Growth Gain Blurs Signs of Weakness in Economy
Erik S. Lesser/European Pressphoto Agency
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Home building in Avondale Estates, Ga. Residential housing investment rose 14.6 percent in the third quarter, one of the bright spots in Thursday’s growth report.
By NELSON D. SCHWARTZPublished: November 7, 2013 |
Five years after the global economy was falling at its fastest rate, Western economies are still failing to gain much-needed momentum, despite the efforts of central bankers on both sides of the Atlantic.
The New York Times
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At first glance, the 2.8 percent annualized growth rate estimated for the United States for the third quarter might appear somewhat rosy. It was the fastest quarterly increase in output so far this year, and well above the 2 percent change economists had expected. But nearly a full point of that jump was caused by a buildup in inventory, which is likely to sap expansion in the current quarter. The annual rate of growth in consumer spending slowed sharply to 1.5 percent, the weakest quarterly increase in more than two years, while spending by the federal government fell 1.7 percent.
Last month’s government shutdown did not take place until after the period surveyed in the report, but the decline in federal spending in July, August and September showed how the across-the-board budget cuts imposed by Congress this year were beginning to bite. Over the last four quarters, federal spending cuts have shaved annual growth by half a percent, according to Dean Maki, chief United States economist at Barclays.
“Clearly, there was an upside surprise in the headline figure, but it doesn’t change our thinking about growth,” Mr. Maki said. “One common theme between the U.S. and Europe is that government spending has been a drag on growth.”
While the United States and Europe share many problems, it is clear that the situation on much of the Continent is much worse.
Many economies in Europe are only now stabilizing after six quarters of renewed recession, and unemployment across the 17 nations that share the euro currency stands at around 12 percent. In especially hard-hit countries like Greece and Spain, the unemployment rate is more than twice that.
The latest data on unemployment in the United States is due out on Friday, but in September the jobless rate stood at 7.2 percent. On Thursday, the Labor Department reported that new jobless claims in the week ending Nov. 2 dropped by 9,000 to 336,000.
Earlier this week, the consistently overly optimistic European Commission cut its growth forecast for 2014 to 1.1 percent from 1.2 percent, and Thursday’s move by Europe’s central bank signaled that central bankers in Frankfurt belatedly recognized just how grim things were.
“The U.S. numbers are not great, but they are consistent with a recovery,” said Adam S. Posen, president of the Peterson Institute for International Economics in Washington. “In Europe, there is stagnation.”
The central bank’s move on Thursday was prompted by a sudden drop in euro zone inflation to an annual rate of 0.7 percent in October, well below the bank’s official target of about 2 percent. The decline raised the specter of deflation, a sustained fall in prices that can destroy the confidence of consumers and the profits of companies, along with the jobs they provide.
While austerity has taken root in both Washington and many European capitals, crimping fiscal policy, the courses charted by central bankers in terms of monetary policy have diverged. Thursday’s rate cut in Europe was a step in the right direction, Mr. Posen said, but he suggested that the central bankers in Frankfurt should follow the lead of the Federal Reserve and go much further.
Unlike the European bank, the Fed has moved aggressively to stimulate the American economy, not only cutting short-term interest rates to near zero but embarking on three rounds of asset purchases aimed at lowering borrowing rates and lifting the growth rate.
Most economists on Wall Street were confident the Fed would begin reducing its $85 billion a month in purchases of Treasury securities and mortgage-backed bonds in September. The Fed chairman, Ben S. Bernanke, hinted in the late spring that this so-called tapering process was around the corner.
The New York Times
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But since then, anemic employment gains, and mixed signals for the economy over all, have stayed the Fed’s hand. Many economists now expect the Fed to keep its current policies in place until the spring. And there are signs that it may seek to counter any negative effects from trimming its asset purchases by vowing to keep interest rates ultralow even longer.
Most economists now credit the Fed with heading off the deep doldrums bedeviling Europe, while at least partly compensating for cuts in federal spending imposed by Congress and weakness in the private sector.
“The Fed opened up the floodgates and prevented even weaker growth or another recession,” said Nariman Behravesh, chief economist at IHS. “In Europe, you have fiscal tightening without anything like what we did in terms of monetary policy.”
The Fed’s policies have helped bolster the housing industry — one of the most notable bright spots in Thursday’s report on growth. Residential housing investment rose 14.6 percent in the third quarter, a slight pickup from the robust gains in the first half of the year.
