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View Full Version : Recession Over: US Economy Grows 3.5%




Catatonic
10-29-2009, 09:40 AM
The US economy grew for the first time in a year as an aggressive array of stimulus measures brought an end to the longest period of contraction since the Great Depression.

US gross domestic product grew at an annualised rate of 3.5 per cent in the third quarter after shrinking in each of the past four quarters, commerce department figures showed on Thursday. Wall Street analysts had forecast that the economy would grow by 3.2 per cent.

Boosting growth was an upturn in consumer spending, residential investment and strong government spending. The impact of government stimulus measures succeeded in jolting the economy during the latest quarter, as the soon-to-expire first-time home buyer tax credit and the ?cash for clunkers? car rebate programme lifted residential investment and chipped away at car inventories.

?The expansion in GDP in the third quarter is further confirmation that the recession ended in the second quarter,? said John Ryding and Conrad DeQuadros, economists at RDQ Economics.

According to the White House?s Council of Economic Advisers, the stimulus added more than 2 per cent to real GDP growth in the third quarter.

?This is obviously welcome news and an affirmation that this recession is abating and the steps we?ve taken have made a difference,? Barack Obama, US president, said. ?But I also know that we have a long way to go to fully restore our economy, and recover from what has been the longest and deepest downturn since the Great Depression.?

Consumer spending, which accounts for about 70 per cent of economic activity, rose by 3.4 per cent after rising by only 0.9 per cent in the second quarter, while the surge in car demand lifted durable goods purchases by 22.3 per cent. Personal consumption expenditures added 2.36 percentage points to GDP growth.

?These numbers are heavily supported by the policy measures that were put in place,? Christian Menegatti, head of global economic research at Roubini Global Economics, said ahead of the report. ?These types of take-it-or-leave-it incentives are very effective in the short term.?

Federal spending climbed by 7.9 per cent in the third quarter, compared with a rise of 11.4 per cent in the prior three months, led by an increase in non-defence spending. This added 0.62 percentage points to the growth in output.

Businesses slowed their liquidation of inventories during the past three months, adding nearly a percentage point to the gain in economic growth. Private companies slimmed their stocks by $130.8bn, down from $160.2bn in the second quarter.

Blunting growth was international trade, with the increase in imports outpacing that in exports.

Many analysts say the rate of growth will slow after the third-quarter jump, as the initial effect of the stimulus wanes. In its latest Beige Book survey, the Federal Reserve said that most parts of the US are seeing stabilisation or growth, but that the rebound has remained weak. The Fed pointed to renewed strength in residential real estate and manufacturing but expressed concern about commercial property.

Economists at Goldman Sachs argue that the recovery will be ?sluggish? with inflation and interest rates remaining low. They warn that headwinds abound with small companies underperforming, the labour market stretched, state and local budgets cutting back and a persistent excess of housing supply.

In spite of the third quarter turnround, recent data have been mixed. Although industrial production and durable goods orders showed encouraging signs of strength recently, new home sales and consumer confidence failed to meet expectations.

Analysts suggest that unemployment, which tends to lag behind during an economic recovery, will continue to be a drag on future growth. The Obama administration is currently debating the merits of a jobs tax credit to help pull back the unemployment rate, which is expected to peak at 10.3 per cent early next year.

Separately on Thursday, labour department figures showed that fewer Americans made new claims for jobless benefits last week. Initial unemployment claims fell by 1,000 to 530,000, while those continuing to claim benefits fell by 148,000 to 5.95m.

http://www.ft.com/cms/s/0/16073bb0-c47f-11de-912e-00144feab49a.html?nclick_check=1



Who's ready to celebrate?

Dieseler
10-29-2009, 09:41 AM
Lies!

sevin
10-29-2009, 10:11 AM
http://static.open.salon.com/files/celebrate1246554461.gif

j/k

sofia
10-29-2009, 10:19 AM
amazing what a little printing press can do.

Let's print some more!

What friggin idiots these media cheerleaders are.

If you flood the market with extra paper OF COURSE the GDP is going to "rise." It's called INFLATION!

Meanwhile, U-6 unemployment remains at 17%

AdamT
10-29-2009, 10:25 AM
"Jobless recovery" LOL

sofia
10-29-2009, 10:30 AM
"Separately on Thursday, labour department figures showed that fewer Americans made new claims for jobless benefits last week. (Because labor pool has shrunk!)

Initial unemployment claims fell by 1,000 to 530,000 (1000? IN A NATION AS BIG AS OURS? Big deal!) , while those continuing to claim benefits fell by 148,000 to 5.95m." (That's because the benefits EXPIRED!)

what lies..

lester1/2jr
10-29-2009, 10:33 AM
I'll celebrate when Paul Krugman resigns or is fired. how's that keynes revival going dude? what are we at 10% unemployement A YEAR after the bailout

NYgs23
10-29-2009, 11:27 AM
Yes, government spending can pump up the quantitative economic indicators by misdirecting resources. It's not a stimulated economy, just a simulated economy.

sofia
10-29-2009, 11:36 AM
I'll celebrate when Paul Krugman resigns or is fired. how's that keynes revival going dude? what are we at 10% unemployement A YEAR after the bailout

U-6 unemployment (the actual measure ) is 17%

U-3 is 9.8%...(U-3 does not include people whose benefits have expired and they have lost hope, or are losing hope of finding a job)

The U-6 figure comes from US Bureau of Labor Stats...

You see, government doesnt exactly lie about unemployment....they just put out the U-3 number without elaborating what it means.

So if a man whose benefits have run out cant find work, and then gets depressed, gives up trying, and moves into a tent city......he actually REDUCES the U-3 unemployment rate!!!!

Oyate
10-29-2009, 12:00 PM
It's pretty typical cheerleading. This is the FT, not exactly noted for non-bias. But I get a kick out of this:

"Economists at Goldman Sachs argue that the recovery will be 'sluggish' with inflation and interest rates remaining low. They warn that headwinds abound with small companies underperforming, the labour market stretched, state and local budgets cutting back and a persistent excess of housing supply."

They just blamed everybody but themselves (the financial sector). It's the fed, it's small business, it's the labour market---the labour MARKET--stretched, it's state and local governments, it's the housing sector but it's not lil ol us says Goldman.

I just love that "stretched labor market". Yeah we know you guys are having a really tough time finding qualified H2 visas and green card workers to replace us.

Kotin
10-29-2009, 12:17 PM
mission accomplished.

manny229
10-29-2009, 12:26 PM
I can't belive so manny people beleive this. I guess this is why the market is up today..

Catatonic
10-29-2009, 01:39 PM
O-bots are eating this sort of thing up. "Look, Obama fixed the economy! When will conservatives be willing to admit it? :rolleyes:"

I've been hearing the establishment say the economy is in great shape and couldn't possibly fail since 2005 so this sort of thing doesn't even register to me anymore.

Sandman33
10-29-2009, 04:37 PM
Unbelievable....

Zippyjuan
10-29-2009, 05:39 PM
A technical "end" of the recession does not necessarily mean that happy times are here again. It is going to take a long time to get jobs going again- and until that does, people will be less willing to spend (and help to create those jobs). But the psycholigical effects are important- the more bad news that comes along will mean more people and companies hunkering down more which in turn slows the economy even more. The Christmas shopping season will be critical this year- a strong season will have companies investing more in making and buying more goods and supplies while a poor season will mean things continue to limp along. Watch for firms to downplay their holiday sales expectations so that they can exceed them (hopefully!).