Looks like the economy is cooling down:
The economy grew at only a 1.1 percent annual in the fourth quarter of last year, the slowest pace in three years, amid belt-tightening by consumers facing spiraling energy costs.
Even with the feeble showing from October through December, the economy registered respectable overall growth of 3.5 percent for all of 2005 — a year when business expansion was undermined by devastating Gulf Coast hurricanes.
The Commerce Department report, released Friday offered the latest figures on gross domestic product, the best measure of the country’s economic standing.
The 1.1 percent growth rate in the fourth quarter marked a considerable loss of momentum from the third quarter’s brisk 4.1 percent pace. The fourth-quarter’s performance was even weaker than many analysts were forecasting. Before the release of the report, they were predicting the GDP to clock in at a 2.8 percent pace.
It will be interesting to see how the market reacts to this news, and this could be more good news for Democrats hoping to regain power in 2006, who, having spent the last three years claiming the economy is terrible will finally be met with a situation in which their rhetoric is close to reality.
The Disenfranchised Voter
Apparently you don’t think deficits matter?
I mean, personally, I think that whenever you have a such big deficit and one that continues to grow, the economy is doing shitty.
But that’s just me.
salvage
Is the economy that bad? I mean from an “average Joe” point of view? Seems to me it’s the one thing that hasn’t gone horribly wrong under Bush.
Or perhaps it’s just a relative thing.
Lines
As long as you’ve got yours, screw everyone else kind of thinking. Cost of living increases for the lowest sector of public has far outreached that of the middle class and upper class. We’re in the middle of one of the longest stretches of class warfare and this is the kind of bullshit Democrats have to put up with.
Blue Neponset
As a Democrat let me be the first to say: All right!!! The Economy Sucks!!!! We finally Did it!!!!
Since day one of the Bush Administration, I have been waiting with baited breath to pay a lot more to fill up my gas tank and heat my home, and my waiting has finally paid off. I can’t wait to pay more for my mortgage when the budget deficit finally catches up with us or the Chinese start selling off our gov’t bonds. I am keeping my fingers crossed and I will light a candle at Mass this week.
Snarkiness aside, I understand the point you are making John, but you are laying it on a bit thick. Just because the Dems are starting to be proven right about Bush & the Economy doesn’t mean they are happy about it. I personally feel more anger than happiness about it. I am sure everyone else with a car, a mortgage and an home to heat isn’t too thrilled about what is going on, regardless of their political persuasion.
Davebo
I suppose it depends on how one earns a living.
Over the past five years the average American has seen his real income decrease pretty consistantly year to year.
http://www.census.gov/prod/2005pubs/p60-229.pdf
See graph on page 3 for more.
Marcus Wellby
And China’s is growing at something like 9.9% — imagine where we would be if we manufactured AND bought our own goods. The economy is fucked in the longterm and blaim falls on Dems and Repubs for selling us out to China for some cheap plastic bobbles.
Doctor Gonzo
Income inequality continues to accelerate; that could explain why those at the top think the economy is just fine while those at the bottom don’t. After all, the economy is great for those already at the top.
Bill Hicks
Lets hope John’s crankiness from lack of food and wine eases soon.
Paul L.
Of course if these growth figures get revised upward in the future by the Commerce Department, the New York Times will bury that.
http://www.bea.gov/bea/newsrel/gdpnewsrelease.htm
“The Bureau emphasized that the fourth-quarter “advance” estimates are based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3). The fourth-quarter “preliminary” estimates, based on more comprehensive data, will be released on February 28, 2006.”
Lines
Its all unicorns and rainbows (but manly rainbows) where Paul L. lives.
Because he has his, screw the rest of you.
Paul L.
Great job refuting my point Lines. Attack the messenger.
BTW, We have eaten all the unicorns and can not see the rainbows through the black smoke of our tire fires (left over from our earth day celebrations).
