Q3 GDP at 2.0%

posted at 9:53 am on October 29, 2010 by Ed Morrissey

If Democrats hoped for a splashy third-quarter GDP number to shake them from their midterm doldrums, the Commerce Department has disappointed them today.  Their initial estimate of the US economy in the third quarter of 2010, the fifth quarter for the current recovery, straggled in at an anemic 2.0%, barely above the final 1.7% from the preceding quarter.  And if this gets revised downward in four weeks, the brunt of it will fall not on departing Democrats in Congress but Barack Obama:

U.S. economic growth edged up as expected in the third quarter but not enough to chip away at high unemployment or change perceptions of more monetary easing from the Federal Reserve next week.

Gross domestic product expanded at a 2.0 percent annual rate as consumer spending rose at its quickest pace since 2006 and businesses continued to rebuild inventories, the CommerceDepartment said on Friday. The economy expanded at a 1.7 percent rate in the second quarter and third-quarter growth matched economists’ expectations.

“Growth is still positive, but a bit disappointing. It’s not where we would like it to be at this point of the recovery,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida.

Actually, 2.0% isn’t where anyone wants to be at any point in a recovery.  It’s a measure that indicates economic stagnation.  That kind of growth not only won’t create jobs, it will make it difficult to prevent further erosion in employment.

The good news from the report was that consumer spending started rising again.  Last quarter, it went up 2.2%; this quarter, it rose 2.6%, the best in four years, and perhaps a signal that the upcoming holiday season may be a little brighter than the last two.  However, most of the demand went to imports rather than domestically produced goods, which means much less impact on hiring, manufacturing, and so on.

And in some potentially bad news disguised as good, business inventories rose at almost twice the level as last quarter.  That means that businesses may be anticipating a rise in demand.  If it doesn’t happen, though, then expect these numbers to drop sharply in the next quarter.  Spending on business infrastructure (equipment and software) slowed from last quarter as well.

This is the last opportunity Democrats had to defend themselves on the economy, and clearly this gives further ammunition to Republicans instead.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

GDP numbers are racist.

Bishop on October 29, 2010 at 9:56 AM

Prices were mentioned as being up slightly 2.3% which would seem to discount any unit growth.

Skandia Recluse on October 29, 2010 at 9:57 AM

The good news from the report was that consumer spending started rising again.

True, I have purchased a few donkey beaters which I plan to use in a few days.

May wear them out and require more.

NoDonkey on October 29, 2010 at 9:57 AM

Bishop on October 29, 2010 at 9:56 AM

You forgot sexist and antigay as well.

NoDonkey on October 29, 2010 at 9:58 AM

I have noticed in the X-mas time catalogs I’ve gotten for years have slashed their prices.
I’m thinking business has been bad for them to slash prices by 10-30 or more %.

Badger40 on October 29, 2010 at 9:58 AM

Just a reminder here … Obama’s stimulus plan was supposed to ensure at least 4 percent per year.

And the tax revenue off that growth was supposed to pay down some of the cost of the stimulus.

And the stimulus growth was supposed to lower unemployment.

FAIL.

HondaV65 on October 29, 2010 at 9:58 AM

Actually, 2.0% isn’t where anyone wants to be at any point in a recovery.  It’s a measure that indicates economic stagnation.  That kind of growth not only won’t create jobs, it will make it difficult to prevent further erosion in employment.

Good thing we’ve got those tax increases and the Obamacare bureaucracy kicking in, it’ll fix things in No time!

You can Count it!

(resisting the urge to use Unexpected in this posting)

Chip on October 29, 2010 at 9:59 AM

RECOVERY SUMMER!!! AUTUMN!!!! WINTER!!! SPRING!!! SUMMER!!!

See, wingnuts, we were right all along!

CDeb on October 29, 2010 at 10:00 AM

“we’ve had, 15 mos straight of private sector job growth….”

POTUS

ted c on October 29, 2010 at 10:01 AM

Sheriff Joe predicted GDP output to be growing at 7% per quarter, IIRC. Is the commerce dept “messin’ wid Sheriff Joe?”

ted c on October 29, 2010 at 10:02 AM

straggled in at an anemic 2.0%, barely above the final 1.7% from the preceding quarter.

I thought last quarter’s growth was 2.4% or something like that.

forest on October 29, 2010 at 10:02 AM

Look for the third quarter figure to be revised upward a bit in the months ahead. Today’s real GDP figure of $13,261 billion (in chained 2005 U.S. dollars) is a bit below what we had projected would be the final estimate for 2010Q3 back on 5 October (we had $13,184 billion as the target.)

If today’s number holds, look for the real GDP growth rate in 2010Q4 to be below 2%.

ironman on October 29, 2010 at 10:06 AM

forest on October 29, 2010 at 10:02 AM

I’m not sure what I was thinking. The original rate was 1.6%.

forest on October 29, 2010 at 10:06 AM

Make that $13,284 billion (some mornings, you just can’t get enough coffee….)

ironman on October 29, 2010 at 10:06 AM

Biden is excited…our GNP is about 10 trillion, so he thinks just 20 more years and we will break even…

right2bright on October 29, 2010 at 10:08 AM

Never trust liberals with your money or the economy. Once it’s in their hands:

It’s their money.
They can do what they want with it.
When it’s all gone, it’s your fault for being clingy and afraid.
If you decide to keep your money, they want to know how they’ll pay for their stuff.
The fact that they have no idea what they’re doing with your money doesn’t matter – after all, it’s not their money.

AubieJon on October 29, 2010 at 10:08 AM

Wanna bet they’ll be touting that 0.3% increase in GDP as if it signifies that the depression/recession is over and the “stimulus” is working beyond all expectations.

coldwarrior on October 29, 2010 at 10:10 AM

I have noticed in the X-mas time catalogs I’ve gotten for years have slashed their prices.
I’m thinking business has been bad for them to slash prices by 10-30 or more %.

