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The U.S. economy grew at a meager 2 percent annual rate in the three months that ended Oct. 1, according to government data released Friday. That's a little faster than most forecasters were looking for. But this is just the first of the government's three GDP readings; these early estimates have a way of getting trimmed back when the final numbers are printed. Stay tuned.
The housing market remains the biggest damper on growth: investment in residential real estate plunged nearly 30 percent after the June expiration of the government's tax credits for first time home buyers. Falling home prices, high unemployment and the ongoing foreclosure mess are going to continue to weigh on the economy in future quarters. Maybe years.
Much of the gain in third quarter GDP came from businesses taking advantage of extremely low borrowing costs to buy new equipment, extending a shopping spree that's been underway all year. Business investment rose 12 percent in the third quarter. But that was less than half the pace of the second quarter, suggesting the boost from business spending may be fading. Even if it holds up, that investment isn't creating jobs. If anything, companies are investing in software and machinery to boost productivity from existing workers so they don't have to hire more people.
Consumers did their part - boosting consumption spending by 2.6 percent. But they had to dip into savings to pay for it, so that's not sustainable. Much of that spending went to buy goods made overseas: imports jumped 17 percent, more than three times the gain in exports. Despite weakness in the dollar, that trade gap widened, further damping down GDP growth.
There's no mystery behind the causes of yet another quarter of weak economic growth. The federal government's stimulus spending may have headed off a deeper slide, but the impact of all that spending is fading. State and local governments are scrambling to fill big budget holes - and laying off workers to try to balance the books. The housing industry is in its worst slide in 60 years, and the latest data don't offer any hope it will recover soon. Some 3.5 million families have lost their home to foreclosure; there may be double or triple that number to come unless government or the lending industry comes up with effective solutions.
And with the midterm election just days away, there's little talk of wider solutions to the economic quagmire. The most common refrains on the campaign trails are vague promises to "fix" the deficit and create jobs. Specific proposals are in short supply.
That leaves the heavy lifting to the Federal Reserve, which has been making loud noises about embarking on another half-trillion-dollar shopping spree for government bonds - with the goal of pushing bond prices higher and interest rates lower. That may help people who own bonds - like banks, insurance companies and other big investors. But bargain basement rates haven't done much to get banks lending or businesses hiring. There's little indication that another round of bond-buying by the Fed will change that.
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BS MSNBC! Job are created when companies do buisness investment, because they need people to maintain the computer sytems and/or run the software. Go do a fact check on this. I ended up getting a job maintaining software licensing due to the new investment.
After throwing trillions at it, GDP is up a paltry 2%? What about debt? Is the GDP increase enough to pay the increasing debt? Deficit is almost 1.5 trillion. That is enough for 15 million jobs paying 100K each even if velocity of money is 0. What does that mean? It means we are working borrowed jobs.
Excessive debt that cannot be sustained by the real economy is the real cause of the crash and it is not over yet. The government lacks the vision for economic progress. All they know is to throw good money after bad and hope that something good comes out of it. Our money supply is debt. The moment borrowing and spending stops, we will find ourselves in the middle of a deflationary depression that will make Great Depression look pale.
To keep bank credit from deflating, government runs many programs such as fannie mae, freddie mac, qe1, qe2, mortgage interest deduction, cash for clunkers, 8k home buyer credit etc. All of this is to make people borrow more so that more money gets injected into the economy so that they can declare that GDP is up at the expense of future generations.
Government allowed deducting mortgage interest from tax. They do not do this because they want people to own their own homes. Things like "Home owners are good citizens" etc are just smoke and mirrors to hide the real intention of inflating bank credit.
Remember the Affordable Housing push? They said everyone should achieve the American dream and they allowed sub-prime. It was intentional. They needed sub-prime borrowers to step up and borrow money after they ran out of prime borrowers. Or the money supply would deflate and their banks would go bust! Here is how the government and the FED runs this ponzi scheme:
http://www.tradingstocks.net/html/housing_market_bubble_bust_cyc.html
This is why they removed 20% down requirement. They needed more people to borrow, bigger amounts. That is why they inflate the home prices exponentially higher because they needed borrowing to increase exponentially.