Lines
Paul, your blind optimism cannot be combatted by mere facts and my own lying eyes, so why try? I have decided that you deserve no quarter, that humiliation and degredation is your due, given the fact that you have no debate skills, that you are an unabashed apologizer for the Republican party and its failed policies. You ignore the huddled masses at your own peril, and your gated communities won’t be enough.
People that refuse the reality of the class warfare that is occuring at the bottom can just continue your self-delusional daydreams of a grande economy, for all I care. You’re not really even worth the time anymore.
demimondian
Paul, I need some help here. I’m just a corporate drone, you know, and for us, a 2% revenue growth miss can be enough to cause a 30% fall in a stock’s valuation, at least when the stock is being overhyped. Here, we’ve got a sixty-plus percent “revenue growth miss” on GDP (1.1% growth estimated versus 2.8% predicted).
Out here among the corproate drones, that’s “Fire the CFO, and wait for the attorneys to start serving papers” time. Where you live, how do you respond to a disacter like that? (After you finish your Unicorn filet mignon, of course.)
ppGaz
I prefer the Panglossian view:
Aside from the fact that everything I need in order to live costs a lot more than it used to, and increased energy costs are eating all of my disposable income and threaten to gnaw away my retirement nest egg too, and lousy energy policy and health care costs and runaway deficict spending in Washington are pulling the legs off the future financial prospects of the country …. the economy seems just fine to me in this, the best of all possible worlds.
Halffasthero
You can only borrow and spend your way to an economy so long before it catches up. The deficit will hit 10 Trillion by the time George is done or come very damn close. The largest part of his tax cuts haven’t even hit yet, which is what I find most frightening. The party is almost over and, to me, the only ones who don’t know it yet are in Washington.
Taking money from lobbyists.
Richard Bottoms
Why is it when Democrats report the bad news weare accused of rooting for it? Just ebcause those at the top have been doing fine, and I’m one of them BTW, doesn’t mean the average Joe hasn’t been struggling.
What growth there has been hasn’t kept up with inflation and was fueled by deficts as well as unsustainable tax cutting.
Then there are those 30,000 Ford workers headed for McDonalds jobs to factor in as well.
We. Told. You. So.
Fuck George Bush.
CaseyL
Oh, they know what’s going on – why d’ya think they’re taking money from lobbyists hand over fist?
When the bottom falls out, it’ll just be the sans culottes who suffer. Not anyone who really matters – i.e., politicians, corporate executives, and the corporate lobbyists who act as their go-betweens.
ppGaz
But man, when you live in Bush’s futureworld of the Ownership Society, and your fate is bolted onto equities instead of worthless government bonds as they are now, all of it architected by a former drunk who ruined an oil business financed by his daddy’s Saudi rich uncles, and then got a free ride on a baseball team flip that made him millions for doing essentially nothing …. you’ll eat those words!
Paul L.
Lines, The New York Times has been saying the economy sucks and will be taking a downturn since Bush took office. Pardon me if I take the New York Times prediction of a downturn with a grain of salt. As for being called a unabashed apologizer for the Republican party, coming from a Democrat hack I am not to concerned about your opinion or takes one to know one. Commenting that the New York Times ignores/buries good economic news from Bush does not make me a unabashed apologizer for the Republican party.
demimondian, the government is a not a corporation/business.
If the government had to obey with the laws it sets for business, It would be out of business. What is the stock of the US government? Treasury Bills? 30% fall in value?
BTW, I am a corporate drone.
Sojourner
Then why did your boy, W, brag about being the first CEO president?
Pooh
Paul, that’s nice blind spot – the NYT you take with a grain of salt, but a ‘truthy’ report from the head Crony at DoC? Solid gold. Nice.
jack
“It will be interesting to see how the market reacts to this news, and this could be more good news for Democrats hoping to regain power in 2006”
It always strikes me as horrible to realise that the Democrats hope for the worst for America, as long as it gets them back into power.