Badger40 on October 29, 2010 at 9:58 AM

Business in bad…and they slashed inventory, and still have too much.
This is going to be a blood bath this holiday.
They will sell one or two high end toys, WII, etc, and little else.
The “secondary” market will be devastated, the question is…what will be the HOT item for Christmas.

right2bright on October 29, 2010 at 10:11 AM

The good news from the report was that consumer spending started rising again.

Sales of popcorn and Slurpees UP SHARPLY (dare I say “unexpectedly”). :-)

tims472 on October 29, 2010 at 10:13 AM

Never trust liberals Oppressives (it’s a better term than Progressives)with your money or the economy. Once it’s in their hands:
It’s their money.
They can do what they want with it.
When it’s all gone, it’s your fault for being clingy and afraid.
If you decide to keep your money, they want to know how they’ll pay for their stuff.
The fact that they have no idea what they’re doing with your money doesn’t matter – after all, it’s not their money.
AubieJon on October 29, 2010 at 10:08 AM

Yup, that sums it up nicely, except maybe the additional point that if you want to keep more of your(Their) money You’re the one being selfish.

Chip on October 29, 2010 at 10:15 AM

We’re following the profile of the Great Depression pretty darn closely. Acute recession, followed by years of anemic growth and investment (inadequate to bring down unemployment) due to overwhelming government meddling.

After 1932 there were increases in investment and goverment purchases and a resulting growth in GDP but the increase in production was not enough to wipe out the pool of unemployment that had accumulated during the recession period. Therefore unemployment remained high and the economy was thus still in a depression. Investment remained volatile during the period of the 1930′s, in part because of the uncertainty created for business by the radical and shifting policies of the Roosevelt New Deal.


Sounds real familiar, and check out the GDP graphs.

forest on October 29, 2010 at 10:15 AM

Welcome to the next two years, unless China’s housing bubble blows up or Brazil really slows down or Europe’s austerity policies don’t go far enough or …

TimTebowSavesAmerica on October 29, 2010 at 10:15 AM

Cambodia’s 2010 GDP was 4.9% as of October 19th.

Great job, PBHO, America is getting beaten by Cambodia. CAMBODIA.

Bishop on October 29, 2010 at 10:16 AM

Things must be really bad if this is the best they can do AFTER fudging the numbers.

PackerBronco on October 29, 2010 at 10:18 AM

Ed said;

The good news from the report was that consumer spending started rising again. Last quarter, it went up 2.2%; this quarter, it rose 2.6%, the best in four years, and perhaps a signal that the upcoming holiday season may be a little brighter than the last two.

I think the little up tick by concusmers, is a lot of people are starting their Christmas shopping ealry. I know my wife, mother in-law and my sisters have. I mean the Halloween stuff is not down yet and there is Christmas merchandise on display already. I don’t remember Christmas merchandise every going up during Halloween or weeks before Thanksgiving. Yet, Obama says the economy is on the rise… Riiighhhhhhhht!

USMCDevilDog on October 29, 2010 at 10:19 AM

Wasn’t it yesterday where one of the headlines was that retailers were predicitng a terrific holiday season? That made me laugh.
In our two income household, where one income pays for Christmas, that income doesn’t look to be long term. We’re expecting a job loss. That expectation has occurred in the last week. Our Christmas list has gone from one high end thing from everyone’s list to one family gift. Wii vs the motion thing from xbox as we already have the xbox.
I know the headlines are all about stopping massive election loss next week, but seriously what are these people smoiking?
The economy is at gridlock.

ORconservative on October 29, 2010 at 10:21 AM

I can hardly wait for January’s tax increases.
 
Are there any records of a country taxing itself into a depression? If not, this could be another chance for Obama to speechify about “for the first time in history”.

rogerb on October 29, 2010 at 10:23 AM

Great job, PBHO, America is getting beaten by Cambodia. CAMBODIA.

Bishop on October 29, 2010 at 10:16 AM

Ugh. I need a drink slurpee.

ladyingray on October 29, 2010 at 10:26 AM

Bad economic policies give bad results. The labor market is still growing faster than the GDP. That means more enter the workforce and more do not get jobs.
We will express feedback on Tuesday.

seven on October 29, 2010 at 10:27 AM

We are waiting for the new tax withholding tables. That will pinch consumer spending in January. Just as we see price increases ain food and energy while they have been removed from the consumer price index.

seven on October 29, 2010 at 10:28 AM

I’m sure we’d all prefer 5%, but 2% is nothing to sneeze at. I don’t mean to apologize for any particular policies but 2% GDP growth seems to dull some of the chicken little predictions coming from the far right.

ernesto on October 29, 2010 at 10:28 AM

A friend of mine will be closing up his ice cream shop after two years in business. He will be followed by a restaurant (10 years in business), a clothing uniform shop (8 years in business), a salon (8 years in business), and two small retail shops (about 5 years each in business).

Gee thanks, President Obama.

VibrioCocci on October 29, 2010 at 10:29 AM

The consumer spending number outstripped personal income. does that mean we are growing dependent on credit again? Second, while GDP was up 2%, inflation was running at 2.3%. That sounds like a negative growth rate of about -.3 to me.

RickCaird on October 29, 2010 at 10:29 AM

I’m sure we’d all prefer 5%, but 2% is nothing to sneeze at. I don’t mean to apologize for any particular policies but 2% GDP growth seems to dull some of the chicken little predictions coming from the far right.

ernesto on October 29, 2010 at 10:28 AM

Wait for the revised number , this is the pre election stats.

the_nile on October 29, 2010 at 10:31 AM

“And if this gets revised downward in four weeks”

Has there been any economic numbers release by the Obama administration that have not had this done? These last 2 years have shown us that the Obama administration is making up data and numbers to push an agenda, like with the unemployment numbers to keep it below 10%, so my guess is after it gets reviewed it is closer to 1.5%.