Well, the music has stopped. Chairs are taken. R.I.P to those who are now standing. Unemployment is the result of deflating money supply which cannot be prevented in the current fractional reserve banking system. We created the money supply when we borrowed. It is the principal. But we promised to pay back principal + interest. Interest was supposed to be created with even more borrowing, so that we could earn it and pay back what we borrowed. Guess what: Boomers are beyond their peak borrowing years. Bank credit cannot be inflated non-stop. This is why there is not enough money for everybody to earn and pay back what they owe. Bankers got bailed out, someone else will pay it. And that is the average American who got the short stick now. Do not hope for much. Prepare yourselves for the coming crash:
http://www.tradingstocks.net/html/prepare_for_market_crash.html
We are reaping the "benefits" of the progressive HATE BUSINESS/PROFITS ARE EVIL attitude. Growth needs to be 3.5% in order to lower unemployment so expect the numbers to go up unless this business hostile government is neutered.
Business by nature loves consumers. In it's simplest form, this appears to be Government once again inflating money by printing it, in order to bail itself out, along with continuing to bail out bankers and other billionaires.
Why has there been no tax holiday for working people? Why does our government hate us so much that they would rather reward the bad behavior of Wall St, Bankers, and Insurance companies?
Why did Obama run as a man of the people and governs like a man of the ultra-rich?
And now we see him with a body count adding up, and all but encouraging children as part of war in foreign lands.
What a peach.
Excuse me, but somewhere these guys missed basic economics 101.... businesses invest when they see demand.... not to create demand.... so you can tell business to invest all you want... but at the end of the day the tapped out consumers have no money... or course they can buy IPADs or IPODs which are not made in the USA anyway.... or those Apps at the Apple store... but that doesn't create jobs like building tunnels, subways or water/sewer plants.... (in case you missed it... check out China/India/Russia and see how they are spending the money)... China will eat us for lunch and laugh all the way to the bank since they are doing it with our money....
Yes Phil, with election day next week it's imperative that conservatives get out the truth about the cause of the deficit and why it will remain astronomically high for years to come.
The administrations bungling of financial matters and blaming the other guy has to be stopped or it will only worsen. Here's is a link to a CATO institute article that explains the entire cause of the deficit in detail. Many will argue that CATO is a conservative institute with an agenda however CATO is well respected and the facts presented are indisputable.
http://www.cato.org/pub_display.php?pub_id=11094
And to further the arguments that can be presented to the uninformed progressives here is one showing how the administration's policies will keep the deficit in the trillion plus dollar range for years, if not decades...
http://www.cbpp.org/cms/index.cfm?fa=view&id=3036
I read that first link and it largely did blame bush for the fiscal situation the country is in. It described Obama as a releif pitcher coming in at the 4th inning at 19-0 and allowing a nother run. Nothing to cheer about but the pitcher before him SHOULD take the blame.
Imagine its 1934. What would have became of this country if we gridlock'd FDR's congress with Republicans who want to all of a sudden NOW reign in deficit spending from a huge fiscal mess of their own doing? Would anyone in their right minds have allocated 30 trillion (In 2008 dollars) in borrowed money to fight WWII?
If the country wants a do nothing congress, than thats just it, we will have a congress that does nothing, and then we will see where we are 2 years from now and see if we still want a do nothing congress. I suspect the democrats are going to do quite well in 2012 when the centrist voters find that the Republicans they just voted in, only whine and moan that Obama blames Bush too much and how we can somehow balance the budget by keeping his tax cuts and not pulling the plug on Grandma's monthly SS check and medicare for her $1200 a month prescription drugs.
James - thanks for following the link.
My post is written with hidden sarcasm...one has to read the articles to know it was written sarcastically. Note I never mention which administration in my post!
I get tired of hearing how the present deficit and debt are the current administrations fault when the facts show otherwise.
And I agree with your points and you have my vote.
Regardless of laying blame for past behavior, the current administration has far from pitched a no-hitter. Laying all of the blame at any one man or party is folly and utter foolishness.
The causes and reasons are many and varied, from Bush policies to Barney Frank's liberal banking initiatives. Remember also that Bush inherited a mild recession - that is if you want to continue to lay blame.
What matters now is that the foolish men and women in DC continue to live rockstar lifestyles on our dime. These dimwits pass multi-thousand page bills that only months later need waivers issued because of the damage these bills would otherwise cause.
The heavy handed democrat leadership has literally locked out the opposing party on the biggest piece of legislation passed in decades.