Many experts have worried that housing and home building might cool because of the increase in interest rates in the late spring and summer that is making mortgages more costly. But five years after leading the economy down, housing is helping keep it afloat. Another source of strength was the trade balance, as exports grew more quickly than imports.
Thursday’s report is the government’s first estimate for the change in gross domestic product in the third quarter, and the two subsequent estimates are likely to be revised considerably as more data becomes available.
Looking ahead, the picture for growth remains cloudy both in the United States and overseas.
Although the euro zone has technically emerged from recession, recent economic indicators have sent conflicting signals about the strength of the recovery. Few economists expect a strong rebound, but some are more pessimistic than others.
As for the United States, economists on Wall Street estimate that the shutdown will ultimately reduce fourth-quarter growth as much as half a percentage point. And momentum was slowing even before the shutdown, with businesses becoming increasingly cautious over the summer. Expenditures on equipment fell 3.7 percent in the third quarter, reversing a 3.3 percent gain in the second quarter.
“The economy remains stuck in the mud,” Ethan Harris of Bank of America Merrill Lynch said in a note to clients on Thursday. “Uncertainty over the future will cause business to delay making decisions.”
HOW DID THEY COMMENT?
HOW DID THEY COMMENT?
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- zcaley
- colorado
You can make big bucks by shorting the consumer. That’s investor advice for the wealthy. They are shorting the consumer.
In the war of shareholders vs workers and profits before people, they have just about squeezed all the productivity out of workers that they can. Consumers are feeling the pinch, while our Congress thinks that cutting spending is the ultimate priority? I don’t think so.- cfc
- VA
If we can just get the economy to slow some more, then we can sustain free money with the Fed's "zero-interest rate" environment, and the stock market can move higher to 17000.
Don't look so confused, this is how you keep the 1% milking a big fat bubble. God knows, when it turns the other way, financial assets will be dead money for years and years.- nuevoretro
- California
The reason the US economy is not improving more is the fact that Mitt Romney, Koch Industries, Goldman Sachs, JP Morgan, Sheldon Adelson and the multi-$billion endowment of the TrEAson party are all sitting on their money in order for "Obama policies to fail." At least that's what Paul Ryan's been saying for the past 7 years.- Twist and Shout
- New York, NY
This is clueless.
We have the lowest employment participation rate, the most people on food stamps and a president that stays far away from the truth.
Need more jobs, less food stamp and a new leader.- OldEngineer
- SE Michigan
It appears that the looming threat of a government shutdown was quite stimulative.
Imagine how much growth we might see if we actually took less out of the private economy to fuel the government appetite.- Jay Casey
- Arkansas
In recent business conferences I had attended business leader after business leader has publicly stated that the uncertainty caused by the (Tea Party's) government shutdown and threats to not raise the debt ceiling have caused them to pull back on hiring and expansion plans in the US market. This in turn reduces the expansion of the economy and the GDP. Whether or not it is the Republican's goal the fact is their games are serious and are damaging our economy in the short-term and possibly the long term. We need to "thank" them at the polls.- jim
- arizona
Money is like manure: it works better when spread around.
We need to raise taxes 15% on the top 5% of wage earners and put that money into a public works program to re-build our nations failing infrastructure.
It is no more complicated that that folks.- Tony
- Boston
My economic predictions: ping pong ball sales will continue to bounce around while pancake sales will remain flat. I'm bullish on cattle.
I'm sorry but I figured we could all use a little levity.- Lance
- New York, NY
"..The effects of the 2007 depression are much less severe than the 1929-41 depression because of safety-net benefits now provided. Consider the horrendous, though not uncommon situation of a household in 1932 comprised of elderly grandparents being supported by their working-age children with young children of their own, when the breadwinners became unemployed. The 1932 family would be destitute. Today the grandparents would have social security and Medicare benefits. Their working-age children could now collect unemployment benefits for up to 99 weeks. Additionally, the entire family could also be eligible for food stamps, Medicaid, rent subsidies, heating fuel subsidies, free school lunches and other benefits. The 1932 family might also have had a bank account in one of the many banks that failed and lost their savings. Today, Federal Deposit Insurance protects such bank accounts. You might say we are now in a depression with benefits....
.
