Economy grows at 5.7 pct pace, fastest since 2003

rdowns

macrumors Penryn
Original poster
Jul 11, 2003
27,345
12,409
A little bit of good economic news.

Link

Thank you George Bush. :rolleyes:


WASHINGTON – The economy grew faster than expected at the end of last year, though the engine of that growth — companies replenishing stockpiles — is likely to weaken as consumers keep a lid on spending.

The 5.7 percent annual growth rate in the fourth quarter was the fastest pace since 2003. The Commerce Department report Friday is the strongest evidence to date that the worst recession since the 1930s ended last year, though an academic panel that dates recessions has yet to declare an end to it.

The two straight quarters of growth followed a record four quarters of decline. Still, the expansion in the fourth quarter was fueled by companies refilling depleted stockpiles, a trend that will eventually fade. Some economists worry that when that happens, the recovery could

Growth exceeded expectations mainly because business spending on equipment and software jumped 13.3 percent — much more than forecast. It's the second quarter in a row that business spending has increased, after six quarters of decline.
The report provided an upbeat end to an otherwise dismal year: The nation's economy declined 2.4 percent in 2009, the largest drop since 1946. That's the first annual decline since 1991.

Still, economists expect growth to slow this year as companies finish restocking inventories and as government stimulus efforts fade. Many estimate the nation's gross domestic product will grow about 2.5 percent to 3 percent in the current quarter and about 2.5 percent or below this year.

That won't be fast enough to reduce the unemployment rate, now 10 percent. Most analysts expect it to keep rising for several months and remain close to 10 percent through the end of the year.
High unemployment is likely to keep consumers cautious about spending. Without strong consumer spending, economists worry the recovery could falter.
"That's why there's so much hand-wringing right now," said Brian Bethune, chief U.S. financial economist for IHS Global Insight. "Can the economy really sustain this? That's the big question mark sitting out there."

Still, it's a "surprisingly good report," Bethune said, with several factors contributing to growth, including a rapid rise in exports and business investment.
About 60 percent of the fourth quarter's growth resulted from a sharp slowdown in the reduction of inventories as firms began to rebuild stockpiles depleted by the recession.

A shift in the so-called inventory cycle can make a big difference to economic growth, even if overall spending by consumers and businesses grows only modestly. That's because an increase in inventories, or even just a much slower rate of decline, means that companies are producing more goods to fill orders, rather than drawing on their existing stockpiles.

Excluding inventory changes, the economy would have grown at a 2.2 percent clip, the government said. That's an improvement from 1.5 percent in the third quarter.

Besides business spending on equipment and software, also powering growth in the October-December period was consumer spending, which rose 2 percent.

A steep increase in exports also helped boost growth. The shipment of goods overseas rose 18.1 percent, far outpacing a 10.5 percent rise in imports.

Government spending was actually a slight drag on growth in the fourth quarter: A small increase in federal spending was outweighed by a drop in state and local spending.
 

NT1440

macrumors G5
May 18, 2008
12,141
13,989
Still doesn't mean **** for those who are jobless and can't find work.

Did anyone notice that many companies used the downturn to justify cutting many jobs that they didn't have to?
 

Rodimus Prime

macrumors G4
Oct 9, 2006
10,132
4
Good job, President Obama!
good job my ass. It was explain that very little of it had to do with jack he did but the fact the invetories were near bottomed out across the boarded. Copies let there supplies run dry hoping things would get better and are now force to refill them so you get a one time boost and they will do it again.

A recovery is worth nothing to me until jobs are being made. This is a paper recovery but one time thing. Jobs are still being loss, the stimulus money is about to be gone so it will be a lovely 1-2 punch because no invitory supply boost and no stimulates money out there.
 

Sky Blue

Guest
Jan 8, 2005
6,860
10
good job my ass. It was explain that very little of it had to do with jack he did but the fact the invetories were near bottomed out across the boarded. Copies let there supplies run dry hoping things would get better and are now force to refill them so you get a one time boost and they will do it again.