The bad behavior is disgusting. Our federal government is the greediest most corrupt entity on earth. Both parties are responsible. Government must be reigned in, spending must be reduced, or we will not recover, as the projected new debt is beyond staggering.
So two years after elected this bozo continues to blame rather than lead, spend rather than reign in spending, and live live a rockstar rather than act and live like a leader.
Wouldn't it be refreshing if the president stayed home, mothballed the jets, cut his own lavish spending by 50% and set a GD example? But no, he's just as big a dummy as the guy before him - once in power, he turned into just another drunken-sailor politician.
This is exactly why the administration and other "I hate America" types have failed so miserably. The built-in attitude that nothing can be done about our economy (because God forbid our policies can't change)
Ive found that Americans on the right side of the political spectrum do not want to pay the taxes involved to keep our government and country a superpower. Its their money, they would rather remain rich and not do anything for the greater good of society, even if it means most Americans get poorer while they stay wealthy.
Wow, you must be a commie/socialist. Take from the ppl who have money and give to us poor folk!! Have you ever worked for a poor man? I doubt it. The ppl who have money AND a work ethic create jobs!!
Yea, well unfortunately for you, this country runs on Tax dollars, not Rubies and fairy dust. Cant suck blood from a rock, so your not gonna get it from the bottom half.
Redistribution of wealth has gone towards the upperhalf by converting this country from one that produces goods, into a low wage service economy ever since the Republican party started electing supply-siders with disastrous results.
Like I said, you do not want to pay higher taxes that entail America remaining a superpower, you cant base everything our government pays for off borrowed money, unfortunately.
And no, Im not looking for a full blown conversion into socialism/communism, however I am jealous of Japan's high speed rail and Finlands Healthcare, thats all Liberals such as myself are saying.
If I hear "you can't work for a poor man", one more time I'm going to puke. We are talking about taxes here, we are not talking about turning the rich into the poor. Answer this, who is more likely to spend extra money they come into. A rich guy that already has everything, or a poor man that can barely put food on the table. Tax breaks that are given to the poor go directly back into the economy. How hard is that to understand?? Businesses should be given tax breaks to encourage hiring but the rich should do their share.
No, genius, we are reaping the rewards of decades of uninformed idiots gnawing away at the regulatory protections that were put in place the last time greed completely wrecked the economy.
'The market' will not regulate itself, it will go to any extent possible to maximize profit for the mega-rich. You have been drinking the greed-koolaid and are voting against your own interests, and you are not even awake enough to realize it.
The current administration cannot undo such a massive amount of harm in few tiny months. Get a clue already, and stop feeding the billionaires while they screw you.
...
Refudiate Stupidgery
You're absolutely right, Rosethornne. It goes something like this (the conservative mantra, per Grover Norguist, Jack Abramoff, and Karl Rove):
Grow government. Grow it big, and spend big. Then break government, break its budget, and gut the social programs and the regulatory agencies to the point of uselessness. Then, campaign on a platform of defunding regulatory agencies and social programs because they're "ineffective" wastes of money.
Put Christine Whitman, eternally hostile to environmental protection, in charge of EPA with the mission of gutting the agency. Put Elaine Chao, champion of big business and nemesis of the working class, in charge of the Department of Labor with the mission of eviscerating that agency. Defund both departments and eliminate any gains they've made over three decades. Then blame the Democrats when BP blows an unregulated oil rig and what's left of the EPA doesn't swim out there and stop the catastrophic leak itself.
I am sick to death of the right wing destroying government in the name of big business, blowing the bank on wars in the name of big business, and then blaming the left for the foibles of the government they have intentionally destroyed. And then we're supposed to blame welfare moms for the deficit and elect Tea Partiers to destroy Social Security and the landmark progress we've finally begun to make on health care.
This "free market" system has waged war on its workers and consumers, and conservative government has been its tool.
Vote. Everybody vote.
You could not be MORE WRONG!
I disagree AKRandy, I think Republicans want to prove that Government is inherently wasteful and bad, and they prove that mantra to the public by electing the Republican candidates that do nothing but waste money and tell fallacy's like "Tax increases kill jobs" and "Tax cuts pay for themselves"
Okay, AKRandy...tell me how I'm wrong. Just saying it doesn't make it so.
