Growing Economy

Economy Surges in Third Quarter, Spending Soars
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By Glenn Somerville

WASHINGTON (Reuters) - Robust business and consumer spending powered the U.S. economy ahead at an even brisker clip in the third quarter than first thought, the government said on Tuesday in a report that also showed the biggest corporate profits jump in more than a decade.

Gross domestic product, or GDP (news - web sites), shot up at an 8.2 percent annual rate, more than double the second quarter's 3.3 percent gain and the strongest quarterly advance in 19-1/2 years.


A month ago, the Commerce Department (news - web sites) said GDP grew at a 7.2 percent rate.


The 8.2 percent gain surpassed Wall Street economists' forecasts for a revision to 7.8 percent. Bond prices initially dipped on the signs of resurgent growth but steadied later.


The report pointed to a long-awaited revival in corporate investment, with nonresidential business spending surging at a 14 percent annual rate, double the second quarter's 7.3 percent and ahead of the initially reported third-quarter rise of 11.1 percent.


Analysts said this number was especially heartening.


"This is a red hot economy," said economist Patrick Fearon of A.G. Edwards and Sons Inc. in St. Louis, Missouri. "It looks like a lot of the revision came in investments, which is a positive sign because that had been an area of real weakness for a while."


The department sharply revised its estimate of inventory reductions, saying stocks of unsold goods fell by $14.1 billion in the quarter instead of the $35.8 billion drop it originally reported.


Consumer spending, bolstered by tax cuts, grew at a revised 6.4 percent annual pace in the third quarter, below the 6.6 percent pace estimated a month ago but well ahead of the second quarter's 3.8 percent growth rate.


Most forecasters say the third-quarter jump in GDP is unlikely to be matched in coming quarters as the impact of this year's tax cuts wanes but they still foresee growth in a range of about 4 percent for the balance of this year and into 2004.


Economist Ken Mayland of Clearview Economics LLC in Pepper Pike, Ohio, said the report showed a better balance in growth that was promising for continued healthy expansion.


"The next phase of economic recovery has to be reinforced by capital spending ... here we have some very strong evidence that businesses loosened up on the purse strings: a real sign of confidence in the economy," Mayland said.


Corporate profits after tax climbed at a 10.6 percent annual rate during the quarter, a sharp change from the second quarter's 5 percent contraction. Commerce said it was the strongest pickup in profits since a 12.4 percent jump in the fourth quarter of 1992.


Fed officials have said firmer corporate profits are vital to sustained growth, not only because they bolster confidence but also because they provide the means and incentive for companies to hire new workers and add to production capacity.


Commerce will issue a final estimate of the quarterly growth data next month.





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"Democrats, however, argue that the tax cuts contributed to a record budget deficit in the recently ended 2003 fiscal year"

Dems can argue about the the national deficit all they want... until it disappears.
 
Originally posted by JohnGalt
"Democrats, however, argue that the tax cuts contributed to a record budget deficit in the recently ended 2003 fiscal year"

Dems can argue about the the national deficit all they want... until it disappears.
True, however I would like to see a reduction in federal spending, the size of government is not becoming smaller.
 
Manufacturing Up for 5th Month in Nov.

December 1, 2003 10:19 AM EST


The nation's manufacturing sector grew strongly in November, with the fifth consecutive monthly rise boding well for the overall economy in the final quarter of the year.

The Institute for Supply Management reported Monday that its manufacturing index rose to 62.8 last month from 57 in October.

An index reading above 50 indicates expansion; one below 50 indicates that manufacturing activity is contracting. From March through June, the manufacturing index was below 50.

The October reading was well above the 58.1 that analysts had expected.

The Institute for Supply Management's index is watched closely each month because it is the first major measure of the previous month's economic activity to be released.

Norbert J. Ore, chairman of the institute's manufacturing business survey committee, said the manufacturing sector had its best month since December 1983, noting a "big improvement" in employment, which grew for the first time after 37 consecutive months of decline.
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Originally posted by MtnBiker
True, however I would like to see a reduction in federal spending, the size of government is not becoming smaller.
I would venture to say that the overwhelming size of the government is due to too many social programs and too many hand outs. And an overwhelming majority of federal dollars spent on those things as well.
 
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Originally posted by MtnBiker
Manufacturing Up for 5th Month in Nov.

December 1, 2003 10:19 AM EST


The nation's manufacturing sector grew strongly in November, with the fifth consecutive monthly rise boding well for the overall economy in the final quarter of the year.

The Institute for Supply Management reported Monday that its manufacturing index rose to 62.8 last month from 57 in October.

An index reading above 50 indicates expansion; one below 50 indicates that manufacturing activity is contracting. From March through June, the manufacturing index was below 50.

The October reading was well above the 58.1 that analysts had expected.

The Institute for Supply Management's index is watched closely each month because it is the first major measure of the previous month's economic activity to be released.