JeffinSac on October 29, 2010 at 10:31 AM

And if this gets revised downward in four weeks, the brunt of it will fall not on departing Democrats in Congress but Barack Obama:

Obama will be out of the country bowing to other leaders….hitting the links, and hanging with TOTUS.

Baxter Greene on October 29, 2010 at 10:33 AM

Wait for the revised number , this is the pre election stats.

the_nile on October 29, 2010 at 10:31 AM

Fair enough, but even 1.7% implies that the sky is not falling.

ernesto on October 29, 2010 at 10:35 AM

I’m sure we’d all prefer 5%, but 2% is nothing to sneeze at. I don’t mean to apologize for any particular policies but 2% GDP growth seems to dull some of the chicken little predictions coming from the far right.

ernesto on October 29, 2010 at 10:28 AM

…there is nothing dull about spending over 3 trillion dollars in two years, breaking most of your promises,and having little to nothing to show for it…..

Baxter Greene on October 29, 2010 at 10:35 AM

The “secondary” market will be devastated, the question is…what will be the HOT item for Christmas.

right2bright on October 29, 2010 at 10:11 AM

Tickle me Elmo yelling “Yes We Did!!!!….Yes We Did!!!!”

Baxter Greene on October 29, 2010 at 10:38 AM

I’m sure we’d all prefer 5%, but 2% is nothing to sneeze at. I don’t mean to apologize for any particular policies but 2% GDP growth seems to dull some of the chicken little predictions coming from the far right.

ernesto on October 29, 2010 at 10:28 AM

2% is horrendous in any economy. When the economy is humming along or even overheated (1997-1999) 3%-3.5% is acceptable and even preferable but anything under 3% is not good no matter the economy.

Capitalist Infidel on October 29, 2010 at 10:38 AM

I’m sure we’d all prefer 5%, but 2% is nothing to sneeze at. I don’t mean to apologize for any particular policies but 2% GDP growth seems to dull some of the chicken little predictions coming from the far right.
ernesto on October 29, 2010 at 10:28 AM

I’m sure you’ll be posting again when the number gets revised downward (as it always has with the Obama administration).

“Well, I’d prefer 2% but 1.8% is nothing to sneeze at ..” – Ernesto 11/4/2010

“1.5% may not be as high as 1.8%, but at least it’s positive” – Ernesto 11/25/2010

“1.2% is still positive and what does it matter anyway? Republicans are racists!!!!” – Ernesto, 12/1/2010

Go away troll. This thread, it’s not good for you.

PackerBronco on October 29, 2010 at 10:38 AM

I’m sure we’d all prefer 5%, but 2% is nothing to sneeze at. I don’t mean to apologize for any particular policies but 2% GDP growth seems to dull some of the chicken little predictions coming from the far right.

ernesto on October 29, 2010 at 10:28 AM

2% annualized growth year after year will make this the second Great Depression. The media will start calling it that as soon as Republicans gain some real power and they can start blaming it on “gridlock”.

forest on October 29, 2010 at 10:39 AM

Actually, 2.0% isn’t where anyone wants to be at any point in a recovery. It’s a measure that indicates economic stagnation. That kind of growth not only won’t create jobs, it will make it difficult to prevent further erosion in employment.

This is why the Fed is more concerned about avoiding the same mistakes of Japan in the early years of its “lost decade” of stagnation- and why countries such as Germany and China enacted much larger stimulus packages than the US (as a % of GDP) to ensure that their economies had more room to recover.

As voters make the mistake of pushing for economic policies that will worsen recession- such as reduced spending during a deep recession- the Fed is exploring options that will act as counter measures to keep the US economy alive.

bayam on October 29, 2010 at 10:40 AM

such as Germany and China enacted much larger stimulus packages than the US

Germany is trying to cut spending, not increase it.

PackerBronco on October 29, 2010 at 10:44 AM

ernesto on October 29, 2010 at 10:28 AM

YOU’RE RIGHT! except this means that the 20% unemployed or underemployed will stay that way and most likely there’ll be layoffs next year when the hope for a recovery goes away. Some of the current quarterly reports don’t portent a healty future, eg 3m.

TimTebowSavesAmerica on October 29, 2010 at 10:45 AM

Capitalist Infidel on October 29, 2010 at 10:38 AM

That’s simply not true. In the middle of a global recession, growth is good. Do you really believe that if we had a President McCain that growth would be 3% or above? If so, I suggest you wake up from your slumber.

As I said, it was not my intention to apologize or justify any particular policies, only to point out that cries of economic collapse are less credible when the economy is growing at about $280,000,000,000 a year.

ernesto on October 29, 2010 at 10:46 AM

…there is nothing dull about spending over 3 trillion dollars in two years, breaking most of your promises,and having little to nothing to show for it…..

Baxter Greene on October 29, 2010 at 10:35 AM

It all depends on your perspective. If you’re Ben Bernanke or another preeminent expert on global economic crises and their aftermath, you’re relieved to see that many of the worst aspects of a depression have been avoided so far. Some people still fail to understand the level of capital destruction and general devastation that occurred in this country in 2008. The good old days won’t return anytime soon, and voters can quickly redirect their anger.

Then again, this country may well be headed the direction of Japan in the 1990′s- deep economic malaise and stagnation that followed a similar economic crisis.

bayam on October 29, 2010 at 10:46 AM

Germany is trying to cut spending, not increase it.

PackerBronco on October 29, 2010 at 10:44 AM

That’s true- Germany is currently trying to reduce spending and we’ll see how that works.

bayam on October 29, 2010 at 10:50 AM

I can hardly wait for January’s tax increases.
 