Good story. This economy is about to crash. Revenue is still going down and spending up. Housing and manufacturing is dead. All the deficits are growing. Thank goodness global warming is killing the energy business. We have all the energy we need but with government restrictions we cannot touch it. Every time the gas price goes abouve $1.50 on an inflation basis the economy crashes. Its just a matter of time.
Good story. This economy is about to crash. Revenue is still going down and spending up. Housing and manufacturing is dead. All the deficits are growing. Thank goodness global warming is killing the energy business. We have all the energy we need but with government restrictions we cannot touch it. Every time the gas price goes abouve $1.50 on an inflation basis the economy crashes. Its just a matter of time.
Ummm...gas prices haven't been below $1.50 a gallon since 2002...
http://zfacts.com/p/35.html
If housing is the prime mover in our economy then that means that we have been reduced to selling hamburgers to each other as a means of maintaining a viable economy, instead of producing goods that we can use and sell abroad---------what a frightful mess we have weaved for ourselves!!---------it will force us to permenently lower our standard of living!!
http://useconomy.about.com/od/economicindicators/a/GDP-statistics.htm
from the site listed: The rate of growth for the US economy was zero or negative for he end of the Bush years!
Redistributing of wealth has already taken place---------it is not within this country, it is going and has gone to Asia from the USA-------------we are doomed to a much lower standard of living to be able to compete with the cost of labor abroad-------not a very good prospect for our future generations---------who knows what the answer is???
Well - Life Inc. is finally saying what many people in these posts have been saying all along. The government is pounding their collective chests about how great a job they have done... but there is nothing but a hollow sound.
If you want to know where the US is going, take a look at the UK---once a viable producer of goods---now reduced to producing HP sauce and Marmalade------very little else beyond tourism, that's why they keep the Royalty, they attract tourists!!----we don't even have that!!
Inaccurate, Heaveto. You need to research the pharmaceutical industry in the UK.
Hello America, so, so, yes so Barrack Obama after 2 years in the Whitehouse finally, finally wants to discuss the Economy, why he wants to discuss, GDP, and we have 2% growth in GDP, what he did not expound upon was the Fact that his $3 trillion dollar bailout is essentially -25% of of the GDP over the next 2 years, so in essence, we have a net GDP of, -23% if we consider the 2% growth. its all very complex why you would need an expert Wallstreet Banker such as Gietner to explain it to you, I am just so glad we have a Harvard Graduate and Nobel Prize Lauriate of Peace and The Economy in the Whitehouse, why where would we be without him? well its not all to be blamed on Obama, lets look back in time to the first culprit of destruction to the Economy, Richard Nixon, yes many of you will not remember Dick, so let me fill in his highlights, His China Visit, yes if we can establish trade with China we can gain access to a Global Economy and a Global Workforce, this was the talk of the town in 1968, now many of us said wait why are we establishing relationships with a communist country? why you backward bumpkin its a Changing World with a Global Economy, what the proponents at the time never told us is what the U.S. economy would be in 2010, well we all know now don't we? we all know what they meant by a global economy, why that was a time before the internet, even before Computers, or Palmtops, or Blackberries, you get the idea, why that was before, Opec, Alcaida, and the Tailaban, oh if we could have only known the future we would have impeached Dick Nixon right then and there. sincerely Fezzy Bear
Fezzy Bear---------The Global Economy would have happened with or without Nixon----it is all a matter of time before the downtrodden rise to share in the 'good life'-------and that is what is happening-----the answer is that all countries must strive for a common standard of living so that costs become more evenly distributed----------either the foor rises to the ceiling or the ceiling comes down to meet the floor that is rising------------most people in this country are not going to like it!!
I am not gonna get on a rant but I want you to digest this.
