If you can endure the “bruised”, “hunkered down” reporting of the Associated Press’s Jeannine Aversa for a few graphs, you’ll get to the meat of the thing: US economy grows 0.6%.
“The economy is weak but not collapsing,” said Lynn Reaser, chief economist at Bank of America’s Investment Strategies Group. “A recession can’t be ruled out, although the stars are not lined up at this point to definitively say one way or the other.”
On Wall Street, investors found comfort that the GDP figure was a bit better than expected. The Dow Jones industrials were up more than 100 points in morning trading.
They’ll be kicking wastebaskets around in Democratic campaign offices this morning. Oh well, give the media a few more weeks to work their magic…
Definition: Recession
“In macroeconomics, a recession is a decline in a country’s real gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year”.
TWO back-to-back quarters of negative growth. So April May, June, July, August, September.
The Dems can still hope for a recession before the election. If there is one more positive quarter, the election will be held in “Recession Free Environment”
Not much of a get-elected strategy
Note in the comment I had put in reader tips earlier today how the headlines for AP and Reuters differed for the same story….
JCL
limping along at 2.4%/annum growth!
Europe to the rescue – by making houses more affordable in the US.
[BRUSSELS, Belgium (AP) — The European Union on Wednesday approved a German bailout of WestLB, a regional bank that lost billions from U.S. mortgages gone bad.
[…]
Germany can now put up 5 billion euros ($7.8 billion) to help the bank ride out its exposure to the subprime banking crisis.
Other European governments have jumped in to rescue troubled banks. The European Commission is investigating Britain’s nationalization of Northern Rock PLC, the mortgage bank that nearly collapsed in a bank run last year.
Numerous European banks have been battered by the U.S. mortgage crisis.
Switzerland’s UBS AG saw losses and write-downs of approximately $19 billion. Deutsche Bank AG said Tuesday that it wrote down $4.2 billion. German regional bank BayernLB reported that write-downs of $6.7 billion.]AP
A $billion here, and a $Billion there, and it soon adds up ! Huge savings for new American home owners !
I’ve noticed that gold is dropping, ~$875 US yesterday. Commodities and metals are beginning to slide a wee bit, oil is slooooowly deflating. Also banks are coming back up a bit.
Not what happens when the ass is dropping out of the US Economy.
Consider that ONE of the negative influences in the US markets is the possibility of A Democrat white house, Congress and Senate being enshrined.
Make no mistake about it investors are HEDGING AGAINST such a possibility … !!
Besides that the MAJOR thing right NOW is that the economy has been inflated for a LONG time.
It will now reset itself and do it properly without the influence of governments and meddling busy bodies.
I’m not as optimistic. That the Feds cut rates today and threw the dollar again under the bus, setting set off more oil and commodity inflation, tells me that they are more worried about the housing and consumer situation deteriorating further.
There are still too many negatives and unknowns out there.
rroe, it’s probably closer to a 3.0% growth, after quarterly compounding, given the .6% is a quarterly figure.
The Leftard MSM has figured out that since their betray-America foreign policy hasn’t worked overseas or at home, they have to do what they can to damage the American economy, to help elect a Democratic president.
But don’t question their patriotism! …
I am not a lefty by any means but I try to be realistic. All the problems the US had before they started lowering interest rates are still there. The real problem in the US economy is too much debt. You can not solve a problem by doing more of the same. All you do is postpone it (until after the election).
By the way if the US calculated the inflation rate today as they did pre clinton the actual rate would be 8%. Double the official 4% rate. The GDP is calculated by removing the inflation rate from growth. This would then result in the US being in an official recession. Staticstics can be made to say what ever you want them to say.
With a wounded US economy that is deflating in the housing/real estate markets (est loss of $6 trillion in house values alone) and the banking sectors, and inflating in the commodities at the exactly the same time, one has to question if any set of economic numbers really means anything at all.
The over-riding factor is the resolution of the housing market crisis.
Some people (ie //market-ticker.denniger.net/2008/04/caution…) point out that much work is being done to trace back and charge/penalize anybody who committed fraud in the assessment and bundling of over-valued mortgages into the magic bean packages which were then sold to unsuspecting buyers.
The shoes will continue to drop for many months yet.
Kevin, the 0.06% reported for each of the last two quarters was the real GDP rate, that is, adjusted for inflation. http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
I attended a luncheon meeting with Bank of Canada Chair Mark Carney yesterday. During the Q&A he indicated that the US economy was certainly weaker than it had been but it was a gross overstatement to assert that it was in recession. He also indicated that unless something catostophic were to occur, it was most unlikely that it would go into recession over the next two quarters.
I think I will take his view of the American economy over yours.
Apparently liberals are the only known species that can loose weight by increasing their weight by 0.6%
And their kids get shorter every time they grow by 0.6 % of their height.
Subprime mortgage deck of cards collapse is a big hit to be sure.
The free-trade imbalance of values with China, Malaysia, Mexico and other cheap labour producing countries has added up over the years.