A recovery is worth nothing to me until jobs are being made. This is a paper recovery but one time thing. Jobs are still being loss, the stimulus money is about to be gone so it will be a lovely 1-2 punch because no invitory supply boost and no stimulates money out there.
I figure if everything bad that happens while he's President is his fault, surely everything that's good is too?
 

NT1440

macrumors G5
May 18, 2008
12,141
13,989
good job my ass. It was explain that very little of it had to do with jack he did but the fact the invetories were near bottomed out across the boarded. Copies let there supplies run dry hoping things would get better and are now force to refill them so you get a one time boost and they will do it again.

A recovery is worth nothing to me until jobs are being made. This is a paper recovery but one time thing. Jobs are still being loss, the stimulus money is about to be gone so it will be a lovely 1-2 punch because no invitory supply boost and no stimulates money out there.
I thought one of the major problems was that stimulus money wasn't being handed out fast enough? Now there isn't any?

Can anyone clarify?
 

Rodimus Prime

macrumors G4
Oct 9, 2006
10,132
4
I figure if everything bad that happens while he's President is his fault, surely everything that's good is too?
I never hold any president to that standard. Economy bad/good is in cycles but you have to look at long term effect of things.

I thought one of the major problems was that stimulus money wasn't being handed out fast enough? Now there isn't any?

Can anyone clarify?
I know I never got into that part. I though the stimulus money was used incorrectly and not targeted well enough. It like using a missile launcher to kill a fly when a fly swatter would do.

They just used a big blast of money instead of smaller targeted attacks at the economy. It has one big effect short term but long term it has a lot of waste and takes longer to clean up.

If the government had used smaller targeted stimulus money it would of had the same effect as the big chunk of changed at trying to fix things but it long lastly damage of it could be repaired and when the money is gone it not as bad.
 

paddy

macrumors 6502a
Jun 25, 2005
653
0
TN
Unemployment's a lagging indicator, it's going to take a while for job growth to catch up with economic growth.
 

Rodimus Prime

macrumors G4
Oct 9, 2006
10,132
4
Unemployment's a lagging indicator, it's going to take a while for job growth to catch up with economic growth.

You say that but I been reading it is up to over 10 years now. This decade will be known as the decade of unemployment. 2015-16 is now best case for unemployment to get back down to 5-6% chance are good that it will take until almost 2020 to recover. They are not predicting the over 7 mil jobs lost and when you add in work force growth so far from this depression is up to over 10 million jobs.

Every month you need a 125k jobs added just to break even and not have unemployment rise. To me that effectly means every month take jobs added and subtract 125k and that tells you the true number on the job pool size shrinking.
 

paddy

macrumors 6502a
Jun 25, 2005
653
0
TN
You say that but I been reading it is up to over 10 years now. This decade will be known as the decade of unemployment. 2015-16 is now best case for unemployment to get back down to 5-6% chance are good that it will take until almost 2020 to recover. They are not predicting the over 7 mil jobs lost and when you add in work force growth so far from this depression is up to over 10 million jobs.

Every month you need a 125k jobs added just to break even and not have unemployment rise. To me that effectly means every month take jobs added and subtract 125k and that tells you the true number on the job pool size shrinking.
You're right but people are going to see these numbers and expect falls in unemployment straightaway. Sucks.
 

mkrishnan

Moderator emeritus
Jan 9, 2004
29,641
12
Grand Rapids, MI, USA
Did anyone notice that many companies used the downturn to justify cutting many jobs that they didn't have to?
This happened in 2001-2002 (rampantly) after 9/11, too.

It's going to take a long time to fully fix this, and I think unemployment is more than just a lagging indicator -- it traditionally has been a lagging indicator, but I think in the modern economy, the possibility of jobless growth is real, and we can't assume readily that just posting growth numbers will ultimately lead to jobs.
 

NT1440

macrumors G5
May 18, 2008
12,141
13,989
This happened in 2001-2002 (rampantly) after 9/11, too.