...If we are in a recession, economic activity will fully resume just from the monetary and fiscal stimulus that has already occurred. Ultimately interest rates will rise. However, if we are in a depression, even one with safety-net benefits that mitigate the hardships, interest rates will remain relatively low for decades as was the case in Japan and the USA of the 1930s, where only World War II ended the depression. ..."
http://seekingalpha.com/article/1543642- workerbee
- Florida
- Verified
It is those New Deal era "entitlements," won by the older generation and passed on to later generations, that help prevent today's workers from falling into destitution and revolting against the status quo, in addition to making this a "lesser depression" rather than a full depression. Those "entitlements" are also called "economic stabilizers" because they maintain consumer demand by providing people with spending money they wouldn't otherwise have.
- John L. Yates
- Philpot, Kentucky
As a Democrat, I am encouraged by this article. I hope the 4th quarter surprises the experts. I am concerned about the inventory level. It seems it takes very little for fluctuations in inventories for lay-offs to occur. Stock piling by the company anticipating a large request for products or just to get profitable levels adjusted plays a role. I get still scared when I see inventory stock piling. It is not good for workers. Here we are going into the holidays and the companies are trying to anticipate consumer sales. Seems to me they are hedging their bets and the employees and hiring new workers will suffer because of it. Merry
Christmas and Happy New Year. Also, won't the Congress and the Senate be doing their dance of the toys mid-December? Another reason corporates are hedging bets. Isn't this supposed to be about jobs, jobs? The article refers to the shutdown and how it will affect numbers in the last quarter. There was an article in the Times a week or so ago about sluggish car sales. Again, due to the shutdown, one of the bright spots in our recovery was hurt by it because people were scared about the future and how long the mess in Washington would continue. They'll make a goof trade-in go a little longer in use to see what will happen I guess. The auto workers are another hourly force and subject to flucuations in the market. I see obstructionism in this as usual. Anything to discredit the efforts of our president. Thanks for listening. John- al
- boston
Oh my.
2.8% growth = a "rosy picture." How easy it is to dupe the public.
2.8 % is a near stagnation a la decaying Europe. I know, Europeans on average have a better safety net and less stress, FOR NOW and as long as they have a 0 population growth. Europeans are operating as a retirement community on their way out and to be replaced by immigrants, whose values and way of life are on display in Congo, Egypt, Syria, Mexico among other places.
Meanwhile, Russia, China, and India are poised to snatch the dominant status from the West. Welcome to the Chinese sweatshops, make yourself comfy, no refill for your coffee, though - time to rid of your Amerikan ways.
A growth of less than 4% is a path to the oblivion of this great nation and a disgrace to the previous generations, on whose blood and sweat this country was built.
Shame!- Capt. Penny
- Silicon Valley
The high flying regional real estate market went into a stall in late August and then fell into a flat spin during the shut down.
The jump in interest rates from 3.5% to 4.75% - resulting in a 12% decrease in consumer buying power over the course of a few days - froze many buyers. Their dollars didn't buy as much house. This resulted in far fewer multiple bids, (e.g. a couple bids rather than a dozen), reduced overbidding.
The shutdown also adversely affected more local sales due to the high number of people with other than pure W-2 tax returns. Most lenders want an IRS 4506T form to support 2 years of income tax returns. My neighbor the realtor deals with people who work for tech firms, self-employed, business owners, capital gains from sale of stock options, income property, etc. resulting in more complicated tax returns for lender underwriters to certify for sale of mortgage backed securities.
In the past few weeks we've seen a drop to 4.25% but that's still about 7% decline in buying power from the beginning of August. We're not Palo Alto or Pacific Heights, but we're seeing some homes receiving no offers.
Prices are up 25-35% since 2012 bottom, those who bought in 2005 have positive equity, 2006 maybe, 2007 probably still underwater.
Sellers are rethinking bringing their homes on the market - which adversely affects the broader economy. Rents are rising so buyers are motivated to get into a fixed cost for housing - but we have low inventory.- RC
- MN
- Verified
The economy is being suppressed by the self-serving Fed. There would be much more growth if the Fed wasn't transferring trillions of tax dollars and lost interest on savings from the middle classes and seniors to Wall Street and the 1%.- al
- boston
Add to it how much the economy would be spurred, had the Fed stopped all the subsidies to farmers, the poor, the sick, the GS employees, and all who don't contribute (save the law enforcement and military).
A bonus boost would come from the shrinkage of the non-contributing population.
- Mouse
- NYC
Hmm....well, let's see, maybe if companies paid a living wage to their employees and gave them raises that at least matched inflation, then the employees...the 'consumers'... could spend that extra money and the economy would grow.
