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GDP surges 7.2%, fastest in 19 years
CBSMarketwatch.com ^ | 10-30-2003 | Rex Nutting

Posted on 10/30/2003 6:36:13 AM PST by 69ConvertibleFirebird

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ECONOMIC REPORT
GDP surges 7.2%, fastest in 19 years
By Rex Nutting, CBS.MarketWatch.com
Last Update: 9:22 AM ET Oct. 30, 2003

WASHINGTON (CBS.MW) -- Powered by tax cuts and low interest rates, the U.S. economy expanded at a 7.2 percent annual rate in the third quarter, the fastest growth in more than 19 years, the Commerce Department said Thursday.

The first estimate of real gross domestic product was considerably stronger than the 6 percent consensus forecast. The economy grew 3.3 percent in the second quarter. Read the full release.

The growth rate is a testament to the power of monetary and fiscal stimulus to boost final demand. Final sales of domestic product grew 7.8 percent, the best in 25 years. Real disposable income increased 7.2 percent. John Maynard Keynes would be proud of his disciples, Alan Greenspan and George W. Bush.

Real GDP is adjusted for price charges. In current dollars, nominal GDP increased 9 percent to $11.04 trillion.

U.S. stock futures bounced higher on the report, pointing to a strong opening. See full story. Bonds tumbled, with the 10-year yield rising to 4.37 percent from 4.26 percent Wednesday. See Bond Report.

Growth was balanced in the quarter, with strong contributions from consumers and businesses, spending and investment. Government spending and net exports also added to growth. The only negative forces were inventory accumulation and investments in business structures.

Fiscal and monetary stimulus peaked in the quarter. Tax rebate checks and lower tax withholding increased disposable incomes, while 40-low interest rates reduced borrowing costs and fueled cash-out refinancings, healthy increases in auto sales and record home sales.

The question now is how sustainable the growth is. Will job growth resume to give consumers more income to replace the boost from tax cuts and mortgage refinancings? Will capital spending keep expanding at a rapid rate? Will higher interest rates choke off the recovery? Will the weakening dollar reduce the large current account deficit and bring more production back to the United States?

In separate reports, the Labor Department said employment costs rose 1 percent in the third quarter, including a 1.5 percent increase in benefit costs. Higher health care costs are drag on job creation.

Meanwhile, the Labor Department said the average number of initial claims for unemployment benefits over the past four weeks fell by 4,750 to 388,750, the lowest since February. See full story.

"The American economy is headed in the right direction thanks to President Bush's jobs and growth agenda," said Commerce Secretary Don Evans.

"The stage is set for another sharp gain in the fourth quarter," said Steve Stanley, an economist for RBS Greenwich Capital. "The acceleration in spending on equipment and software is a particularly significant development and bodes well for future gains in employment, as firms are apparently feeling increasingly confident about their business prospects.

Consumer spending surged ahead 6.6 percent, the best in more than five years. Led by strong auto sales, purchases of durable goods rose 26.9 percent, the best in 15 years. Spending on non-durable goods rose 7.9 percent, the best in 27 years. Spending on services increased 2.2 percent.

Consumers also increased their investments in residences by 20.4 percent, thanks to record low mortgage rates during the summer months that boosted housing starts by more than 30 percent.

Businesses did their part, as well. Investments in equipment and software rose 15.4 percent, the biggest swing in capital spending since the first quarter of 2000. It's the fifth increase in capital spending in the past six quarters following six straight quarters of declines.

Investments in business structures fell 2.4 percent, the seventh decline in the past eight quarters. In all, nonresidential investment rose 11.1 percent.

Businesses remain cautious, however. Inventories were reduced by $35.8 billion, subtracting about 0.7 percentage points from growth. Once businesses decide to replenish their stocks, production and employment should rise, economists say.

The nation continued to run a large trade deficit with foreign economies. But the gap shrank in the third quarter, so net exports added about 0.8 percentage points to growth. Exports rose 9.3 percent while imports increased 0.1 percent.

Government spending increased 1.3 percent, with equal contributions from the federal government and state and local governments. Defense spending was flat.

Inflation accelerated slightly during the quarter. The gross domestic purchases index rose at a 1.9 percent annual rate after rising 0.4 percent in the second. Energy prices accounted for much of the increase, but even the core rate accelerated to 1.5 percent from 0.8 percent. The personal consumption expenditure index rose 2.4 percent with the core PCE index up 1.8 percent.Rex Nutting is Washington bureau chief of CBS.MarketWatch.com.



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TOPICS: Business/Economy; Extended News
KEYWORDS: boom; bushrecovery; economy; markets; stocks
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Submitted with my appologies to the doom and gloom Freepers, of course...

Final sales of domestic product grew 7.8 percent, the best in 25 years.

In current dollars, nominal GDP increased 9 percent to $11.04 trillion.

Meanwhile, the Labor Department said the average number of initial claims for unemployment benefits over the past four weeks fell by 4,750 to 388,750, the lowest since February.

Let the DemocRATs (and whinner Freepers) keep shrieking about the worst economy ever...

1 posted on 10/30/2003 6:36:13 AM PST by 69ConvertibleFirebird
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To: 69ConvertibleFirebird
But the French Senator said this....