It's going to take a long time to fully fix this, and I think unemployment is more than just a lagging indicator -- it traditionally has been a lagging indicator, but I think in the modern economy, the possibility of jobless growth is real, and we can't assume readily that just posting growth numbers will ultimately lead to jobs.
Exactly, many companies used the recession as a sign that they need to streamline themselves and make do with less people. Its not like suddenly big companies are going to open the floodgates and hire tons of people when they realize that they can operate quite well with fewer people.

The only way I see jobs coming back in droves is if we start manufacturing in this country again, and in a big way.
 

Rodimus Prime

macrumors G4
Oct 9, 2006
10,132
4
Exactly, many companies used the recession as a sign that they need to streamline themselves and make do with less people. Its not like suddenly big companies are going to open the floodgates and hire tons of people when they realize that they can operate quite well with fewer people.

The only way I see jobs coming back in droves is if we start manufacturing in this country again, and in a big way.
Very true. I was reading another reason why this recovery will only be a paper recover (no new jobs) is because the industries that hostoricly lead the country out are so badly damage that they are dead for a while.

Those big industries that normally lead the country out are construction and auto. Both are in such bad shape that they will not recover for a decade or so
 

Ugg

macrumors 68000
Apr 7, 2003
1,985
15
Penryn
Very true. I was reading another reason why this recovery will only be a paper recover (no new jobs) is because the industries that hostoricly lead the country out are so badly damage that they are dead for a while.

Those big industries that normally lead the country out are construction and auto. Both are in such bad shape that they will not recover for a decade or so
There's a very good chance this will be a jobless recovery. However, Toyota's gas pedal problems and Ford's profitability along with Chevy's upcoming Volt, means the auto industry may just pick up. Also, Tesla is going public so there's hope. Of course the Volt and Tesla are dependent on higher oil prices. So, that means that if there is an American recovery, higher oil prices are a given. Now that China is the largest market for autos, I think we'll start to see a gradual but steady uptick in oil prices.

Construction is a little tougher. The housing market has been wayyyyyy overbuilt. It's going to take a year or two for it to recover and commercial real estate is just starting to feel the impact of tighter credit and lower occupancy rates.

That said, locally, there are a number of projects that have received their federal funding but are simply waiting for the weather to warm up before they begin. I'm sure that areas of the country that are under snow are even more stalled in beginning federally funded projects. I think we'll see a big boost in April/May and a decent jobs market in the summer and early fall with a fall off next winter.
 

mkrishnan

Moderator emeritus
Jan 9, 2004
29,641
12
Grand Rapids, MI, USA
The only way I see jobs coming back in droves is if we start manufacturing in this country again, and in a big way.
I think the services sector does have a future, too, in the sense of Local First kind of initiatives. This is so much more evident in Michigan than in most places, but this country needs to bolster domestic goods and services sold locally and regionally -- farms that sell high quality produce in their regional area, and the ecosystem on up from there, of local restaurants that use local foods, local artists that use local materials, and so on -- we need more of that backbone.

But yeah, the Bush/Rice era talk of a post-industrial service based economy is hogwash -- when we gave up our interests in manufacturing over the last two decades it led directly to an erosion of quality of American life.

And then finally, I totally agree with Friedman that establishing a position in the green economy is going to be important to our national power and prosperity in the next hundred years.
 

Ugg

macrumors 68000
Apr 7, 2003
1,985
15
Penryn
I think the services sector does have a future, too, in the sense of Local First kind of initiatives. This is so much more evident in Michigan than in most places, but this country needs to bolster domestic goods and services sold locally and regionally -- farms that sell high quality produce in their regional area, and the ecosystem on up from there, of local restaurants that use local foods, local artists that use local materials, and so on -- we need more of that backbone.

But yeah, the Bush/Rice era talk of a post-industrial service based economy is hogwash -- when we gave up our interests in manufacturing over the last two decades it led directly to an erosion of quality of American life.

