTogQ%3d%3d&ctbDocIDs=10689902&v=1&m=qQVXKNXS2W94OW5%2f6C8LqMdMWVM%3d


30 posted on 01/29/2008 8:29:43 PM PST by Freedom_Is_Not_Free
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To: Freedom_Is_Not_Free

Thanks for the link. If they’re right and the current account deficit drops to 3.5% of GDP by the end of 2009, what will the whiners complain about?


31 posted on 01/29/2008 9:03:42 PM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot
WoW! Toddsterpatriot must have a filter on his computer that blocks out anything he doesn't want to see, hear or believe. Where do I buy one?

For those of you who can handle the truth rather than bury your head in the sand, here are the major statements from Merrill Lynch's official statement to their shareholders regarding the financial climate for the next 24 months, from the link I posted to Toddsterpatriot, above.

Merrill Lynch states:

"The recession in housing has spilled over to the rest of the economy..."

ML assumes we are already in the beginning of a recession.

"Home prices are expected to decline by 15% in 2008 and by a further 10% in 2009, with more depreciation likely beyond the forecast period"

ML expects AT LEAST a 25% reduction in home prices in two years and ultimately 30% or more before a bottom in housing is reached. This points to recession.

We expect annual earnings to be $80, down 8.4% from 2007... The annual averages, however, mask a 20% peak-to-trough decline, which is typical of recessionary backdrops. We expect more write-downs will result in a 15% decline in reported earnings this year.

ML believes these losses and decreased earnings are recessionary.

We expect job losses in the range of 2.5 million, close to what we saw in the last recession. This in turn is expected to push the unemployment rate up to 5.57% by the end of 2008, and to 6% by early 2009.

ML believes these job losses are recessionary.

Rising unemployment, $6 Trillion in lost housing wealth, combined with slumping equity valuations, and the lack of participation from the baby boomers for the first time in three decades likely will result in the worst consumer recession since 1980.

That is ML's third declarative statement of RECESSION, clearly backing their reasoning for supporting their conclusions, unlike those who cherry pick data and pulls conclusions out of thin air.

For the sake of those of you who aren't like ToddsterIDontWantToKnow, let me repeat ML's financial projections for their shareholders for the next 24 months...

...likely will result in the WORST CONSUMER RECESSION SINCE 1980.

Sorry for shouting, but it was worth repeating, and firmly, otherwise some might be tempted to be swayed by Toddsterpatriot's desire to disregard all of this key information.

Market participants and policy makers alike have pretty much abandoned the notion that the US slowdown is merely confined to housing.

US retailers just experience the worst holiday season since 2001. Which cannot have come as much of a surprise considering that consumer confidence hit the lowest point it ever has during any crisis in the last 20 years.

Let me repeat that again...

...consumer confidence hit the lowest point it ever has during any crisis in the last 20 years.

My fingers are tired, so people will just have to read the rest of the information at the link above, and posted to see why Merrill Lynch believes we have begun a long, deep recessionary period and to appreciate how much compelling data ToddsterWhatICantHearYou? glossed over in his attempt to completely discard professional financial projections. This information is not some editorial garbage, but the official financial forecast for Merrill Lynch's shareholders.

I wrote this post for the benefit of others, not for ToddsterIOnlySeeWhatIWantToSee, so you can see the FACTS of the matter in the link I provided to you, so you can appreciate the content in the link if you didn't already read it, and FWIW the conclusion by Merrill Lynch that we are already in a recession that will be deep and will be long.

Never mind the attempt to ignore that compelling financial data by those who would rather put their heads in the sand and pretend all is well and things are just peachy in the financial/business/economic world.

In the meantime, ToddsterOsterich ignores all he doesn't agree with, which is why I rarely to never post anything to him. It is a useless exercise in futility. The blind willingly remain stumbling in the dark. We'll see what he says after he trips and falls down...

32 posted on 01/29/2008 11:44:18 PM PST by Freedom_Is_Not_Free
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To: Toddsterpatriot

Here is the link again, for those who did not open Merrill Lynch’s future economic projections and would like to:

http://cfcr.ml.com/GetDoc.aspx?e=9YhRnwvMzjDHV5nMTFs8bDKppVhpHO9X0%2bgMcb9D4eLNKCYm9wea%2bChrDydr6TEUnZFLbSjxykK09fOPWLTogQ%3d%3d&ctbDocIDs=10689902&v=1&m=qQVXKNXS2W94OW5%2f6C8LqMdMWVM%3d


33 posted on 01/29/2008 11:45:08 PM PST by Freedom_Is_Not_Free
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To: Freedom_Is_Not_Free; Mase; RockinRight; expat_panama
WoW! Toddsterpatriot must have a filter on his computer that blocks out anything he doesn't want to see, hear or believe. Where do I buy one?

Wow! That's pretty funny! In case anyone thinks that Merrill Lynch is infallible, I present a chart of their stock for the last year.

Earnings for the last year were a loss of $9.69 per share.

Merrill Lynch's official statement to their shareholders

The shareholders who saw the stock drop from $95 to $57 appreciate the statement. They'd appreciate not losing 40% in the last year a little more.

Merrill Lynch states:

ML assumes...

ML expects...

ML believes...

ML believes...

That is ML's third declarative statement of RECESSION

LOL! You'd think their impressive record of economic prognostication would have lead to a rising instead of a falling stock price. They're so good, you'd expect an annual profit instead of a $9.69 per share loss.

Sorry for shouting, but it was worth repeating, and firmly, otherwise some might be tempted to be swayed by Toddsterpatriot's desire to disregard all of this key information.

Sorry for laughing, but my predictions for the last year seem to have worked out much better than Merrill's.

to see why Merrill Lynch believes

Believes. Not knows.

so you can see the FACTS of the matter

Still laughing.

This information is not some editorial garbage,

LOL!

and FWIW the conclusion by Merrill Lynch that we are already in a recession that will be deep and will be long.

I'll wait to see the huge earnings Merrill posts the next two quarters.

Never mind the attempt to ignore that compelling financial data

Predictions are not data.

34 posted on 01/30/2008 6:51:06 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot
Given the performance of Merrill Lynch last year along with their need to go begging to sovereign wealth funds to stay afloat, it's no wonder they see nothing but doom. They're the last organization I'd be looking to for advice about the economy...unless of course you believe that a global financial collapse is upon us and 25% unemployment and soup lines are just around the corner.

Some of these guys will even tell you that it won't be long before we're killing each other outside Kroger fighting for the last box of Corn Flakes. What a depressing way to go through life.

35 posted on 01/30/2008 7:25:50 AM PST by Mase (Save me from the people who would save me from myself!)
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