"This is the worst economy since Herbert Hoover" – John Kerry, 8/6/03
2 posted on 10/30/2003 6:37:19 AM PST by finnman69 (cum puella incedit minore medio corpore sub quo manifestus globus, inflammare animos)
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To: 69ConvertibleFirebird
And who was president 19 years ago? Ronaldus Maximus!
3 posted on 10/30/2003 6:39:08 AM PST by Frank_Discussion (May the wings of Liberty never lose a feather!)
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To: 69ConvertibleFirebird
If Bush were smart, every speech he gave would have a 'fastest growing economy in decades" banner behind him. Let Lefty Pelosi or "French John" Kerry piddle over that one!
4 posted on 10/30/2003 6:39:34 AM PST by .cnI redruM (I ain't sayin' nothin', but that ain't right! - Stewart Scott, ESPN.)
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To: 69ConvertibleFirebird
I remember conversations on here earlier this week that the media was promoting the number 7% so that it could come out at 6.8% and their headlines could be "Economy falls short of predictions".

Well now what are they going to do?

Even the NY Times has had to admit, in print, that the Bush Tax cuts are the primary fuel in the economic engine right now.

5 posted on 10/30/2003 6:39:35 AM PST by Phantom Lord (Distributor of Pain, Your Loss Becomes My Gain)
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To: 69ConvertibleFirebird
Real disposable income increased 7.2 percent. John Maynard Keynes would be proud of his disciples, Alan Greenspan and George W. Bush.

Ahhh, isn't Bush the opposite of Keyens on economics?

6 posted on 10/30/2003 6:41:06 AM PST by Phantom Lord (Distributor of Pain, Your Loss Becomes My Gain)
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To: Phantom Lord
duplicate thread

http://www.freerepublic.com/focus/news/1011220/posts
7 posted on 10/30/2003 6:41:35 AM PST by petercooper (Proud member of the VRWC)
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To: Phantom Lord
You're right, I remember hearing that exact prediction (that the economy would prove to fall short of expectations) somewhere. The dem candidates must be crying in their beer at this point.

Now if we can just turn things in Iraq around, the election will be all sewed up . Dorothy Rabinowitz had a good article on Opinion Journal about the Democratic debate. She said that they were making a Republican campaign commercial, that all the Republicans needed to do was play video tape of the various remarks by the candidates to show their unelectability.
8 posted on 10/30/2003 6:48:03 AM PST by Eva
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To: petercooper
duplicate thread

Yes, except for the author, the source, and much of the content.

9 posted on 10/30/2003 6:49:17 AM PST by 69ConvertibleFirebird (Never argue with an idiot. They drag you down to their level, then beat you with experience.)
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To: 69ConvertibleFirebird

Deeply, deeply saddened.

10 posted on 10/30/2003 6:54:40 AM PST by KarlInOhio (Pining for the fjords.)
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To: 69ConvertibleFirebird
These lines about "how sustainable" this will be can be likened to this:

Vikings Score Again to Take 52-0 Lead Over Bears. Some Question How Sustainable Vikes' Momentum Is!"

11 posted on 10/30/2003 6:56:33 AM PST by LS
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To: KarlInOhio
Damn! Damn! Damn! You realize several Freepers need to be on a suicide watch over this!
12 posted on 10/30/2003 6:57:18 AM PST by LS
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To: petercooper
duplicate thread

No, it isn't. Using your logic, 2 thread that both dealt with the Govenor's race in California, despite being written different news organizations, journalists, and sources would have been "duplicate threads."

13 posted on 10/30/2003 6:58:14 AM PST by SkyPilot
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To: Eva
You have apparently bought the lefties message hook line and sinker regarding Iraq. You said "now if we can just turn things around in Iraq..."

That perception is even more ridiculous than those Clinton b*ttlickers statements about how bad the economy is going. President Bush and the USA scored one of the greatest victories in history, and the reconstruction efforts are going fine (despite the very regrettable loss of soldiers occasionally).

Please don't inadvertantly pass along the Beast's propoganda so easily.

14 posted on 10/30/2003 7:01:44 AM PST by Husker8877
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To: 69ConvertibleFirebird
John Maynard Keynes would be proud of his disciples, Alan Greenspan and George W. Bush.

Keynes? Keynes?

Real Answer: Ludwig von Mises market economy.

Call it supply side, call it market economy but it's anything but Keynesian.
15 posted on 10/30/2003 7:02:04 AM PST by Bosco
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To: 69ConvertibleFirebird
GDP surges 7.2%, fastest in 19 years...

Women, Children, Minorities to Suffer Most....

16 posted on 10/30/2003 7:03:28 AM PST by clintonh8r (A gentleman should know something about everything and everything about something.)
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To: 69ConvertibleFirebird
It is growing inspite of daschle and the do nothing democraps.I wish the flea's of a thousand camels would infest the armpits of the democrats.
17 posted on 10/30/2003 7:03:49 AM PST by solo gringo (Always Ranting Always Rite)
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To: Husker8877
I was referring to reducing the terror attacks in Iraq, not because the reconstruction is going badly, but because it would remove the last campaign complaint of the Democrat candidates.
18 posted on 10/30/2003 7:05:51 AM PST by Eva
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To: Eva
I understand.

Of course lies are the only thing the evil dems have. That those lies put our soldiers at greater risk means absolutely NOTHING to them.

19 posted on 10/30/2003 7:17:14 AM PST by Husker8877
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To: LS
Damn! Damn! Damn! You realize several Freepers need to be on a suicide watch over this!

I know the ones you are refering to...

20 posted on 10/30/2003 7:24:54 AM PST by 69ConvertibleFirebird (Never argue with an idiot. They drag you down to their level, then beat you with experience.)
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