And,’predicted 2.8%’ and ‘estimated 1.1%’ are predictions and extimations, no? I seem to remember Democrats hooting over bad ‘estimated’ employment numbers in one of their incessant attacks on Bush, hell, I remember them chortling over the damage Katrina would do to the 3rd quarter before that 4%+ number got shoved in their faces. Predictions are NOT your friend.
And finally, China. I seem to recall the pervasive Japanese eclipse of our entire society–it permeated our literature, our films–even our science fiction. And it was wrong. I expect the same to happen with China, particularly since it’s an economic ‘powerhouse’ of the same stripe that the Soviet Union was.
Steve
Yes, Democrats root for bad economic news, just as Republicans root for terrorist attacks in order to prove to those pansy-ass liberals that the threat is real. You’re really advancing the tenor of dialogue around here, friend.
jg
Can someone please exlain to me why I should think the economy is doing well. Whats the conservative view that makes whats going on now a good thing?
Lines
jg: When you redefine what “economy” means, then you can make sure that its always rosy while you want it to be.
ppGaz
Uh, trickle-down earmarks?
jg
I want someone to explain what it is that a walmart worker sees that makes him think Bush’s economic plan is working.
Digital Amish
The rich are getting richer and the poor are getting poorer.
DougJ
What’s happening with the economy is pretty simple: we have very healthy increases in productivity nowadays, which should translate into lots of other good things, such as wage increases (which don’t seem to be happening) and GDP growth (which does seem to be happening, last quarter aside).
This has little or nothing to do with our government.
jg
Yes but why are there people in the middle who support Bush? What’s their delusion? I want to be able to explain to my conservative friends who live check to check why they are screwing themselves by voting for the Bush’s of the world. But I can’t until I understand what their angle is. Before I can reason them out of it I have to know how they were reasoned into it, if at all.
Pooh
jg,
If boys start kissing the terrorists win over our activist judges who are fatter than Michael Moore. Is a little economic growth too much to sacrifice to prevent that from happening?
Pooh
From what I understand, “productivity” in a vaccuum is fairly meaningless. You can increase ‘productivity’ at a McDonald’s by 50% if you fire 1/3 of the workers. Same number of burgers(?) get sold. (Of course that doesn’t account for the unsanitary conditions in the kitchen, the bathrooms being out of TP and the cook needing a skin graft from falling asleep into the fry-o-lator.)
Paul L.
How does your foot taste?
Where did the New York Times get the growth number?
“The Commerce Department report, released Friday, offered the latest figures on gross domestic product, the best measure of the country’s economic standing.”
I guess he thought being portrayed as a CEO was less slimey than a politician.
Sure CEO are overpaid crooked b*st*rds. But they are better liked than career politicians.
What a genius that Karl Rove.
Pooh
Paul, you’re holding out for the “upwards adjustment”, color me unimpressed.
ppGaz
That’s just a bunch of pointy-headed liberal claptrap.
jg
I think it had more to do with the myth that Bush was a successful businessman who was going to bring his business genius to work in the White House. Many people still believe Bush succeeded in the business world rather than have jobs given to him for being the son of a senator/VP/President.
demimondian
Actually, DougJ, I disagree with your premise.
There are two ways that productivity increases can show up in the economy. The “good one” is increased wages to compensate for increased economies of scale, leading to the migration of items down from luxury status. (E.g. the heated floors in our new extension…ahh, no more sore feet in the winter.) The other one is characterized by job loss due to the elimination of job categories, and is often accompanied by pay reductions among jobs which persist. In that model, economies of scale are not prevalent, but rather increased economy of production at a constant, or even slightly reduced, scale dominate.
I call that latter one “The Shruburban Economy” — and it’s what we’re seeing now.
Pooh
demi, thanks, that’s what I was trying to say above…
tbrosz
Yeah, the post-Katrina quarter is a “trend.” But none of the quarters with huge growth over the past years are “trends.”
I can come up with any conclusion you want if you allow me to pull one small chunk off of a graph and run with it.
ppGaz
Couple of commies patting each other on the back here ….
