7.4% unadjusted GDP surge accompanied by plunge in Unemployment figures

[Sava]

Originally posted by JohnT



Sorry, I do like to deal with cites and primary sources.

Then why did you post a CNN article?

[rah]

Originally posted by Sava
Since I'm not an economist, I tend to listen to people smarter than me.

If you're not an economist, how do you know that he's smarter than you in that field? Or do you just assume he's smarter since he's voicing opinions that you like.

[JohnT]

Sava, my primary source for this info (above) has yet to be updated and the CNN article was the best I could find at the moment.

Also, people respond better to articles than "look at this unformatted table of data that I cut 'n pasted from the Dept. of Labor."

[Lefty Scaevola]

Originally posted by Sava
I tend to listen to people smarter than me.

That would be everyone who does not suffer from Anencephaly.

[DanS]

Plus, most of this GDP growth was business restocking and the bubble in home buying.

None of the GDP growth was business restocking. Indeed, businesses continued to reduce stocks.

[Dinner]

Dan: Even if the over all level of stock is decreasing there will still be a certain amount of restocking. In order to see a drop in over all stock levels all that has to happen is for the out flow (sales) to exceed the in flow (restocking).

To claim that none of the GDP growth was from business restocking is false.

[el freako]

The fall in jobless claims still doesn't alter the fact that total hours worked during this recession has fallen further and for longer than during any recession since 1929-33.

At this point (3 3/4 years after the peak) in the recessions of 1973-75, 1980-82 and 1990-91 total hours worked had recovered to it's peak level after falling by 3% to 4%.
This time round it has fallen by 6% and has only just bottomed out

[Sava]

Originally posted by rah


If you're not an economist, how do you know that he's smarter than you in that field? Or do you just assume he's smarter since he's voicing opinions that you like.

I'm aware of Krugman and his credentials. Since the late 90's he's been the one of the only mainstream editorial economists whose been most accurate. You should read his book, "The Great Unraveling".

DanS: I apologize, you were right, I misinterpretted "businesses ramping up production" as restocking inventories. But nevertheless, production grew faster than demand, which suggests much less growth next quarter.

The point is people, this economy won't see true success until consumers have more money to spend. Cutting taxes and increasing deficits won't help if tuition costs, state taxes, local taxes, and health care costs rise. Consumer income isn't increasing beyond GDP growth, and as more people pile up credit debt and lose jobs, consumer spending will slow.

Sure, Democrats might scrap the tax cuts, or even raise the top marginal brackets, but the rewards of this are great for the economy. If working and middle class people receive tax credits for education, job training, home buying, and health care; they will have more disposable income to put into the economy. Our economy as a whole will be more productive.

As I've constantly been saying, this isn't a supply side problem, and supply side tactics won't help. In fact, they've been hurting the economy in conjunction with the loss of jobs and outsourcing to foreign countries. Outsourcing may cut the bottomline a little, but if Americans don't have jobs THEY CAN'T SPEND MONEY!

[DanS]

But nevertheless, production grew faster than demand, which suggests much less growth next quarter.

Again, this isn't the case.

[Japher]

This is good news JohnT

I saw this over at Bigcharts (the first page I go to every morning) and was still shock to see that the indexes are still down...

While Sava is sceptical, I think he has a right to be. Most of the people who lost their jobs have gone into other sectors or back to school. Most of the spending has been debt generating purchases. I don't think I will be totally relieved until the major indexes are steady, and a little higher. Still, this is a good sign that it is not far off. Invest NOW!

[Sava]

Originally posted by DanS
Again, this isn't the case.

So growth is going to continue at this rate despite lower demand? Care to elaborate?

[Japher]

If you build it they will come...

[DanS]

I don't really care to elaborate, since it's plum obvious. If demand is higher than production, then inventories will be reduced, as happened in the latest quarter.

[el freako]

Originally posted by Sava
So growth is going to continue at this rate despite lower demand? Care to elaborate?

He's not saying that Sava, he's saying that stockbuilding is likely to show a bigger contribution to growth in Q4 than in Q3.

Total growth in Q4 is very unlikely to be at the rate of Q3 as most of the growth was in consumer spending - this was financed by the tax cut (after tax incomes rose by 7.2% but pre-tax incomes rose by only 1.6%) - as there will be no further tax cuts until Q2 next year then growth is likely to be slower until then.

BTW these tax cuts have pushed government borrowing to 5.5% of GDP ($600bn) in Q3 - I dread to think what the numbers will be like in a years time.

[rah]

Originally posted by Sava
I'm aware of Krugman and his credentials. Since the late 90's he's been the one of the only mainstream editorial economists whose been most accurate. You should read his book, "The Great Unraveling".

And I'm sure his liberal tendencies and rabid anti-Bush retoric have nothing to do with it. His theories are biased by his obvious political agenda. But I'll give him some credit but refuse to put him on the high pedestal that you have done. He does do a better job than some of his peers on the right. And no, I have no intention of reading his book. (yes, my biases are showing also. )