Nah, that will never work.- Dave Georgeson
- Ashland, OR
Spot on comment, Mouse.
I am a die-hard liberal that through a ton of hard work has been instrumental in creating just over 23,000 good paying American jobs over the past 36 months. The important words in the preceding sentence are "good paying."
It is hard to understand the logic of those that want to beat up those less fortunate. No...make that "it is impossible to understand the logic" of such cruel entities.
Dave- Michael Masci
- NY
That would hurt shareholders, or should I say the 1%. They are the ones in control.
- Ron
- Chicago
Are the Wall Street experts talking down on this news to discourage the Federal Reserve from taking it as an inducement to accelerate tapering of its buying-stimulus program? Even under Janet Yellen, this day must come eventually. Hasn't the market already factored this this inevitability?- sas
- nyc
@ron - "... tapering of its buying-stimulus program? Even under Janet Yellen, this day must come eventually."
------------------
and why, exactly "must [this] come eventually?" only if you assume the economy is ever really coming back.
now that all the cheqp fossil fuel evergy which has fueled our economy is gone (the fracked gas won't last more than another few years), the fed will be filling the empty tank for the foreseeable future -- perhaps forever.
- Cliffy
- maine
The stock increase to 15.800= is soon to happen because of the "QE" extension
Unfortunatl, when the fed's ease, the economy will flatten again causing double jumps in inflation ,crippling the working and partly self sufficient households
Obama care will turn into a national medicaid/ medicare program- Paul
- White Plains
Of course the economy did slightly better. The Fed is pumping $85 billion a month into the economy, and interest rates are near zero because of that. Even people who are in serious debt will borrow money at these artifically supported rates and spend it. If the Fed pulls the plug, the economy and stock market will tank.- jean501
- manhattan
$85 billion affect mostly Wall Streets & Big Banks Casino.
So, whether, the $85 B is there or not, it won't affect the economy, but it will have a positive correction to the stock market.
- hen3ry
- New York
- Verified
I'm so glad the economy is doing a little better. Now, when is that going to help the rest of us, the 99% who have to work for a living, who, if we lose our jobs, may never find new ones? Businesses are not hiring Americans. They are outsourcing in order to pay less for a theoretically better workforce living in a foreign country. Businesses no longer train employees because they can find the perfect employees overseas and pay them less. Businesses stopped investing in and training employees long before Obama or W took office. This is a long term trend and all the economic improvement in the world means nothing to me or any other person in the middle class if we cannot find a job, keep a job, save for retirement, have a roof over our heads, or dare to hope for a halfway decent future. I don't care if the stock market tops 20,000; if I'm unemployed and have no money I'm still going to be living on the street. If our jobs fail to pay enough to keep us well above the poverty level because businesses don't want to pay the Main Street economy will fail. The real question is whether or not our politicians have enough backbone to speak up for the average American citizen who does want to work, to support himself and his family. If not we will become like Tsarist Russia or France before its revolution.- Linda
- New York
Businesses outsource because it's cheaper to hire people in over-populated countries such as the Phillipines and Bangladesh. As long as the imbalance in birth rate continues, we'll continue to lose jobs.
The one bright, glowing spot in the picture is that with massive advances in computer and other forms of technology, there are huge increases in productivity, and in the future we can hope that one salary will support more people...In the meantime, so many millions are struggling here; we need more equitable distribution.
- N.S. Palmer
- Washington, DC
Who got most of the benefit?
Never mind, it was a rhetorical question. We know who: the top 0.01 percent.- Kevin
- East Bay, CA
I guess the government shutdown didn't tank the economy like Obama and friends predicted.- Barry C
- Sonoma County, CA
You guessed wrong.
The article covers 3rd Q results. That Q ended Sep 30.
The shutdown started Oct 1. That's in the 4th Q. Those results won't come in until 1st week Feb.
Those pesky facts make a Massive Fail of your attempt to play "Pin Default On The Donkey".- Mouse
- NYC
Kevin: Because time moves forwards, not backwards, at least for most of us, so we will not see the affects of the shutdown in the previous quarter.- Rural America
- Pennsylvania
Q4 for 2013 and Q1 for 2014 will show the greatest impact from the shutdown. The slope of the graph for ecomonic growth/decline Q 2 and Q3 2014 will be very telling, especially depending on how budget issues are handled in February. Economic indicators lag by 3 to 6 months.