Digital Amish
jg, snarkiness aside, I’m with you. I don’t understand it either. From what I’ve seen, the household economy on the kitchen table at the end of the month doesn’t reflect the economy I hear about from economy cheerleaders.
I’m not much on the financial end of things but it seems that the last few years of growth have been carried by the increasing debt load of the middle and lower consumer classes. With the continual erosion of middle income jobs I don’t see how it can continue.
But at least there will probably be fewer personal bankruptcies this year.
srv
For 2005, with the new law looming, it was 2 million, up 31.6%. One in every 53 households. For some reason, I’m thinking these were the smart people and there are still alot of really stupid ones out there.
What was the number of interest-only loans last year? I know a builder who says almost 1/2 the purchases in SoCal are speculation now…
DougJ
Demi and Pooh: my understanding is that in the long run, real wage increases tend to track productivity increases pretty well. I’m also inclined to believe that, in the main, our productivity increases nowadays are related to technology, not to firing workers. Though I’m sure firing workers is part of it.
I guess my point is this: the economy may be in good shape, but it would probably be in better shape if the hands of the wheel of the ship of state didn’t belong to Mr. Magoo.
ppGaz
Damning with faint praise. Besides, Magoo was funny.
Lines
Now where are those WMD’s? Come on, ppGaz, that was comedy GOLD! He killed with that one!
demimondian
It’s a little more complicated that that, Doug. There are two broad ways to increase productivity: attrition (whether voluntary or not) and automation. They’re frequently tied together, though: if I automate a factory, and cut a set of line workers, the productivity of the factory goes up even if I haven’t increased its output. (In fact, I may be able to reduce output somewhat, in order to keep supply in line with demand. Since I’ll be spending less, I’ll still make money.)
In a competitive economy with complete information, of course, my buyers will respond to my changes by offering my less money, and, as a result, I’ll need to up my output to make up for that. However, in an economy where I can effectively conceal my costs of goods sold, I may have an optimal strategy in which I reduce total output to cut costs and still increase profits.
Darrell
Good point. GDP had grown by 3.0% or more in 11 straight quarters, the longest such streak since 1984-1985
moflicky
and if the dems regain control, double the physical sciences budget, put a cable modem in every home and offer discounted health insurance to the uninsurable (like me), those deficits will shrink like a penis in a cold pool?
I’m not sleepy, tell me another fairy story daddy.
moflicky
just like in 1992, the day Clinton became president, the reagan/bush homeless crisis disapeared overnight…
just like the dot.com bust – which started a full year and a half before he became president – was all bush’s fault.
a good economy under a republican is a ‘jobless economy’. a poor economy under a democrat is just bad luck.
Davebo
tbrosz
I posted a link to a graph above. Running from 1963 to present.
Tell me how it can be spun into a positive for the period from 2001 to 2005.
Davebo
Well, that’s pretty much the way it’s worked in the past. What little past we have of deficits actually being reduced that is. Think back, it wasn’t that long ago.
Cable modems? I think you’re projecting a bit.
It wasn’t a democrat that called for the federal government to pay for everyone’s box to convert analog TV to digital ya know.
moflicky
no, it wasn’t very long ago at all. I remember it like it was yesterday…..
it was the mid 90s, when the economy was growing so fast congress couldn’t spend the revenues fast enough. an economy inflated by 18 year old script-kiddies getting 7 figures with stock options from internet startups spending millions in venture capital to be first to exploit al gore’s invention. stock prices going through the roof for companies who didn’t even have a 10 year plan for making a profit.
to paraphrase andrea mitchell’s squeeze alan, an economy of irrational exhuberance.
yearly budget surpluses as far as the eyes could see, and congress couldn’t spend it fast enough. they didn’t learn they’re lessons very well.
for the record, i’m as pissed off at the GOP for their spending binge as any moveon.org lefty. but forgive me if I have absolutely zero confidence that higher taxes will be able to catch up with the increased spending the dems will propose if they return to power.
I just don’t believe a word of it.
