U.S. GDP unrevised at a 0.5% fall for third quarter (0.5% GDP contraction)

Market Watch ^ | 12/23/08 | Greg Robb

[TigerLikesRooster]

U.S. GDP unrevised at a 0.5% fall for third quarter

By Greg Robb, MarketWatch

Last update: 8:46 a.m. EST Dec. 23, 2008

Comments: 173

WASHINGTON (MarketWatch) -- The U.S. economy slowed sharply in the third quarter, declining at a 0.5% annual rate, unrevised from last month's estimate, the Commerce Department reported Tuesday.

It's the weakest quarterly growth rate since the first quarter of 2001. The economy grew 2.8% in the second quarter. Economists now say that a recession began December 2007, based on data showing declining employment, incomes and industrial production. But it didn't really sink in until the July-September quarter.

For the current quarter, economists are predicting a sharp decline in the neighborhood of 6.0%. This would be the biggest drop since the early 1980s.

Gross domestic purchases -- the total value of goods and services bought by U.S. residents -- fell 1.5% in the third quarter, experiencing downward momentum after falling only 0.1% in the second quarter. Final sales of domestic product, including exports, fell 1.3%.

[TigerLikesRooster]

Ping!

[JasonC]

Annual rate - that means the actual decline within the quarter was 0.125%, aka the real economy is .99875 times as large as it was in the stimulus-package goosed second quarter, and still larger by 0.6% than in the first. The great depression this is not.

[TigerLikesRooster]

I don’t know. So much debts to clear. No real deep pockets in the world to plug the hole. It is too early to make such a declaration. Or we could replace it with big inflation.

[blam]

Sadly, The Worst For The Economy Is Yet To Come

[Sacajaweau]

Up the minumum wage.

Ignore the high price of oil...

Create a mortgage market for people with lousy credit and lousy work ethics...

Support Illegal immigrants

Voila!!

[spikeytx86]

Spent an hour last Friday looking for a Restaurant here that did not have an hour plus wait. I guess someone forgot to tell everyone we were in a Great Depression.

Which begs the question, what if the media threw a Great Depression and nobody showed up?

[Sybeck1]

Up the minumum wage.

And unemployment will continue to rise......

[expat_panama]

what if the media threw a Great Depression and nobody showed up?

Waddya talkin' about, it's already official that since the 2007 Great Bush Depression, the gdp has gone from $13950.6B to $14412.8B

this a shrinkage of a negative half trillion dollars!!!!!

You know things must be bad if even the losses are negative, right?

[FreeAtlanta]

I am so confused. Does this mean that the GDP was actually positive growth in the 3rd quarter? If so, then we still haven’t entered the “recession” the media and Liberal/Democrats want so badly.

[KarlInOhio]

The economy grew 2.8% in the second quarter. Economists now say that a recession began December 2007, based on data showing declining employment, incomes and industrial production

Where did this new definition of a recession come from? I had always heard that it was two consecutive quarters of GDP contraction, which (presuming that in the fourth quarter it shrinks) would mean the recession started July 2008.

[JasonC]

There are tons of deep pockets in the world, and who do you think owns all the debt? There is no such thing as a net debt. If people are going to default on their debts, guess what? They don't owe them. If they don't default on their debts, guess what? Then their debts are money, for those who lent it.

Everything is owned, and owned exactly once. You can't make anything worthless just by borrowing against it, all you do is change who might wind up with it if the borrower can't make good. All the houses are there, all the commercial properties, all the factories. This doom-mongering is just illiterate superstitious the gods must hate us nonsense, start to finish.

[JasonC]

They threw out the definition because it would have had the professors who announce such things announcing the recession starting the instant Obama takes office. The 3rd and 4th quarters of 2008 will be the first back to back down ones. But they changed the rules to shove it back into last year. Liberals lie for a living, it is what they do, it is all they ever have done or ever will do.

[JasonC]

No, it was positive in the 2nd, and very slightly down in the third. But still above the level of the 1st quarter. There won't really be a recession until the 4th quarter numbers are in, in January. But hey, then they'd have to announce the recession commencing on inauguration day, and they can't have that. So to heck with the definition, just wing it. It is all Bush's fault, remember?

[expat_panama]

There won't really be a recession until the 4th quarter numbers are in, in January

We no longer need two consecutive negative quarters; in fact this current officially designated recession is seeing an expanding gdp.   Here are the BEA figures from their site:

US GDP	current $B	chained $B
2007	13,510.90	11,357.80
II	13,737.50	11,491.40
III	13,950.60	11,625.70
IV	14,031.20	11,620.70
2008	14,150.80	11,646.00
II	14,294.50	11,727.40
III	14,412.80	11,712.40

[Toddsterpatriot]

LOL!

[TigerLikesRooster]

Well, the problem is that valuation(or price) changes, subject to demand and supply. What you thought is worth one million dollars' worth of stocks or securities can be two million tomorrow or 100K one year from now. At the moment of transaction, things of the same value changed hands. However, after that, their value undergo changes. You don't have to do the transaction of sell or buy. Others sell or buy, which sets new price and your asset value changes accordingly.

Change of expectation or perception drives it in asset market. If expectation or perception is misplaced, we are on the verge of insolvency. It is not like 50% would go down and the loss in the former will be realized as gain for the other 50%. That is rather superstitious, isn't it? Demand collapses, the price will plummet and your asset value will dive. Demand collapse and supply surge will be doubly damaging for price. Not all securities have to be at the market. Only 5% of them could be out on the market at any given time. Still they can set the price way high or way low. Buyers or sellers willingness to buy or sell respectively will determine the price. In this case, price differentials are not transferred from one party to another. It is not the zero sum game. In this market, over time both can benefit or both can lose. There is win-win and then there is lose-lose. We are in the lose-lose phase, due to changed perception. Or shall we say we suddenly realized that stuffs we have and what we see at the market are not as good as gold but as worthless as dirt? That does not mean that insolvent businesses won't have fine workforce, great equipments.

[expat_panama]

We do live in unusual times...

[KarlInOhio]

in fact this current officially designated recession is seeing an expanding gdp.

You have to adjust for inflation, otherwise you could print stacks of money, devalue the currency and pretend that more stuff is being produced rather than less just because the dollars have one more zero at the end than they did last month. The second column adjusts for inflation. The drop from Q2 to Q3 is 0.13%. If you multiply that by four you get the quoted annual rate of -0.5%.

[expat_panama]

You have to adjust for inflation,

We can do it either way which is why I showed both sets.  Look at the inflation adjusted numbers and note how they get bigger in all but two quarters.  Also, look at how the size of the GDP is bigger than it was in the beginning of the recession even after adjusting for inflation.  After adjusting for inflation this economy grew to the tune of 86.7 billion inflation adjusted dollars.

multiply that by four you get the quoted annual rate of -0.5%.

Right, the -0.5% is what this past year of recession would be if all quarters were just like the third one.   This the just like the -0.5% drop in the 3rd quarter of Clinton's economy before the '00 election.  That one wasn't a recession even though it was the same -0.5%.  Regardless, we have not had four quarters just like this last one.  What we've had has been an expanding recession.   This is something that's never happened before.  It's a lie.  We have got to recognize this.