- Ricky Barnacle
- Seaside
- Verified
Obviously, this is Obama's fault. Wait a sec...- digitalblog
- New York City
"U.S. Economic Growth Beat Expectations in Third Quarter"
Can you imagine the economic growth we would have if there is no GOP obstruction in congress?- Tony
- New York
Negative growth. Like the $800 billion stimulus that we passed in 2009, which was supposed to create millions of shovel ready jobs and keep the unemployment rate below 8%. Obama wanted it, Obama got it, and it provided none of the benefits Obama touted. But it did pay off campaign contributors and funded companies like Solyndra.
Oh well, back to Blaming those big, bad Republicans, and Blame Bush.- Swan
- U.S.A
Tony,
When W. Bush left office, real unemployment was greater than 14%, and most economic expert agree that it would require more than $1.5 trillion dollars to fix the worst collapsed since 1930 depression. By the way, GOP obstruction in the last few years has cost America more than one million jobs like government shutdown, held the economy hostage on the debt ceiling talk.....
Oh my, another Solyndra myth, Obama was born in Kenya..... stop wasting your time. How about spend your energy focus job for American people or deliver your alternative health plan. Oh wait, your GOP healthcare.gov, the server could not be found. What's up with that?
- yasuaki torii
- Japan
I need probe into why inventory? European Central Bank lowered 0.25, Fed no change, China hesitating. Why need the inventory added now ?- Barry C
- Sonoma County, CA
No probe necessary.
Simple answer ... U.S. Holiday shopping season is imminent.- kc
- pittsburgh
It's because the inventory didn't sell - not that it was a planned increase in inventory
- C.W.
- West Coast
The American economy did better in the third quarter than expected. That must be bad news for Republican obstructionists who don't want any news of improvements that might reflect constructively on President Obama.- Kevin
- East Bay, CA
You could read the article, not jist the headline, and learn that this GDP was far from all roses. GDP was up for statistical reasons not because there was real growth by businesses or consumers.- al
- boston
C.W.,
Nothing happening in the economy reflects on Obama in either bad or good way.
He's a lawyer and has 0 training in economic science. His decisions on economic policies come exclusively from his advisors, whose calculations and computer simulations he does not understand (and neither do I).
2.8% growth in one quarter out of the year is a bad news for ALL Americans. We are squandering the capital we inherited from our great ancestors.
- John T
- NY
High inventories? That means they can't sell their product. How is that a good sign?
Are these numbers going to be revised down, like the other "forecasts"?- Prescott
- NYC
High inventories are a positive sign in that they indicate business assume strong sales ahead. Having said that, the stockpile of industries has a drag on growth in future quarters because as those industries are sold out, they are not neccesarily replenished (if the inventories are lower, they'd need to get refilled quickly once sold or else supply may run out)- Kevin
- East Bay, CA
Its not a good sign. Businesses are producing faster than people are buying. Businesses will have to slow down in the future. A future GDP report will be as bad as this one is good as the inventory effect reverses.- Dan
- new york
The consumer needa a raise to buy their product.
- johns
- Sudbury MA
It seems a no-brainer that trade deficits hobble growth and allow our wealth to flow overseas. After decades of policies designed to balloon up our trade deficits in the name of "free" trade, higher retailer profits and cheap products for consumers, we have this great op-ed that clearly explains how corrosive such policies are for our economy and that no other country plays by these rules. The question becomes is anyone listening? Is our Congress finally prepared to design more intelligent trade bills? Are our unions prepared to be realistic to allow manufacturing to grow again? Are our retailers prepared to buy local even if the margin is a bit lower? Will the consumers focus on what they buy and put in their mouths and demand American products that are made by other tax payers? To date, the answer to everyone of these questions has been NO.- enough01
- NY
Yeah and 90 million people are still out of work, More part time jobs then full time jobs,students lead the way in student loan debit, and now we just faced the biggest tax hike in history due to Obamacare ,29 differant taxes.- Jack
- Illinois
Could the answer be 'not yet"? We must continually ask these questions until we get better answers than we have been getting all these decades.- enough01
- NY
Growth is better then exspected, but companies are not hiring and Reason being when you have a President that protects the 1% and special interest ,we are at a stall.
- Michael O'Neill
- Bandon, Oregon
In 2001 everyone at the PSCA (Plan Sponsor Council of America) annual meeting was fretting over the massive economic turmoil we could all see coming when the Boomers started to retire. The Y-Year was thought to be 2008 (when the first Boomers started to reach 62). By 2013 we expected the 'Main Street' and 'Wall Street' gyrations to be in full swing.