If Republicans give tax cuts to the top 2% the the debt will rise by 4 trillion dollars. Even with what Democrats purpose just giving tax relief to the middle class is going to raise the debt by 2.75 Trillion. If we cut taxes then the debt goes up. That being said we are in a recession and the only thing that will get us out of this mess is time not any policy or any one person can do it. The Republicans are dead set on tax cuts not only by what the party stands for but also by their own admission. The debt will increase when this happens no matter if it is the Democratic policy or the Republican policy. Now with that being said I ask you this. If you are a conservative and the debt is an issue with you like it is with all conservatives. When they approve tax cuts and send the debt sky rocketing are you going to blame it on Obama or the Republicans. Seems to me like if you were really concerned by the debt then you would be against tax cuts all together and if you were then that would not make you a Republican. As far as CATO is concerned that is like a democrat pulling information from the Huffington post or a republican pulling information off FOX news. Ok so I am going to rant for a min. Below i will show you the debt over the last 10 years. To give a quick summary of it however when Clinton left office it was at 5.5 Trillion. When Bush's last fiscal year was done the debt was at 11.6 Trillion dollars. Today we stand at 13.5 Trillion. Bush spends roughly 6 Trillion dollars and buries this country in debt and you scream about Obama for 1.9 Trillion. 1 Trillion of which was for Healthcare and will drop the deficit by 1 trillion over the next 20 years (CBO numbers so it is fact) and the other roughly 700 Billion was to stop us from slipping into a depression. Now I know you are gonna go on about how the stimulus didn't save us from a depression and Healthcare will cost us way more now then it did then and to that I suggest you read up on it because that came from the non-partisan congressional budget office. so what you are really yelling about is the other 200 billion Obama spent that wasn't for the American people per say. I won't pretend to know what that 200 billion was spent on as I haven't done the research but I know that you are comparing 6 Trillion by the Bush administration and 1.9 trillion by this administration when the bulk of it was to help people without health insurance and to stabilize the country and stop us from going into a depression then you have some serious partisan issues. However I will say this before you try and spin this. I am an independent and have no part affiliations. I am just trying to put the numbers in front of you and educate you on the debate. Thanks for taking the time to read.
07/22/2009 11,634,723,000,000.00
09/30/2008 10,024,724,896,912.49
09/30/2007 9,007,653,372,262.48
09/30/2006 8,506,973,899,215.23
09/30/2005 7,932,709,661,723.50
09/30/2004 7,379,052,696,330.32
09/30/2003 6,783,231,062,743.62
09/30/2002 6,228,235,965,597.16
09/30/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.86
Howard, Jason--------------Well said!!!
LOL, exactly Jason.
Hard to believe but read the CATO link above...amazing to find a conservative article that admits the truth. The 2nd link shows why the "conservatives" are still responsible for the current deficit.
Nice to see you using Sept 30 dates to match the fiscal calendar! Well done
Here's an idea. Cut gov spending. In half! Bring gov pay and bennies down to match the private sector. Close one of every two gov offices and make the other actually work like a business and take up the slack. Institute a fair flat tax that everybody pays. More revenue and the expensive IRS is no more. Remove all recipients of medicaid and ss or ssdi that did not pay in from those programs, put time limits on welfare and food stamps, and wa-la, problem solves itself!
The right wing Puritans (in the Republican party) say that "Government doesn't work"-----they then get elected and prove it!!
My employer booted out most of the Americans and replaced them with H1-B foreigners and their children. The rest of the work is sent overseas. The foreigners now run the shop and booted out more Americans and replacing them with relatives. The unemployed idiots blame on the US government and want an instant fix by replacing one government with another so they can buy more guns and shoot each other. Unemployment problem will be solved shortly.
Its election time .....ever thing is good right now and wont get any worser till Wednesday... after the election.
Up 2% in one quarter??
For all of those Conservatives out there, There are 4 quarters in the year, That amonuts to 8% annual growth even if the economy doesn't climb even higher, Not to shabby compared to Bush's "real" numbers is it??
What the white part of the page said was, get used to it as long as the chump with the big ears is in the W.H.
Don’t worry because if the HEROES take over in November we will be neck deep in jobs with in a year, NOT. Only problem is if they have their way the jobs will be slave labors jobs with NO benefits. They will continue to allow lower wages while finishing the deregulation of the Corporations.
Try workin for a while. It might improve your self image.
jed233,
I can only speak for me but I have a well paying job and on top of that I have a pretty good self-image. That being said I agree with the poster. Oh and by the way the presidents approval rating is higher than any other sitting president at this point in his presidency. He will in fact be a two term president and after the Republicans start their antics in the house in 2011 we will have another majority in both houses as well.
To Howard, Jason.
Thanks you for your intelligent postings
To Howard, Jason.
Thanks for some substance in this crazy election controversy. It looks like the rrepublicans are set to take over with nothing but denial and a "no" mentality. I have yet to hear an intelligent alternative plan from them. How can the American people be so gullible?
Obama's biggest mistake--he should have declined the Nobel Peace prize. People would have more respect for him now and be more inclined to forgive his lack of accomplishments while in office so far.