Are there any records of a country taxing itself into a depression? If not, this could be another chance for Obama to speechify about “for the first time in history”.
rogerb on October 29, 2010 at 10:23 AM

It will truly be an historic destruction of a society – unless you count the fall of the Roman empire.

But something to really look forward to.

(Just call me Captain Sarcastic today)

Chip on October 29, 2010 at 10:51 AM

I call BS. This GDP number is complete horse manure. Deduct the government spending and what’s left?

You get three guesses, the first two don’t count.

dogsoldier on October 29, 2010 at 10:54 AM

I’m not sure what I was thinking. The original rate was 1.6%.

forest on October 29, 2010 at 10:06 AM

You’e right- anything in the 2% range is pretty generous. Especially when you consider how much of the economy’s current growth is attributed to the stimulus. The CBO and Wall Street generally peg the number at 1.5 to 3.5%, meaning that minus public spending, the economy would have retreated.

Now think about what might be in store for us as the effects of the stimulus wind down later this year and disappear by early 2011. Not a pleasant thought.

http://www.bloomberg.com/news/2010-08-25/obama-s-economic-stimulus-program-created-up-to-3-3-million-jobs-cbo-says.html

bayam on October 29, 2010 at 10:58 AM

ernesto on October 29, 2010 at 10:35 AM

Except that number is FAKE. Government spending makes up a large portion of it and government spending has no business in it. Not that long ago it wasn’t.

dogsoldier on October 29, 2010 at 10:58 AM

That’s simply not true. In the middle of a global recession, growth is good. Do you really believe that if we had a President McCain that growth would be 3% or above? If so, I suggest you wake up from your slumber.

As I said, it was not my intention to apologize or justify any particular policies, only to point out that cries of economic collapse are less credible when the economy is growing at about $280,000,000,000 a year.

ernesto on October 29, 2010 at 10:46 AM

The Master of Lesser of Evil Logic and governing. Akin to Obama and the Dems.

Please explain Germany’s 7.9% GDP this past quarter – and how they accomplished it, compared to the anemic, so-called “growth” of the US and 2.0% GDP.

Heres a hint – they reversed the perverse form of “sharing the wealth”, whereas Obama is engaging in the failed “policy”

Great timing.

Odie1941 on October 29, 2010 at 11:00 AM

The good old days won’t return anytime soon, and voters can quickly redirect their anger.
bayam on October 29, 2010 at 10:46 AM

So, on the one hand the Democrats can’t possibly be responsible for the economy even though they’ve had control of congress for 4 years and complete control of the government for nearly 2 years.

And yet the Republicans will be instantly and fully responsible if they win next week?

Is that what you’re saying?

Chip on October 29, 2010 at 11:02 AM

That’s simply not true. In the middle of a global recession, growth is good. Do you really believe that if we had a President McCain that growth would be 3% or above? If so, I suggest you wake up from your slumber.

As I said, it was not my intention to apologize or justify any particular policies, only to point out that cries of economic collapse are less credible when the economy is growing at about $280,000,000,000 a year.

ernesto on October 29, 2010 at 10:46 AM

What does that even mean? No one said anything about McCain. You won’t find any economist that thinks 2% growth is good or even ok. It’s bad, period. And what I said isn’t even arguable. You can’t argue against facts………..on second thought that’s what liberals do.

Capitalist Infidel on October 29, 2010 at 11:06 AM

Please explain Germany’s 7.9% GDP this past quarter – and how they accomplished it, compared to the anemic, so-called “growth” of the US and 2.0% GDP.

First, keep in mind that many aspects of Germany are more socialist than the US, including socialized medicine and an extremely generous social safety net, before you go too far down the “let’s follow Germany” path. Second, because Germany had balanced its budget during the past decade, it was enable to pass serious tax cuts (an option off the table in the US) and staggered its stimulus over a longer period of time.

Because Germany has an export-based economy, it was able to quickly rebound as China and India returned to double digit growth. The nature of Germany’s economy gives it a huge advantage as the developing world can drive much of its growth.

bayam on October 29, 2010 at 11:13 AM

And yet the Republicans will be instantly and fully responsible if they win next week?

Is that what you’re saying?

Chip on October 29, 2010 at 11:02 AM

Nope, not at all. I’m just saying that voter anger is a volatile and unpredictable thing. In my opinion, the massive economic dislocation caused by the near collapse of the US economic system will prevent any kind of solid and quick recovery from occurring, even if a new Republican Congress gets their way. There’s simply no easy way out of the hole that we’re in.

bayam on October 29, 2010 at 11:16 AM

Then again, this country may well be headed the direction of Japan in the 1990′s- deep economic malaise and stagnation that followed a similar economic crisis.

bayam on October 29, 2010 at 10:46 AM

Ahh yes…the “new norm”

I am hearing Japan mentioned quite a bit lately.

My big problem with it is that anyone paying attention knows that this problem was created on both sides of the aisle.

The Obama administration has decided to use the economic crises to batter their opposition (much the same way the democrats used the war they voted for) and push their agenda that has stagnated growth instead of helping pull us out of the recession.

The same President that whines about the “deficit he inherited” also brags about “saving the world” from financial destruction using TARP,the legislation he voted for that made up about half of his “inherited” deficits from his democratic lead Congress.

Obama’s own CBO and his own economic team (that are now gone) stated that we would be seeing more growth and unemployment going down this year if he had done nothing.

I will feel much better about what TARP and the STIMULUS have done when some of this transparency that was bragged about so much is applied to where and who the funds went to.

We were promised this:

Obama on passing the stimulus

That is why I have moved quickly to work with my economic team and leaders of both parties on an American Recovery and Reinvestment Plan that will immediately jumpstart job creation and long-term growth. …

….and this was stated by one of Obama’s leading economic policy guru’s.

Christine Romer..


. A well designed recovery plan will not only create numerous jobs, but also many jobs paying
good wages and providing full-time employment.