Steve
Moflicky, I’m not sure if you’re a drinker of the supply-side kool-aid or not, but let’s run with the idea that tax cuts pay for themselves, because it’s clear that they at least PARTIALLY pay for themselves.
Presumably, there are other policies besides tax cuts that also help pay for themselves. If we take the burden of health care off corporations, that’s a big-ticket item that your tax dollars will pay for, but it also frees up lots of corporate capital to open new stores and create new jobs and compete with companies overseas who don’t have to pay a big health care bill. I wouldn’t try to claim it will pay for itself, but certainly you can expect a positive impact on the economy.
Similarly, when you spend money on things like technology, infrastructure, and education, you expect a payoff that helps the bottom line. Not necessarily an immediate payoff (these are capital expenditures, after all), but we wouldn’t do it if we didn’t think it would make everyone better off in the long run. It’s not all about being charitable and bleeding-heart.
Also, and I’m guilty of a partisan bias here, the prescription drug benefit you’d get from the Democrats might not be any cheaper than what you get from the Republicans, but I do believe it would do a better job of actually working for people rather than just serving as a Big Pharma giveaway. And when people get taken care of, that helps the bottom line as well.
And yeah, the most obvious thing is that Democrats are likely to stop the death spiral of tax cuts, and maybe even roll things back for the top bracket so the rich get soaked a bit. The revenue half of the equation is pretty critical too.
It will take a lot of work to get back to Clinton’s balanced budgets but we can at least try and get on the right track. Expecting the same people who broke the balance of payments to fix it again just isn’t realistic.
jg
I’ve never heard anyone blame Bush for the dotcom bust.
It won’t be your taxes that get raised and it will be better than the cutting taxes while increasing spending plan that these clowns are running now.
Perry Como
Defecits don’t matter because we have a printing press. Need more money? Print it up!
Bob In Pacifica
I heard that one reason the fourth quarter is going to look so bad is that a lot of people went out and bought cars in the third quarter on those “dealer discounts” or whatever they called them. So no one was buying in the fourth quarter.
How much debt have we built up under Bush? I know it’s trillions. If that money had been distributed more equitably, for infrastructure and healthcare (in a reasonable manner), the money would have stimulated the economy. We got hardly any stimulation from the tax cuts for fat cats.
The Disenfranchised Voter
moflicky,
It might surprise you but the Republicans aren’t the party of fiscal responsiblity anymore. I trust the Dems with the economy more than the Republicans–and I believe in using tax cuts to stimulate the economy.
Though, as anyone with even a little economic knowledge will tell you, cutting taxes while at war is both stupid and reckless.
tzs
Also we’ve been eating our seed corn in science and technology for quite a while and are starting to see the results.
Add to that the increasing anti-intellectualism in this country, the unwillingness of the Republicans to tell the Religious Right to put a sock in it, and our total lack of any energy policy….
There’s a reason why I’m investigating moving back to Japan.
tbrosz
If you look at the period after 2001, which included a recession, the 9/11 attacks, the war, the oil prices, and the hurricanes, it’s a bloody miracle we aren’t in a depression.
I don’t see a lot of difference in the shape of the curve between now and the 1990 recession.
I understand the need to talk the economy down, since it’s an election year, but some people are practically resorting to quantum mechanics to do it.
moflicky
DV,
no, it doesn’t, and as I said before, i’m pretty pissed off about it. But I’ve yet to see a budget increase, government program, another entitlement or a tax increase the dems didn’t like.
If you win an election or two then you can show me. In the meantime, i’ll keep voting for those who at least give lip service to low taxes and small government as opposed to those who don’t even pretend.
Perry Como
The reason that I keep voting Republican is the ability we have to manage the debt. Just the other day we hit:
$8,190,567,748,779.48
as our public debt, and the Republican Party realizes that you have to spend money to make money. Even though we just broke our own debt ceiling, the economy is screaming. Housing prices are higher than ever, giving the first time home owners the perfect place to start a family.