Norbert J. Ore, chairman of the institute's manufacturing business survey committee, said the manufacturing sector had its best month since December 1983, noting a "big improvement" in employment, which grew for the first time after 37 consecutive months of decline. <--

I find it interesting to note that this thread started in October, and we're just now starting to talk about real hiring. But let's not be fooled. We're only hiring at the 120-135k per month rate, which is still less than the 150k per month needed to absorb new entrants into the job market. There are still an estimated 5+ million who have stopped looking for work, and another 1-2 million who are significantly unemployed. While I find this good news, I also find it curious that also comes when the tax refund benefit bulge occurs, and during the largest refinancing binge in this country's history. It will take another quarter or more before you've convniced me that we're really on the mend.
 
Originally posted by expose_writer

I find it interesting to note that this thread started in October, and we're just now starting to talk about real hiring. But let's not be fooled.
I'm not trying to fool anybody. Just posting articles about economic indicators. It takes time for an economy to show recovery, this thread could be updated for several more months.
 
Economists Predict Drop in Unemployment

January 2, 2004 06:40 AM EST


NEW YORK - Companies are expected to step up hiring in 2004 after a year in which household spending boosted the economy more than business investment, according to a group of economists surveyed by The Wall Street Journal.

The 54 economists surveyed for the Journal's 2004 economic-forecast report said they thought the unemployment rate could fall to 5.5 percent by November.

Hiring fueled by increasing corporate profits and economic growth could lead to as many as 1.5 million new jobs, the Journal said.

Though they did not predict a boom, the respondents said they expected the recovery to continue, with strong growth in the first part of the year expected to slow toward the year's end.

"The economy will be producing a message that employment is growing at a pretty good pace, but not booming," Richard Rippe, chief economist at Prudential Equity Group Inc., told the Journal.

Real gross product was expected to grow at an annual rate of 4.5 percent in the first quarter, 4.3 percent in the second quarter and 4 percent in the second half of the year, the economists said.

Half of the respondents said they thought the Dow Jones Industrial Average could exceed 11000 by year end, and 93 percent said they had increased the amount they had personally invested in the stock market in the past year.
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Fed Reports Economy Gathering Strength

Wholesale prices rose by 0.3 percent in December, mostly reflecting higher costs for gasoline and other energy products. January 14, 2004 07:06 PM EST


WASHINGTON - A batch of new economic reports Wednesday provided fresh evidence that the U.S. economy is continuing to gain momentum, with an unexpectedly sharp narrowing of the trade deficit and a strengthening of business activity in most parts of the country as the new year began.

The Federal Reserve reported in a nationwide survey that the economy continued to rebound from late November to the early part of this year, with retailers reporting a boost from a late surge in holiday shopping and even growing signs that the nation's battered manufacturing sector was beginning to pull out of its steep nosedive.

The Fed survey, compiled from reports from the Fed's 12 regional banks, said "the nation's economy has continued to strengthen" into the early part of January, with gains in such areas as auto and home sales and hints that rising orders were prompting manufacturers to begin rehiring some of the 2.8 million factory workers laid off over the past 3 1/2 years.

In another encouraging sign, the Commerce Department said Wednesday that the nation's trade deficit posted a surprising decline to $38 billion in November, down 8.6 percent from the October deficit and the smallest imbalance in 13 months.

The narrowing deficit reflected a 2.9 percent jump in exports to $90.6 billion, led by a surge in sales of civilian aircraft and soybeans and other farm products. Imports, which had hit a record high the previous month, dipped 0.8 percent to $128.6 billion in November.

Analysts credited stronger global economic growth and the falling value of the dollar against other currencies for the revival of U.S. exports and said the rebound was a major factor in their forecasts for a revival in manufacturing in the coming year.

"It's nice when economics actually works," said Joel Naroff, head of a Holland, Pa., economic forecasting firm. "The weaker dollar appears to be doing what it is supposed to do: increase exports, lower imports and narrow the trade deficits."

The news was reinforcing for Wall Street. The Dow Jones industrial average climbed 111.19 points, or 1.1 percent, to close at 10,538.37, more than making up for Tuesday's 58-point drop.

A third report Wednesday showed that the 13.5 percent drop in the dollar against other major currencies over the past year had not triggered one unwelcome side effect, rising inflation. A falling dollar makes U.S. exports cheaper on global markets but also raises the costs of imports to American consumers.

The Labor Department reported, however, that inflation at the wholesale level rose just 0.3 percent in December, reflecting a jump in energy prices. The Producer Price Index of wholesale prices had fallen by 0.3 percent in November.

Outside of the volatile energy and food sectors, the closely watched core inflation rate fell by 0.1 percent in December, matching the decline in November. It was only the third time since 1974 that the core inflation rate had posted consecutive monthly declines.

For the year, wholesale prices were up 4 percent, the biggest gain since 1990 and a reflection of the gains in energy prices. The core inflation rate outside of food and energy was up a much more benign 1 percent.