….None of this has even remotely come true.

You are a sharp person and I know that even though we have political differences…we still should be able to agree on something as evident as the fact that not one single person on the Hill has paid for the economic destruction that has occurred to this country.

To get out day after day and yell “It’s Bush’s fault” only makes solving the problems of corruption,irresponsible spending,and out of control government worse.

We are heading into 2011 with serious economic problems in almost every area of our country and we don’t even have a budget.

Americans have their homes,jobs,and their retirement funds biting the dust while Capital Hill has comedians clowning around in hearings.

The largest and most energetic rallying for this administrations policies will be held this weekend by a comedian who handles this country’s issues with his “clown nose on … clown nose off” commentary.

The American people are done being ignored and treated like serfs while their lives are slowly disintegrating around them.

You are right….the “good old days” are not returning anytime soon.The American people know this and that is why we need serious leadership on the Hill to institute serious reform instead of activists who will do and say anything to stay in power.

Nov. 2 is not going to be just a bunch of dumb Americans voting out of fear,they don’t believe or trust anything coming out of the Hill right now and are not falling for the smoke and mirrors.

Baxter Greene on October 29, 2010 at 11:21 AM

That’s simply not true. In the middle of a global recession, growth is good. Do you really believe that if we had a President McCain that growth would be 3% or above? If so, I suggest you wake up from your slumber.
ernesto on October 29, 2010 at 10:46 AM

Tell you what: In 2012 we’ll run against the real record of President Barack Obama and you run against the hypothetical record of President John McCain and we’ll see who wins.

PackerBronco on October 29, 2010 at 11:31 AM

Nope, not at all. I’m just saying that voter anger is a volatile and unpredictable thing. In my opinion, the massive economic dislocation caused by the near collapse of the US economic system will prevent any kind of solid and quick recovery from occurring, even if a new Republican Congress gets their way. There’s simply no easy way out of the hole that we’re in.
bayam on October 29, 2010 at 11:16 AM

But if Obama’s version of Socialism is supposed to be working, shouldn’t the indicators be moving in a much more positive direction?

(And before you run off on a tangent of the definition of Socialism, let’s just get that part of the discussion out of the way)

Socialism defined by the American Heritage® Dictionary of the English Language, Fourth Edition as:

1.Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.
2.The stage in Marxist-Leninist theory intermediate between capitalism and communism, in which collective ownership of the economy under the dictatorship of the proletariat has not yet been successfully achieved.

The government owns some car companies, the student loan system, and is the process of talking over the healthcare industry and is ramping up to control the financial industry, and wanting to control the energy industry through cap and tax or the EPA.

So, if it’s supposed to be working, why aren’t we all living in “worker’s paradise” as they say?

Chip on October 29, 2010 at 11:33 AM

That’s simply not true. In the middle of a global recession, .
ernesto on October 29, 2010 at 10:46 AM

….uhhhh….Newsweek and many democrats said the recession was over months ago.

….I believe we are in the “recovery summer” era now.

Baxter Greene on October 29, 2010 at 11:34 AM

Please explain Germany’s 7.9% GDP this past quarter – and how they accomplished it, compared to the anemic, so-called “growth” of the US and 2.0% GDP.
First, keep in mind that many aspects of Germany are more socialist than the US, including socialized medicine and an extremely generous social safety net, before you go too far down the “let’s follow Germany” path. Second, because Germany had balanced its budget during the past decade, it was enable to pass serious tax cuts (an option off the table in the US) and staggered its stimulus over a longer period of time.

Because Germany has an export-based economy, it was able to quickly rebound as China and India returned to double digit growth. The nature of Germany’s economy gives it a huge advantage as the developing world can drive much of its growth.

bayam on October 29, 2010 at 11:13 AM

I suggest listening to Merkl’s speech last week – concerning how and why the cuts to their net loss socialism programs have aided the growth of Germany’s GDP.

The fact Germany is an export country is nothing new, what you fail to factor in – is Germany’s PREMIUM net exports – engineering and consulting services. They arent fighting over mass manufacturing contracts, akin to India and China – through low prices. Another key factor – Germany’s investment to GDP ratio went from 18% in the 70%, to 3% in 2008. That number is revised again to 5%… Business 101 for global dummy’s.

Oh – and take a look at Chinas “drop” in GDP for Q2, Q3 – compared to their accelerated growth in 2009, Q1 2010.

The key is learning what Germany is NO LONGER DOING as an economic model – not engaging the model in the middle of a recession – ala Dems and Obama.

“tax cuts off the table” in the US – isn’t true – in fact its the opposite of what needs to be done AND WHAT GERMANY embraced.

Do you really think a socialist country, like Germany can triple our GDP… because they are more socialist and act like true socilist, safety nets and all – while increasing tax’s and spending more government monies?

Tax cuts + less gov. spending = growth.

Its a lesson taught for a few hundered years, yet our dolts in charge and the Dems feel the need to face failure head on, full guns blazing.

Lastly – America is also an export economy, (export $1.05T, import $1.5T) which gave rise to other key export country’s – for the net profit no longer existed – and businesses go “outsourced” If you dont think there is a direct link to India and Chinas growth – through American exports, success and consumption, you have your head in the sand.

Odie1941 on October 29, 2010 at 11:36 AM

That should be:

So, if it’s supposed to be working, why aren’t we all living in a “worker’s paradise” as they say?

Chip on October 29, 2010 at 11:37 AM

My big problem with it is that anyone paying attention knows that this problem was created on both sides of the aisle.
The Obama administration has decided to use the economic crises to batter their opposition (much the same way the democrats used the war they voted for) and push their agenda that has stagnated growth instead of helping pull us out of the recession.

