Posted on 05/01/2006 8:39:44 PM PDT by RWR8189
Despite a great deal of pessimism, the US economy is booming. Real GDP grew by 4.8% in the first quarter, while "core" real GDP (consumer spending plus fixed investment) expanded at a 6.4% annualized rate. Excluding the volatile transportation sector, durable goods new orders surged 2.8% in March and are up 9.6% in the past year. Sales of both new and existing homes exceeded expectations in March, while commercial and industrial loans have expanded at a 14.5% annual rate during the first three months of 2006. For April, Wal-Mart blew away expectations and reported 6.8% same-store sales increases.
The reasons for this boom are entirely understandable. First, the US is experiencing an unprecedented period of productivity growth as technology proliferates. Second, tax rates on long-term capital gains and qualified dividends were dialed back to 15%in May 2003 - which turned on the entrepreneurial spirit almost instantaneously. Third, monetary policy remains accommodative, a fact that has been widely, and wildly, underappreciated.
Even though most people think of the Fed in terms of interest rates, in reality the Federal Reserve only controls one policy tool - money. When the Fed adds money to the economy, the growth rate of nominal GDP (otherwise referred to as total spending or aggregate demand) accelerates. When the Fed subtracts money from the economy, nominal GDP growth slows. In short, the amount of money in the economy determines the level of spending.
Nominal GDP slowed from roughly 6% growth in the late 1990s, to a deflationary 3% in the early 2000s. Since 2002, nominal growth has accelerated to its current rate of 6.7%. This acceleration in nominal GDP growth is an obvious signal of accommodative monetary policy. Rising commodity prices and a falling dollar also indicate that the Fed has been adding more liquidity than the economy really needs.
Historical relationships show that a growth rate of 6.5% in nominal GDP means that the neutral federal funds rate is somewhere between 5.5% and 6.0%. The longer the Fed holds rates below that level, the faster nominal GDP will grow, which in turn drives up the level required to be "neutral."
The bottom line is that the Fed is still accommodative. In addition, technology and tax rates are positive forces boosting the economy. For this reason, the economy is highly unlikely to slow as the conventional wisdom believes. The boom will continue.
(Brian Wesbury is the Chief Economist for First Trust Advisors in Chicago, IL)
More great news we'll never hear on the drive-by media.
No, the economic boom is true! It's because of all the illegal Mexican aliens doing all the work, don't you know?/sarc.
No matter how the junk media spins and fabricats polls...this is reality in America, and this is how people vote.
And for this, among other things, we owe our gratitude to 550 Floridans, and 60,000 Ohioans. I shudder when I think of John Kerry's campaign promise (in his drab monotonous voice).." We ^ will ^ roll ^ back ^ the ^ tax^ cuts^.." Even if he failed to keep every other promise, John Kerry would have most definitely delivered on this. For if a democrat promises to raise your taxes, you better believe him...
Maybe that's why we are in trouble. Everyday American's in the past, have not put their priority on making money, only on being free and honest. When you put your priorities on Wall Street quotes and international gains and power, you are lost. You are no longer an American. In fact, you have become nothing. You have become everything true American's have fled from and fought against. God bless and help America.
The real question about "Real GDP grew by 4.8%" is what inflation rate was used to adjust GDP to get Real GDP. If the government used the phoney CPI numbers to reach the 4.8%, then Real GDP is way overstated!
The BEA doesn't use CPI when determining real GDP.
Ain't it about time for a DNC/Dean rant on how BAD, BAD I SAY! things are in this oountry? And by the way, let all the illegals in here, we don't want anyone to escape all the suffering.
The economic boom is the only thing keeping the illegals from being chased all the way to the border and out of the country.
If more people were suffering economically among Americans, their inaction would become action against illegals.
It's all cyclical though.
Just because we have about an average 4% growth over the past 5 years and unemployment is lower than it has been in decades and the stock market is soaring and wages are up and...........oh hell I can't go on........the ECONOMY IS just SO DAMN BAD!!!
Consumer Confidence Hits 4-Year High
Consumers shrugged off higher gasoline prices in April and sent a widely watched barometer of consumer confidence to its highest level in almost four years. The New York-based Conference Board said that its consumer confidence index rose to 109.6, up from a revised 107.5 in March. April's reading was the highest since the index touched 110.3 in May 2002.
Consumer confidence buoyed by a robust economy and plentiful employment opportunities has confounded Democratic strategists. "There is no justification for this confidence," said Howard Dean, chairman of the Democratic National Committee. "It is in direct contradiction to our message that this is the worst economy in U.S. history."
Dean went on to blame Republican initiated tax cuts for a "false sense confidence." "This can't really be happening," said Dean. "The Republican claim that letting taxpayers keep more of their earnings stimulates them to work harder and invest more conflicts with everything I know about economics. Rising incomes are luring consumers into a false sense of confidence."
Dean says the DNC will get things turned around. "We are stepping up our criticism," said Dean. "By election day, we think voters will be ready to punish Republicans for a disastrous economy even if statistics stubbornly continue to indicate economic prosperity."
read more at...
http://www.azconservative.org/Semmens1.htm
The U. S. economy is booming and will continue unless Democrats get their wish. The only real hope Democrats have of regaining power is if they can bring about any of the following:
1. Be successful in engineering an assassination or two.
2. If they can pull off a military coup.
3. If gas prices double.
4. If they can help terrorists make a major attack.
5. If they can legalize illegal aliens.
6. Massive voter fraud
7. Or all of the above.
Naaaaahh... we don't elect dictators, we elect Presidents. BUSH can't even get the House of Representatives to play along with HIS liberal-to-moderate agenda... You think they'd go along with Kerry's wide-eyed kookball agenda?
>> 1. Be successful in engineering an assassination or two. <<
Well, three... And then they'd be stuck with a President Byrd.
>> 2. If they can pull off a military coup. <<
In this country? They think there's already been one!
>> 3. If gas prices double. <<
Done that... In these parts, TWICE! (I remember 79 cents a gallona few years ago; it's now $3.19)
>> 5. If they can legalize illegal aliens. <<
Well, Bush is sure destroying all political capitol to make that dream a reality for Nancy Pelosi and Teddy K.
>> 6. Massive voter fraud <<
So, they fell 1.5 million short...
There's one that scares me:
>> 4. If they can help terrorists make a major attack. <<
"Despite a great deal of pessimism, the US economy is booming."
Blink,blink, blink blink blink!
That web site is very funny satire. Sadly, I had to visit that link to realize it was satire.
"We must not let the threat of an expanding economy defeat our objectives"
-- Franklin Delano Roosevelt... in real life... to the the Democratic National Convention... seventy years ago...
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