Corporations would be losing their most valuable talent at the rate of 7,000 to 8,000 a day as 10,000 people a day reached retirement age.
Markets would be under extreme selling pressure as 401k's and pension plans all began chasing in to fund retirement.
Who knew that the Great Recession would scare seniors into working far longer than they planned?
Who knew the liquidity crises would dump massive amounts of newly created Fed funds directly into the markets?
The GDP should have flatlined about the time of the Lehman failure. We have been living on borrowed time ever since.
The one thing that is certain is that when the future arrives it will look nothing like the pundits expect.- dannomusic43
- Michigan
The recent NYT article on the trade deficit dovetails seamlessly with this article.
Our government should be addressing our TRADE deficit.
Get out of the way, Republicans, and let adults govern.- RLS
- Virginia
- Verified
The Obama administration is conducting negotiations on the Trans-Pacific Partnership agreement in secret. 600 corporations are privy to the details of the negotiations, yet Congress and the public has been kept in the dark. The President is pushing for an up-or-down vote by Congress under fast track authority. It will not give members of Congress any time to learn the details of the agreement or put forth any amendments. A bad idea.
If the TPP is approved it will allow multinational corporations to offshore millions of jobs and ban “Buy America” policies. Only 5 of the 29 chapters deal with trade. The TPP will erode protections in domestic laws and give radical new powers to multinational corporations when it comes to labor issues, environmental and safety standards, land-use rules, public health, food safety, financial regulations, Internet freedom, and more
Lori Wallach of Public Citizen calls the TPP a “corporate trojan horse.” Wallach’s interview with Democracy Now:
http://www.democracynow.org/2013/10/4/a_corporate_trojan_horse_obama_pushes
http://www.citizen.org/TPP
http://www.exposethetpp.org/
- Look Ahead
- WA
- Verified
Now we know why the GOP was so desperate for a Shutdown. They had to sabotage a gradually improving economy and any possibility of job growth. Expect more of the same in the future.- Alan
- New York, NY
Of course there are some concerns, however, the Great Recession officially ended in 2009. We are much further along in the recovery. There is always bad news and concerns, but in the bigger picture the economy is recovering slowly and steadily. We've come a long way from the economic abyss of Fall, 2008, and things will continue to improve.- Know Nothing
- AK
You must have a Job; I do not- Franklin Schenk
- Fort Worth, Texas
Know Nothing, Perhaps it is because you "know nothing". Have you every tried educating yourself? I pumped gas when I lost my job as an aeronautical engineer.- hen3ry
- New York
- Verified
Definition of a recession: when the other person loses a job and can't find a new one.
Definition of a depression: when you lose your job and can't find a new one.
- dave lyons
- calif
"Residential housing investment rose by 14.6 percent, a slight pickup from the already-robust gains in the first half of the year. "
the question is with so many houses on the market, are real people buying houses or just investment companies?
Here in California the cost of housing has always been way above average and recently this county was among the top ten "too expensive" place to retire in. A few days ago, I saw a sign -twirler at an apartment house trying to draw in someone to rent a vacant apt. Never saw that here in 55 years. If housing is expanding, it doesn't seem to be in apartment rentals, some of which have gone begging for 2-3 months.
I still get more than what I think is a fair amount of begging e-mails with sales on this or that, software companies practically giving aware their work for pennies on the dollar, local stores closing, or having unending sales,etc. If the economy is picking up, as they say "it ain't here".
why is the economy so sluggish? "Uncle Ben" replaced the Grinch and stolen Christmas for the past 5 years with his crazy QE policies. The "little guy" has taken it in the shorts by getting practically ZERO on his savings, and if we make up 70% of the GDP, then we need money to spend. The interest I used to earn paid a half-years rent. Now, my principal is going down the drain never to be replaced and with it any real security that I (a millions of others) might have had. Food stamps here I come!- Martha Shelley
- Portland OR
Food stamps? There won't be any for you, Mr. Lyons. Once your principal is gone, you can check out the price of cat food. However, per today's NY Times, the government is giving $millions in agricultural subsidies to billionaires.
Next thing, the 1% will bring back the droit du seigneur.
- WW
- LA
- Great. But think how well Americans would be doing now if the Republican party was not bent on stalling the economy until Republicans are back in power so they can take credit for the economic prosperity.