Consider all the *made in china* goods filling your apartment bought from WalMart and the dollar store.
Add the $1.49 spent daily in Iraq, Afghanistan and various hot spots and the US economy is simply a miracle of resiliance. = TG
PS: OK, there are some of those Walmart and Dollar Store items around my place as well = TG
Avoid US dollar value shares?
Stick to Canada, Netherlands, German, India and more reliable currency values?
Addison Wiggins thinks so, because . . .
** Today, there are simply too many dollars in circulation for the currency’s own good. Why? Americans have been living beyond their means for more than two decades. The U.S. dollar’s problems stem from a single cause. “If there’s a bubble,” wrote David Rosenberg, chief economist at Merrill Lynch, “ it’s in this four – letter word: debt. The U.S. economy is just awash in it. ”
You’ve seen it firsthand: John Q. Public now holds more credit cards and outstanding loans – with a higher and higher total debt load – than ever before. Outstanding consumer credit, including mortgage and other debt, reached $ 9.3 trillion in April 2003 – a significant increase from its $ 7 trillion total in January 2000 – but by the third quarter of 2007, debt had nearly doubled since 2000, to $ 13.7 trillion. With consumer spending alone responsible for approximately 70 percent of U.S. GDP, that’s quite a hefty personal debt load.
The corporate debt picture is no better. American companies have never depended so much on sales of their corporate bonds. Between 2002–2007, investment – grade corporate bond sales increased nearly 60 percent, growing from $598 billion to $951 billion. But junk bond sales for that same period broke the bank, surging from $57 billion to $133 billion.
The third leg of the debt problem, following consumer and business debt, is Uncle Sam. Government debt as of November 7, 2007, officially passed $ 9,000,000,000,000. That’s about $ 30,000 for every man, woman, and child in the country. This total includes debt owned by many types of investors, from individuals to corporations to Federal Reserve banks and especially to foreign interests. (By 2004, foreign central banks had stockpiled more than $ 1.3 trillion worth of dollar – denominated Treasury bonds and agency bonds at the Federal Reserve. By 2007, foreign debt had nearly doubled, to $ 2.033 trillion.)
What the $ 7.8 trillion figure does not account for are items like the gap between the government’s Social Security and Medicare commitments and the money put aside to pay for them. If these items are factored in, the government debt burden for every American rises to well over $ 175,000. In 2005, the Methuselah of investment mavens, Sir John Templeton, then 93, said you should get out of U.S. stocks, the U.S. dollar, and excess residential real estate. Templeton believed the dollar would fall 40 percent against other major currencies, and that this would lead the nation’s major creditors – notably Japan and China – to dump their U.S. bonds, which would cause interest rates to run up, thus beginning a long period of stagflation. He was right.
Don’t let his age fool you – Templeton was still sharp in 1999 when the financial industry hacks in Florida were urging their customers to buy more tech stocks. Templeton warned that the bubble would soon burst. He was right; they were wrong. Of course, he was only 87 back then. He is almost certainly right again. Other great investors, too, are getting out of the dollar. For the first time in his life, Warren Buffett is investing in foreign currencies.
George Soros, who made a fortune selling sterling in the 1992 ERM crisis, warns that the U.S. system could “ blow up ” at any time. Richard Russell, the influential editor of the Dow Theory letters, speaking at the New Orleans Investment Conference, warned: “If ever there was a crisis that could shake the global economy – this is it.” Jim Rogers is teaching his daughter to speak Chinese. When old – timers nod their heads in agreement – especially when they happen to be the most successful investors in the world – their advice may be worth listening to.
American consumers, companies, the U.S. government, and the country as a whole owe more dollars to more people than ever before. But perhaps the greatest threat to the U.S. economy is its foreign creditors. There is – or should be – a limit to the number of dollars foreigners are willing to buy and hold and thus a limit to their willingness to service our credit habit. Why? Because the United States, while still the world’s number – one economic power, is showing itself to be an unreliable steward of its own currency.
Regards,
Addison Wiggin
The Daily Reckoning : DailyRekoning.com
=============================
= TG
‘the US economy is simply a miracle of resiliance’. – TG
Right on TG.
The best thing about capitalism is that it allows people to become wealthy thru blood, sweat, tears and hardwork.
The worst thing about capitalism is that it is absolutely brutal in metering out punishment to people who abuse it.
But there are a whole lot of people on Wall Street who have abused it and the US Feds, apparently, are not going to let capitalism hand out the punishment that these people deserve.
And worse yet, many of the wrong people are going to be punished.
BTW, here’s a interesting website that keeps score on the banks and debt.
http://bankimplode.com/
Brian,
What I said was that if you used the pre Clinton calculation you would get an 8% inflation rate instead of the current official 4%. The formulas have been adjusted since then to make inflation seem tamer. It is now like comparing apples to oranges.
http://www.shadowstats.com/
The changes that were made
http://www.shadowstats.com/article/56