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Darn that recession - where is it?
Posted by: McQ on Wednesday, October 31, 2007

As pundits and politicians try to talk us into a recession, the economy seems unwilling to go along:
The economy picked up speed in the summer, growing at a brisk 3.9 percent pace, the fastest in 1½ years and an impressive performance even as a credit crunch plunged the housing market deeper into turmoil.

The latest snapshot of the country’s economic health, released by the Commerce Department on Wednesday, suggested that the economy is demonstrating much resilience and thus far holding up well to the strains in the housing and credit markets, which had intensified during the third quarter and rocked Wall Street.

A second report from the department showed construction spending rose 0.3 percent in September, the best showing in four months. All-time high spending in both commercial construction by private builders and government projects more than offset weakness in home building.
Of course none of this will stop the "weak" or "failing" economy talk on the political circuit, but I thought you ought to know.
 
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Nothing to see here, move along!
 
Written By: Joel C.
URL: http://
Sure the economy of the RICH grew at 3.9% per year, but what about the economy of the Gay, Lesbian, Bi-Sexual, and Transgendered, the Poor, Womyn, and People of Colour? Their economy shrunk, stolen by the Republican One Percenters and their allies in Chimpy McHaliburton’s Neo-Con Theocracy.
 
Written By: Joe
URL: http://
The best performing stock market of 2007 may be Zimbabwe’s.
A growing money supply may look like a growing economy but if it is just monetary inflation then it is just a facade of growth. By any common sense measure, Zimbabwe’s economy is in the toilet and already flushed.

The Fed cut the interest rate and the DOW is up 130 points (as of 3pm on 10/31). I wonder if the Fed is following the Zimbabwe model.
 
Written By: tkc
URL: http://
Well, Krugman has been predicting a recession since Bush took office (at least that long). I’m starting to think it’s just wishful thinking on his part.
 
Written By: the wolf
URL: http://
tke, well I don’t think I follow your point or logic(?)...so the fact that Mugabe has massive unemploymentand/we don’t, that Mugabe has starvation and we don’t, that the real economy is growing in the US and Mugabe’s is sinking would tend to support the counter-factual that the US economy and stock market are NOT like Zimbabwe’s. I’m not Paul Krugman, so I oculd be wrong, though.
 
Written By: Joe
URL: http://
< sarcasm > The fact that a recession is looming must be firmly implanted in everyone’s cnsciousness prior to the change of power at the election so that the next Chief Executive of the country (ie. President) can do what CEO’s everywhere do - blame the problems they cause at the start of their administration on the previous administration. < / sarcasm >
 
Written By: BIllS
URL: http://bills-opinions.blogspot.com
Joe, my point is simply this: growth fueled by monetary inflation is only a facade of growth. Zimbabwe’s stock market is an extreme example of this. The monetary supply here at home certainly is being inflated. Oil and gold and the value of the dollar are reflecting this.
Yes, we have 3.9% growth and we do not have a recession. That does not mean that everything is coming up roses.

btw... I think Krugman is a scam artist.


 
Written By: tkc
URL: http://
Does anyone recall Al Gore complaining about Bush knocking the economy in 2000 during the campaign, when the DJIA fell from 12000 in March to about 10000,the NASDAQ did a similar slide, and layoffs were ripping thought the economy (actually, since 1998, during which the IT industry shed a million jobs)?

Note that, according to the left, reality is what someone wants it to be.



 
Written By: Sharpshooter
URL: http://
This was good news. I suspect that 3.9% is a bit overstated and that we will see a downward revision to 3% or so. The reason for the downward revision has to do with the fact that this is an estimate of GDP growth after inflation (that is, real GDP growth). The estimate for inflation that was used this quarter was too low I believe. Nonetheless, even a 3% GDP growth rate during that horrendous quarter is very good.

The big contributors to growth were increased consumer spending, strong exports and increased business spending. Those factors took up the slack from the slumping housing and financial sectors.

On the heels of the GDP reports we got word that the Federal Reserve had dropped its Fed Funds rate by a quarter point. That is also good news for the economy. It will probably result in more weakness in the dollar, but the silver lining there is that a weaker dollar means our exports are very competitive and export growth should continue.

I had to chuckle a bit when I read the comments comparing our economy to Zimbabwe’s economy. Our inflation rate this year is around 2.5% or so. Zimbabwe’s inflation rate in September was 7,982% as reported in the Wall Street Journal.
 
Written By: Kurt Brouwer
URL: http://fundmasteryblog.com
Kurt, our inflation is measured by the CPI which leaves out things such as food and energy costs. Oil just hit $95/barrel. This isn’t just all demand. It reflects the weak dollar. The weak dollar makes our exports more affordable overseas but it also makes imports here more expensive. We import alot of oil. So, in short, the CPI inflation number is a scam. That said, we are nowhere near the 7000% inflation rate of Zimbabwe but the reality is that our current economic policy could lead down that road.
I don’t think our economy will ever be as bad as Zimbabwe’s (short of some sort of massive disaster) but I think it can be as bad or worse than the late 70s, that terrible combination of little to no growth with double digit inflation.

The point of bringing up Zimbabwe is to show that, on paper, certain aspects of the economy can appear healthy while the reality is that the economy is in the toilet.

Here is a good article on the CPI versus monetary inflation.

Let me ask this: does anyone here think America’s fiscal house is in order?



 
Written By: tkc
URL: http://
Well, Krugman has been predicting a recession since Bush took office (at least that long). I’m starting to think it’s just wishful thinking on his part.
I think the current score is that Krugman has predicted 15 of the last 2 recessions.
Let me ask this: does anyone here think America’s fiscal house is in order?
You probably won’t find too many folks around here who would claim it is. With the baby boomer group about to hit SS and Medicare, that alone will swamp many other good trends.

But it’s not all gloom and doom either. Business is still reaping the benefits of the explosion of computer, Internet, and telecom based technologies that boost productivity. That does not appear to be slowing down; to the contrary the amount of utilization of those technologies is still growing rapidly as it moves into smaller size companies.
 
Written By: Billy Hollis
URL: http://
We should expect dips about every 12 yrs, 1979, 1991, 2002, so about 2014.
 
Written By: abw
URL: http://abw.mee.nu
I think this goes hand-in-hand with the "do nothing" Congress.
 
Written By: Neo
URL: http://
I just had to laugh at this Billy Hollis post.
Well, Krugman has been predicting a recession since Bush took office (at least that long). I’m starting to think it’s just wishful thinking on his part.
I think the current score is that Krugman has predicted 15 of the last 2 recessions.
 
Written By: Neo
URL: http://
Kurt, our inflation is measured by the CPI which leaves out things such as food and energy costs.
Strictly speaking, that’s not true. In fact, two CPI numbers are quoted: the "total" CPI, which includes food and energy, and the core CPI, which excludes food and energy. The reason they are excluded from the core is because food and energy costs can vary widely from one month to the next. But energy costs are represented in the core CPI by virtue of the fact that everything requires energy to produce and transport.
 
Written By: Steverino
URL: http://

 
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