- For example:
- The "sequester"
- The federal government shutdown
- Threatening to default on the federal debt
- The record number of filibusters
- The historically low amount of legislation passed by Congress
- The record number of presidential appointments that have stalled.
- Meanwhile, corporations are sitting on a record high multi-Trillion dollar pile of cash. Cash that could be used for R&D, jobs, capital improvements, and more.- WKing
- Florida
Please explain why the volume of legislation passed is a metric of good government.- al
- boston
WW,
I've given it a thought, as you advised. Here what I think.
If I had an extra $100 today I could've given it to the gov to buy a used outdated tablet for a local school, so that someone ELSE'S child could use it for her homework.
Or I could hire an illegal migrant to work a cornfield to sell the corn to China or India, where I could use the profit to set up a shop refurbishing used tablets that I could sell back to the US, thus turning my $100 into a $1000 within a harvest season. Meaning 900% annual growth.
Now compare that to the reported 2.8% growth in the 3rd quarter. "Think of how well would this American be doing" if the Democrat gov did not hamstring him with their regulations. Think also of how much more revenue he'd bring to America in tax money, even at a low rate.
- RLS
- Virginia
- Verified
Who is benefiting from this economy?
Corporate profits are their greatest percentage of GDP in history, while workers’ wages have fallen to their lowest share of GDP.
The median wage was $27,519 last year, the lowest level since 1998 ($26,984). Since 2009, 95% of all new income has gone to the top 1 percent. Corporate profits have gone up 121% when adjusted for inflation since 2000.
The average income for people making more than $50 million rose to $97.5 million last year, an increase of almost 20% in one year and income for people making $5 million or more went up 40%.
The median family income was less last year than in 1989. The average middle class family has seen its income go down by more than $5,000 since 1999.
Average male workers made $283 less last year than they did 44 years ago. Average female workers earned $1,775 less last year than they did in 2007.
Last year, 46.5 million Americans (21.8% of all children) lived in poverty. More seniors lived in poverty last year than in 1972.
The minimum wage was last increased in 2009. Before 2007, the minimum wage was stuck at $5.15 for “ten years.” How can Australia afford to pay its workers a living wage ($16.37 for adult workers, roughly 15.00 USD)?
“Over the past ten years, the profits of corporations and proprietors have amounted to an average of 20.4% of America's national income. The equivalent figure in Australia is 12.7%.”
Fair Work, Fair Pay: Lessons From Australia
http://truth-out.org/opinion/item/5601- Concerned Citizen
- Anywheresville
@RLS: nothing whatsoever, sir, keeps you from emigrating to Australia. They general welcome skilled workers, and being a native English-speaker would likely be a plus.
You will however discover quickly that the $15 per hour minimum wage means that a hamburger is $6, a can of Coke (at the supermarket, ONE can) is $3 and a gallon of milk is $7. And a small one bedroom condo is way over $250,000.
- Patrick
- Long Island NY
Terrific news. The first quarter was so-so with the start of the increased payroll tax but the economy took off despite the higher payroll tax in the second quarter and promises to be still growing albeit just a little slower because of the Congressional charades, in this quarter.- BrentJatko
- Houston, TX
If the 4Q numbers are indeed lower I predict Republicans will blame Obama for the shutdown that they caused.- dave lyons
- calif
the payroll tax that was on "holiday" was just shifted to the federal budget since the gov't made up the difference, so where is the gain? Nationally, we are worse off thanks to a dumb decision. Our deficit increased (with interest) and then its re-start caused people to think their taxes went up. FICA is the best thing for the working class as it is a permanent savings account that will one day save them from poverty. It is the only money people have that they can't blow on junk purchases--at least immediately. We need to fix social security and increase the cap and include all forms of income to make it solvent beyond the current expectation which is now 2035. SS is in no danger--it is congress that is creating the panic over a non-budget issue. sadly, people are so poorly informed that don't realize that their social security is not an entitlement but something that was earned over their working lifetime by contributions in equal amount from them and their employers. They should look at their employer's contribution as an "every payday bonus" rather than grouse about a 6.5% contribution that comes from their paycheck.- Barry C
- Sonoma County, CA
Not so terrific news just yet ...
If those growing inventories aren't turned into sales in short order, the gains will be short-lived. Given much of that build-up anticipates the holiday season, those first retail data post-Thanksgiving will provide a critical "tell" as to sustainability.
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