I’m not sure I agree with that description of events, although I know many people on the street are absolutely certain that Obama is to blame for the Great Recession. It’s hard for me to reconcile that belief with CBO numbers, in line with Wall Street estimates, that show the stimulus has created millions of new jobs and kept GDP growth from returning to negative territory. Certainly you don’t hear Greenspan or Bernanke saying that the stimulus or other key Obama economic polices are misguided. I think people are very frustrated by the high unemployment rate and can’t quite accept just how much destruction occurred when our form of capitalism nearly collapsed.

The same President that whines about the “deficit he inherited” also brags about “saving the world” from financial destruction using TARP,the legislation he voted for that made up about half of his “inherited” deficits from his democratic lead Congress.

Well, Bush should get full credit for TARP since he’s the one who passed it. And it turns out that TARP will either cost taxpayers next to nothing or even return a small profit. It’s been a major success.

To get out day after day and yell “It’s Bush’s fault” only makes solving the problems of corruption,irresponsible spending,and out of control government worse.

Yes, I agree all the bickering is pointless. Americans are so divided these days that there’s often little room for compromise or moderation. It saddens me to think that while we’re increasingly divided, other countries have less political drama and are starting to out-maneuver the US.

bayam on October 29, 2010 at 11:38 AM

Any bets on the “true” number, once it gets REVISED DOWNWARDS next month?

GarandFan on October 29, 2010 at 11:38 AM

We are heading into 2011 with serious economic problems in almost every area of our country and we don’t even have a budget

Not only that; there’s not a single person in Washington that can tell you with any degree of confidence what your tax rate will be in 2 months . How can businesses budget? How can they possible fund expansion or make projections for the upcoming year without knowing what their tax rate will be?

The Dems should be kicked out of office for that reason alone.

PackerBronco on October 29, 2010 at 11:39 AM

If we could have only elected Mike Castle, he would have fixed all of this.

wheelgun on October 29, 2010 at 11:41 AM

It’s hard for me to reconcile that belief with CBO numbers, in line with Wall Street estimates, that show the stimulus has created millions of new jobs and kept GDP growth from returning to negative territory

Uh, maybe because those numbers are bullsh*t?

In a nutshell the government economist used a formula to predict how many jobs would be created if the government if x dollars were spent in stiumulus.

Then, after the fact, to determine how much jobs were created by the stimulus they asked, “well, how much money did we spend?” and then using the same formula, they calculated the number of jobs created.

So they never really measured the net number of jobs created through the stimulus, they only really measured the amount of money that was spent.

PackerBronco on October 29, 2010 at 11:42 AM

The “secondary” market will be devastated, the question is -what will be the HOT item for Christmas.

right2bright on October 29, 2010 at 10:11 AM

The usual ‘racism’ nonsense has abated somewhat, so I predict the Obama Chia Head will make a strong showing.

slickwillie2001 on October 29, 2010 at 11:46 AM

Do you really think a socialist country, like Germany can triple our GDP… because they are more socialist and act like true socilist, safety nets and all – while increasing tax’s and spending more government monies?

There are a lot of “socialist” counties with far higher tax rates and government social programs that currently have far stronger economies than the US has. But that doesn’t mean we should follow in their path. I think our system is superior.

Tax cuts + less gov. spending = growth.

I agree with you except for when a country is experiencing a period of deep recession. Barron’s has explored this topic in greater depth- when households and businesses have been devastated and refuse to spend or invest, the public sector is sometimes the only game in town. It underscores the importance of behavioral finance.

bayam on October 29, 2010 at 11:48 AM

bayam on October 29, 2010 at 11:38 AM

You seem like a bright person – how in the hell can you conclude a 3.6% rise in unemployment from 6 – 9.6% over the past 3 years affords any “job growth”.

It is a lessor of evils ploy of BS.

And what CBO and Wall St estimates are you talking about? 1 has nothing to do with the other, nor do their variables, formulas or data the same. Are you talking about the CBO who “magically” came up with a sub trillion dollar price tag on Health Care – only to have them revise it 3 times in 9 months whereas the pricetag is double the original “estimates” Of course, they claimed “we only used the data we had access to” – which is fraud in itself and/or exposes the fraud of Dems to hide the true costs – and when those costs kick in???

Or the Wall St you speak of, those whos only opinon is “up” or “assests on hand”. 90% of Wall St is dead wrong every year. Please dont tell me you look at the 30 DOW stocks to depict our economy. I suggest “net gainers vs losers” or even better – take a look at Wall St’s performance between 1928-1940. Its smoke and mirrors with zero correlation or causation to the economys “success”

Odie1941 on October 29, 2010 at 11:49 AM

So they never really measured the net number of jobs created through the stimulus, they only really measured the amount of money that was spent.

PackerBronco on October 29, 2010 at 11:42 AM

I’ll agree that economic modeling is not an exact science and even the smallest rounding error can be magnified into a huge miscalculation. On the other hand, the CBO and other economists, including those at major investment firms, ran different models but came up with similar results.

bayam on October 29, 2010 at 11:51 AM

(And before you run off on a tangent of the definition of Socialism, let’s just get that part of the discussion out of the way)
?

Chip on October 29, 2010 at 11:33 AM

This is also a good definition of socialism:

Unemployment at an all time high in America….


CBO BOMB: ‘Deficits will cause debt to rise to unsupportable levels’…

Over the past few years, U.S. government debt held by the public has grown rapidly. According to CBO’s projections, federal debt held by the public will stand at 62 percent of GDP at the end of fiscal year 2010, having risen from 36 percent at the end of fiscal year 2007, just before the recession began. In only one other period in U.S. history—during and shortly after World War II—has that figure exceeded 50 percent.

…they are projecting about 100% of GDP in the near future at this rate.


