Posted on 11/29/2007 6:32:25 AM PST by Sub-Driver
Economy Grew 4.9% in 3rd Quarter, Up From Previous Estimate of 3.9% By JEFF BATER November 29, 2007 9:06 a.m.
WASHINGTON -- The U.S. economy soared last summer, growing at a rate much stronger than earlier estimated, but the earnings of companies were flat, the government reported Thursday.
Gross domestic product rose at a 4.9% annual rate July through September, the fastest quarterly pace since 7.5% in third-quarter 2003, the Commerce Department said.
The new, 4.9% estimate for third-quarter 2007 GDP reflected a revision up from a previously reported 3.9% increase. Higher inventories and exports were behind the government's revision to GDP, a measure of all goods and services produced in the economy.
The median estimate of 20 economists surveyed by Dow Jones Newswires was a 4.9% increase in the third quarter. The surge beat the strong, 3.8% pace of second-quarter GDP. But data suggest the economy slowed, perhaps sharply, in the current, fourth quarter; the first estimate of GDP for the period won't be released until Jan. 30.
Corporate profits after taxes were unchanged in the third quarter, at $1.152 trillion, from the second quarter, the report showed. Profits in the second quarter increased 5.2%. Year-to-year, profits rose 2.7% since the third quarter of 2006.
(Excerpt) Read more at online.wsj.com ...
Is food even close to the largest % of your budget? It’s about 4-5% of mine.
Profits dropped a lot due to write downs in the subprime shake out. Besides financial corporations, profits increased around $12 billion.
Add Gasoline — I live in Nebraska which is 500 miles across. Rises in Gasoline hits us hard. Not to mention farmers.
Roll that gasoline cost into any item trucked into the cities, too.
And Energy? I got a new furnace/AC last year to reduce energy costs (I’m retired on fixed income) but my level payment plan went up a lot.
Are you not noticing the inflation in your budget? those examples were for simplicity sake.
I’ve seen food and gas go up by a decent amount. Electricity is up around 4% here. Housing drop, clothing drop, electronics drop, computers drop. Pretty much everything else has been flat for me. My overall cost of living is probably around 2% more than last year. Meanwhile average median wage increase in my area is up around 3.5-4%.
Never mind.
So the answer to my question about the GDP rise does NOT reflect to the fall of value of the dollar. Thanks.
Correct.
But when you know the behavior of markets, you also know that when financials lose money, they pull their heads in, lending slows, and as a result the economy slows.
You can see the results in the Fed’s Beige Book survey from yesterday.
Long story short: The administration’s handling of the problems in the finance sector has been pathetic. It does have the power to push the economy into recession, and it appears that the sub-prime problem is spreading into other sectors of the economy - listen to cisco’s conference call and NB how Chambers makes specific mention of the collapse in IT spending from the financial sector. Look at how non-mortgage lending is being impacted, etc.
The Bush administration appears completely AWOL on the one issue that has a better chance than any other of delivering the WH into Hillary’s hands next year. Complete malfeasance, IMO.
It does reflects inflation adjustment but not the fall to other currencies. GDP growth rate before inflation adjustment grew at 5.9% in Q3.
Won’t argue with that.
The Fed reports on inflation “ex food and fuel” - and guess what? Those are the two areas in the economy where we’re seeing very tidy rates of inflation.
This manner of reporting inflation - ie, the Fed’s obsession on wage inflation - is nearly useless in this cycle of commodity-driven inflation. The increase in consumer prices due to fuel/food pass-throughs show up much later than if the reporting took food & fuel into account in the inflation computations.
Millions of savers are being robbed of their personal savings with the devaluation of the dollar. If this isn’t clear to everyone, you need to learn more about the dollar devaluation.
http://ftalphaville.ft.com/blog/2007/11/07/8713/the-dollars-slide-13-down-and-falling-faster/
Here is a chart of the dollar’s buying power since the 1970’s.
The $ dropping vs the Euro & Pound isn’t a huge cause for concern. There is very little that we can’t produce here for cheaper at this point than Europe. That is good for US business. Consumers get far more products from Asia. The $ is down 5% from then Yen in the last 5 years and 6% vs the Yuan. The dollar is up 2% vs the Peso in that same time frame. The high euro is killing exports and growth there while causing a huge boom here.
The Fed has many inflation measures. Many of which include food and fuel.
CPI & PPI do include food & fuel. Core CPI does not. CPI is just over 3%. Core CPI is at 2%.
“From October 2006 to October 2007, finished goods
prices advanced 6.1 percent. Over the same period, the index for finished energy goods climbed
16.6 percent, prices for finished consumer foods rose 7.1...”
That's not buying power, that's conversion rate.
And our 65,000 troops in Germany? Do you suppose we hire contractors there and pay them in Dollars or Euro?
Personally, I’d bring them home now that the cold war is long gone or move them to Afghanistan/Iraq. Besides, they still get food and shelter provided by the military so it’s not like they could be that worse off. If the military wanted to offer a cost of living adjustment there then that’s fine..but that’s 65k people out of a US population of well over 300,000,000
DOOMED!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.