The new Fed survey will form the basis for discussion when central bank policy-makers hold their first meeting of 2004 on Jan. 27-28. Most analysts believe the Fed will continue to leave interest rates unchanged at a 45-year low of 1 percent for much of this year, hoping to provide a strong foundation for a sustained economic rebound in 2004.

David Rosenberg, senior economist at Merrill Lynch in New York, said Wednesday's inflation report supported his view that "the Fed remains on hold for all of 2004."

The Fed's regional survey said the strongest retail sales were reported by the San Francisco region, followed by solid gains in the Boston, Philadelphia, St. Louis and Kansas City districts.

Nearly all Fed districts reported increases in manufacturing activity in December and several noted that factory employment edged up a bit as well. This upturn has yet to register on the national unemployment figures, with the Labor Department reporting last week that factories cut an additional 26,000 workers in December, the 41st consecutive month of manufacturing job losses.

In agriculture, the Fed survey said that the finding of a case of mad cow disease in a herd in Washington state had resulted "in a great deal of uncertainty for cattle ranchers" with several districts reporting declines in cattle prices as a result of foreign bans on U.S. beef exports.
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...When you examine the statistics more closely, the gains in the stock market are a product of the improved profits generated by jobs cuts, not actual gains in sales or productivity. This upturn in the economy has produced remarkably few jobs, and left many out in the cold,,,literally.
 
Originally posted by tybalt
Those statistics include me as one of the "no-longer unemployed." After 15 months since being laid off from my job as Director of Engineering of a mid-size company that is now a small company, I took a job as a sales clerk at a local department store. Unfortunately, there was no $50k signing bonus. No $235k salary. No stock options. No 401k matching. No 401k. Not even basic health insurance.

I still get invited to give keynote speaches at technical conferences, and three of my patents issued in the last month. Looking back at the last few years, I can't believe how much I have accomplished. I co-authored two textbooks, published almost 100 technical papers, and commercialized some of the most interesting technology ever developed for wireless LANs. While I was employed, each day I received calls from head hunters and competitors trying to offer me a better deal. As the economy declined, so did the frequency of the calls. I started looking for another job 3 months before I got laid off. A few dozen of us continued to work at the company for no pay while we looked for other employment. Most of those people are still there trying to turn the company around. Unfortunately, the economy won't cooperate. The employer list of the few co-workers who found work is as follows: Dillards, Mike's Carpet, Puddle Car Wash, TGI Fridays, Walmart, Target... you get the idea. More statistics that show that unemployment is dropping and the economy is improving.

During the time I was unemployed, my conservative friends joked about me being a slacker. As my assets dwindled, they chided me for not "getting off my ass and finding a job." Unfortunately, none of my contacts could give me any opportunities, and my conservative friends are useless because they don't work. Talk about slackers, I accomplished more in one year than all of my Republican slacker friends combined have accomplished in their whole lives. They just snort coke in the country club lounge while the dividend checks roll in.

Experiencing how the other 99% lives is forcing me to temper my conservative viewpoints. By the way, since I have a PhD in Electrical Engineering, is it inappropriate to ask the zit-faced 16-year-old kid who is my manager to call me "Doctor"?


Yes. It does sound like you're quite the dynamo. We all got ramrodded by the bust in the tech bubble. It was all just a nice dream, man.
 
Another sad story, time to stop feeling bad for yourself and determining your own destiny !;)
 
Originally posted by eric
Another sad story, time to stop feeling bad for yourself and determining your own destiny !;)

Did you mean START determining your own destiny? Cuz that's what I was thinkin'.
 
Originally posted by eric
Another sad story, time to stop feeling bad for yourself and determining your own destiny !;)

are you talking about working for yourself eric? like starting a business or something?
 
Originally posted by eric
Another sad story, time to stop feeling bad for yourself and determining your own destiny !;)
My wife started her own business 6 years ago after a bad episode at her previous employer, she now earns about 65% more income, but works her ass off doing it.
 
Originally posted by rtwngAvngr
Yes. It does sound like you're quite the dynamo. We all got ramrodded by the bust in the tech bubble. It was all just a nice dream, man.
Actually, I don't think it was as simple as that. A $50K signing bonus, $235K annual salary. Imagine if, instead of looking for the next big score, most employees and employers were actually more interested in giving/getting fair compensation for a fair day's work.

The huge drop off in employment and stocks was due to GREED. Greed by the employers, greed by the employees and greed by the american public allowing stocks to trade 1,000 x earnings! Most of the people got what they deserved...nothing.

If you look at the track of the economy from just before the stupidity started to now, you would see a consistent increase in overall economic markers.

I equate all this with those stupid con games wherein people lose their life savings. Anyone who's worked honestly can spot them a mile away. Did anyone in their right mind think it healthy for the economy to support a jump of 100-200% of salaries in a year? Did they think that the stock market could support trading levels increasing 40-50% per month? Consumer spending at those levels?

Hello, earth here. It's called saving your money for a rainy day.
 

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