Wealthy lawmakers increased their riches as U.S. economy sputtered in ’09

By Kevin Bogardus and Barbra Kim – 08/31/10 06:00 AM ET

The wealthiest members of Congress grew richer in 2009 even as the economy struggled to recover from a deep recession.
The 50 wealthiest lawmakers were worth almost $1.4 billion in 2009, about $85.1 million more than 12 months earlier, according to The Hill’s annual review of lawmakers’ financial disclosure forms.

The few powerful are growing richer while the middle class disappears and the economy stagnates.


Federal spending insulates region

By Patrice Hill

The Washington Times
7:41 p.m., Sunday, October 17, 2010

Throughout the recession, one major city stood out as an oasis for jobs and growth: Washington, D.C.
Supported by a gusher of federal borrowing and spending, the District of Columbia was the nation’s only metropolitan area that never stopped growing..

“The federal government is the engine that drives this economy, directly or indirectly, accounting for at least a third of economic activity,” she said. “In response to the economic crisis, not to mention two wars, federal activity is actually expanding.”

…Centralized area of power continues to grow while the rest of the country disintegrates.
Government “drives” this economy instead of the private sector.


America’s 3 Wealthiest Counties Now Ring Washington D.C.
Mark , TraderMark

Published 03/12/2010 – 11:21 p.m. EST

Now as the median wage of the federal worker far outpacing that of the private sector – along with the concentration of unions in the public sector [Jan 24, 2010: For the First Time, More Union Workers Work in Government versus Private Sector] – we’ve seen a wholesale switch. I would assume the huge outgrowth of lobbying (jobs) in the country the past decade, along with those in the private sector who contract with federal government have also helped to push along this trend.

….and as you would expect…they view the country a whole lot differently than the vast majority do:

Poll: D.C. elites a world apart

By: Andy Barr

The survey also reveals to a surprising degree how those involved in the policymaking and the political process tend to have a much rosier view of the economy than does the rest of the nation — and, in some cases, dramatically different impressions of leading officeholders, political forces and priorities for governing. 

Only 27 percent believe the country is headed in the right direction, compared with 61 percent who think the nation is on the wrong track. Likewise, when asked whether the national economy is heading down the right or wrong track, just 24 percent chose the right track, compared with65 percent for the wrong track.

Yet among the 227 Washington elites polled, more think the country is on the right track, 49 percent, than the wrong track, 45 percent. On the economy, 44 percent of elites think the country is on the right track, compared with 46 percent who believe it is not.

…who are you going to believe….the Obama administration or your lying eyes.

Baxter Greene on October 29, 2010 at 11:54 AM

On the other hand, the CBO and other economists, including those at major investment firms, ran different models but came up with similar results

I wouldn’t trust anything from the CBO. Their record has been spotty at best and their results are easily manipulated by the political class who specify what values to input into their formulas in order to achieve the desired results.

PackerBronco on October 29, 2010 at 11:56 AM

You seem like a bright person – how in the hell can you conclude a 3.6% rise in unemployment from 6 – 9.6% over the past 3 years affords any “job growth”.

You’re right, my mistake. I should have only said ‘jobs created’ by the stimulus, according to CBO estimates. This country is not experiencing any kind of substantial net job growth.

As for Wall Street, I’m not defending or promoting equities as an investment class or the ability of the average stock broker to predict futures stock prices.

bayam on October 29, 2010 at 11:56 AM

I agree with you except for when a country is experiencing a period of deep recession. Barron’s has explored this topic in greater depth- when households and businesses have been devastated and refuse to spend or invest, the public sector is sometimes the only game in town. It underscores the importance of behavioral finance.

bayam on October 29, 2010 at 11:48 AM

“behavioral finance” is best know as “let the market decide” or “capitalism” The only and I mean only “public sector game in town” – is keeping tax cuts or lowering tax implications. There is a rabbit hole of ignorance being exposed by Barron’s – no surprise there.

The “public sctor” has a pricetag – one normally more costly than private – being the private motivation is profit, whereas a $3T deficit gov clearly doesnt care about net profit or rate of return, unless you count “political cover” Its also multiplying the problem – which I believe Barrons has written 10 times more articles about.

So net, net – do you think the 150k “jobs” created by the Census which are now over – earned a proper and sustainable ROI??? It was useful for the 6 months it contributed to the Dem meme “we are creating jobs” – yet they are too dumb to realize – comes back to haunt them as “unemployed” – while the price tag was higher, net, net than a private sector job.

Odie1941 on October 29, 2010 at 11:57 AM

After the lies, always wait for the revisions …

tarpon on October 29, 2010 at 11:59 AM

It saddens me to think that while we’re increasingly divided, other countries have less political drama and are starting to out-maneuver the US.

bayam on October 29, 2010 at 11:38 AM

Well said.

I think the vast majority of Americans want to see politics put to the side and see a real “fireside” discussion with the American people about what it is going to take to right this ship.Not backroom deals and bills passed in the middle of the night that have not even been read.
The American people have lost an incredible amount of faith in Capitol Hill and it will get worse if things don’t change.

I do have to take issue with this claim of whether the “jobs created/jobs saved” line has any credibility.

It’s hard for me to reconcile that belief with CBO numbers, in line with Wall Street estimates, that show the stimulus has created millions of new jobs and kept GDP growth from returning to negative territory.

The CBO and Obama’s own administration have stated themselves (along with outlets like AP,Rueters) that their is no way to tell if a job has been saved or lost.

Earl Devaney, the man in charge at Recovery.org,

“Your letter specifically asks if I am able to certify that the number of jobs reported as created/saved on Recovery.gov is accurate and auditable. No, I am not able to make this certification,” Devaney wrote, in a letter provided to ABC News.

However, Devaney can’t certify the jobs data for a more fundamental reason: it’s all fake. The “saved or created” formulas from the White House do not relate to reality, even when properly reported back to Recovery.gov. As we have seen in state after state, the jobs listed as “saved” were mostly never at risk in the first place. In most cases, they were public-safety and education jobs that would have been spared in favor of other, less critical bureaucrat positions that states didn’t want to highlight as existing, let alone being “saved.”