And then finally, I totally agree with Friedman that establishing a position in the green economy is going to be important to our national power and prosperity in the next hundred years.
To paraphrase Tip O'Neil, "All jobs are local".

The nineties and the noughties were all about tax incentives to fickle corporate entities. Many were multinationals but many were All-American. How many over the top sports stadiums were built by local taxpayers with ticket prices unaffordable to the bulk of citizens and all profits going to sports teams? How many billions of dollars in taxes were foregone by local governments to lure transient global businesses?

Decreased American mobility is, I believe, partly an indication that Americans are tiring of the rat race. That they would rather identify with a place than a faceless corporate logo endlessly luring them to the pot o' gold at the end of the rainbow...

Alice Waters was slightly before her time but Michael Pollan with his timely books on food is right on. Americans have lost their way when it comes to food. We have been brainwashed to think that the lowest price is more important than quality. We don't know where our food is coming from nor what it contains. Increasingly, food products make up more of our diet than food itself. Only by seeing food grown and processed are we able to make intelligent decisions about what we eat.

Architecture has also suffered by the Bilbao Effect. Rather than build for a local market, too many localities feel they need to bring in an "iconic" architect. Whether it be the spectacular failure of Seattle's (and MS co_founder Paul Allen) Experience Music Project, or the size for the sake of size Burj Dubai.

Real people have been left behind in the last two decades. It doesn't matter how you measure it, whether through wealth or education, the people on the lower rung of the ladder in the OECD countries have been treated as stepping stones for the wealthy.

It's time for Americans to take back what is rightfully theirs and to do so, as you very rightly put it, means going local. Food, energy, art, music, housing, architecture and even movies can now all be local thanks to the democratizing influence of the internet.
 

opinioncircle

macrumors 6502a
May 17, 2009
500
0
Still doesn't mean **** for those who are jobless and can't find work.

Did anyone notice that many companies used the downturn to justify cutting many jobs that they didn't have to?
I agree with you. I am vastly disappointed by President Obama. I believe he hasn't adressed or faulted to adress issues. The healthcare bill situation is just out of this world.

I wish him the best, and think he'll do better in Y2, but he has to change his change-based politics.
 

Zombie Acorn

macrumors 65816
Feb 2, 2009
1,301
9,062
Toronto, Ontario
Exactly, many companies used the recession as a sign that they need to streamline themselves and make do with less people. Its not like suddenly big companies are going to open the floodgates and hire tons of people when they realize that they can operate quite well with fewer people.
This is the difference between government and private business, private business can't afford to keep people on just for the heck of it.

The only way I see jobs coming back in droves is if we start manufacturing in this country again, and in a big way.
You can manufacture right now, there is no law stopping it. Good luck competing with higher worker costs (unions) and lower quality products due to cost cutting to make up for the union wages though.
 

leekohler

macrumors G5
Dec 22, 2004
14,162
19
Chicago, Illinois
This happened in 2001-2002 (rampantly) after 9/11, too.

It's going to take a long time to fully fix this, and I think unemployment is more than just a lagging indicator -- it traditionally has been a lagging indicator, but I think in the modern economy, the possibility of jobless growth is real, and we can't assume readily that just posting growth numbers will ultimately lead to jobs.
Exactly, many companies used the recession as a sign that they need to streamline themselves and make do with less people. Its not like suddenly big companies are going to open the floodgates and hire tons of people when they realize that they can operate quite well with fewer people.

The only way I see jobs coming back in droves is if we start manufacturing in this country again, and in a big way.
Very true. I was reading another reason why this recovery will only be a paper recover (no new jobs) is because the industries that hostoricly lead the country out are so badly damage that they are dead for a while.

Those big industries that normally lead the country out are construction and auto. Both are in such bad shape that they will not recover for a decade or so
And if we would just get UHC, so that companies aren't responsible for it anymore, we could be more competitive in the world market. Until we do that, our products will always cost more, or be of lower quality.