…from Obama’s CBO:


“It is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package.”

The accounting for these figures is suspect at best.
To take taxpayer money….send it to government and make the claim that even a dollar spent toward an entity saved or created jobs that they had no idea whether they would be lost or not does not sound credible.

They have basically pumped figures into Keynesian models and taken the figures that came out the other end to make these claims.They are not based on the facts on the ground.

From the AP:

“For one thing, the so-called underemployment rate, which includes workers who are working part-time but who want full-time work, increased from 16.5 percent to 16.7 percent. During our supposed ‘Recovery Summer,’ we have lost 283,000 jobs (54,000 in June, 171,000 in July, and 54,000 in August). And for August, the employment-population ratio — the percentage of Americans with jobs — was 58.5 percent. We haven’t seen figures this low in nearly three decades.”

When the stimulus was signed and jobs were promised along with nothing above 8% unemployment….America was around 134 billion employed. We were promised that it would go to around 137 billion employed. It is instead around 130 billion employed and we are at around 9.7% unemployment.

I think the books are being cooked and America is yet to find out just how bad things really are.

Baxter Greene on October 29, 2010 at 12:13 PM

The books have been cooked for a long time. When the administration of the time added government spending to the GDP (or the reported value of the day, which had a different acronym), they did so for political purposes.

Now politicians determine whether we are in a “recession” or not, and I guarandamntee you they will never allow the “D” word to be used on their watch.

Why are so many people determined to force our current economic situation into the mold of a recession? I tell you it’s politics AGAIN.

Objective comparison of the real economic situation to past negative situations show this to be a DEPRESSION.

We did not have a real recovery of any sort. When you remove ALL the government spending from the numbers they report, you get a value hovering near ZERO.

Attempting to lipstick that as a “Recovery” is propaganda of the vilest sort.

BTW: The “officially” fake BLS U6 number is 17.5% unemployment. In reality it’s over 22%. Shadowstats.com calculates ALL the people who are like ACTUALLY OUT OF WORK.

The Dept. of Labor doesn’t. It’s politically inconvenient.

dogsoldier on October 29, 2010 at 12:30 PM

I think the vast majority of Americans want to see politics put to the side and see a real “fireside” discussion with the American people about what it is going to take to right this ship

Part of the problem is that no one actually knows how to recover from a once-every-century economic collapse. The Fed doesn’t really know and Wall Street economists don’t have any kind of consensus, although I tend to listen to the ones who predicted the asset bubble and near collapse of the banks. I doubt that the Tea Party has analyzed past economic crises and formulated a thoughtful policy response to our situation.

The Fed, and particularly Bernanke, were very involved in examining and then criticizing the Japanese government’s response to that countries asset bubble collapse over a decade a go- a scenario in many ways similar to collapsed asset values here. While US economists may understand what not to do to make things worse- governments have done the wrong things in many cases- there’s no clear formula for what do to. No set of actions or inactions are guaranteed to swiftly end these depression-like conditions.

BTW: The “officially” fake BLS U6 number is 17.5% unemployment. In reality it’s over 22%. Shadowstats.com calculates ALL the people who are like ACTUALLY OUT OF WORK.

You’re right, it’s that bad. Some people have been honestly calling it a depression:
http://techcrunch.com/2010/08/17/keen-on-economy-paul-kedrosky-techcrunchtv/

bayam on October 29, 2010 at 2:13 PM

bayam on October 29, 2010 at 2:13 PM

Alas, there are no swift solutions. I know that’s not happy news, but there it is. No shortcuts.

ObamunistCare must be repealed.

The bush tax cuts must be made permanent, along with permanent reductions to capital gains taxes and the elimination of the death tax.

R&D Tax credit planning and implementation needs to take place.

High tariffs on certain imported goods need to be introduced as well. I don’t particularly like this but, lets face it, we deal with a number of countries that are not friendly to us and are out to hurt us any way they can.

It’s in our better interests to protect ourselves better than we are.

dogsoldier on October 29, 2010 at 3:02 PM

I thought last quarter’s growth was 2.4% or something like that.

forest on October 29, 2010 at 10:02 AM

that was the first of three announcements. First they have the big “things aren’t so bad” announcement… which is a lie. (2.4%)

Then sometimes the “maybe that was too high” announcement, which is still a lie. (skipped for Q2, generally only done if the first one gets caught as a lie)

Finally the “ok, fine, it sucked” announcement, which is delayed enough that it doesn’t get much reporting. (1.6% or 2/3rd of the original announcement)

2% GDP growth seems to dull some of the chicken little predictions coming from the far right.

ernesto on October 29, 2010 at 10:28 AM

If you’re going to accept their first number as honest; yes.

But why would you do that? They haven’t had a number since Obama took office that they didn’t revise down at least once, often twice?

I’m thinking they’ll be under 1.5% after the election when they release the real number; probably in the 1.2-1.4 range. Which would also match the 2/3rd of the initial announcement that they had last time.

If they get forced to say something pre-election it’ll be the middle lie of maybe 1.7-1.8… but they’ll be able to hold off for the final one I suspect.

If you’re going to accept their first number, why not accept all their lies?

If you want real numbers that have data and validity and meaning… this isn’t the release where that happens. Sorry for the confusion you seem to have had.

If 3 months from now 2% ends up being the real number; you can tell me “I told you so”… but I’m feeling pretty confident that 2% isn’t the real number.

Oh, and I’ll freely admit my 1.2-1.4% is a fictional number I created; which doesn’t make it less accurate than 2%. I mean last quarter I called 2.4% downgraded to 1.5% before the first number was released… and that was me making up numbers as well. :)

gekkobear on October 29, 2010 at 6:57 PM