Breaking News: Economy grows at best pace in 2 years, signaling end of recession

I'm very glad you posted this, and I appreciate it. However, I find it funny that this is "breaking news" this morning, when as early as last week, preliminary reports already broke this news. I also find it funny that the market reacts today on news that they knew earlier in the week.

 

im in homebuilding and here is what i am seeing...

the 3rd quarter was our best in over a year - its was the 3rd straight quarter of growth, which hasnt been seen in at least a couple years...BUT...when broken down by month july and august were strong (best months since 2q08) and september tanked.

i am seeing a push to build specs to meet the demand for the the $8k tax credit - even from builders who havent traditionally been spec builders. it will be very interesting to see what happens in the 4q - 4q08 was the worst i have seen so i dont think we will be that bad (hopefully), but the september #'s are a concern. especially if builders are sitting on a bunch of homes the built back in july and august and cant sell.

 

It was breaking news this morning. There were private firm estimates last week. A few days ago, Goldman came out with a lowered estimate of 2.7% growth, which rattled the markets and sent them down. Today is the official news, so the effects of the Goldman estimates would naturally be undone to some extent.

It's no different than earnings vs analyst estimates, or estimates of anything from unemployment to consumer confidence as compared to the actual numbers.

 

The business cycle lives.

 

I read that article earlier this morning and its good news but its way too early to talk about a sustained recovery. The stimulus and other programs seem to have done its job in providing short term relief but whether the economy can stand on its own is far from certain.

 

Oh brother.

 

I think we're a long way from getting out of the woods. The FED will have to keep rates at 0% for AT LEAST another year.

 

I'm glad we're no longer going to have to prop up all those bad bank loans....o wait.

 

you're never out of the woods...there's always a downturn waiting to bite you in the ass.

this is good news, though.

i will say i know a lot of guys in commercial construction and commercial real estate who are scared to death of 2010.

 

I think this is an interregnum, not a trend.

(Incidentally, if Bush was still Pres, I'd be blasted for that sentence and told I was hoping America failed just for political gain.)

 

Most reports conclude that gov't spending is the reason for the surprising bump - the real question isn't whether or not the stimulous boasted GDP - it's whether or not the bump is sustainable.

Did we "shock" the economy out of recession or simply cover up weakness?

 

I was told to wait until the next big write down of mortgages, then light the signal

link

 

Looking at the chart, the one big plus we're looking at is the Alt-A market is much smaller - at its peak, there's an estimate of $9B in Alt-A mortgages resetting. With subprime, we peaked at $33B. For comparison, we're now at about $5B in Subprimes/month - the Alt-A market peaks at about where we were a few months ago in subprime.

Sweet Lou is right here - this is a good GDP # but it's intentionally inflated by stimulus. That's great, but the ultimate goal of the stimulus is to jumpstart the private sector economy - we won't know just how effective that part is for a little while yet.

 

The major mortgage servicers -- J.P. Morgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. -- also hold large portfolios of option ARMs acquired through purchases of other banks. Investors suspect that they are reluctant to forgive principal on option ARMs in their servicing portfolios because that could trigger write downs of the banks' option ARM holdings.

Delinquencies and foreclosures of option ARMs are climbing and the problem is expected to get worse. In the second quarter, 15.2% of option ARMs were at least 60 days past due, compared with a 5.3% delinquency rate for all mortgages, the Office of the Comptroller of the Currency said in a report analyzing 34 million U.S. mortgages. Meanwhile, 10% of option ARMs were in the process of foreclosure, more than triple the 2.9% rate for all mortgages, the OCC said.

The poor performance partly reflects the loans' heavy concentration in the four states that have seen the sharpest price drops. Option ARMs represent nearly 40% of loans at least 60 days past due in Florida and in Nevada and 28% of such loans in California, according to First American CoreLogic. One in five delinquent mortgages in Arizona is an option ARM.

Making matters worse, more than a million option ARMs are due to reset over the next four years, according to First American CoreLogic. When that happens, borrowers who were making partial interest payments will have to make fully amortizing payments reflecting a larger loan balance.

Option ARMs aren't good candidates for the government's loan-modification program. Borrowers with such loans are often already struggling to make already very low payments, leaving little room to cut the payments further.

Some borrowers are so deeply underwater that lenders would have to write off or defer huge amounts of loan principal to achieve a sustainable modification. That could trigger a failure of the net present value test required to complete a modification under the government's program.
link

I think when you just stopped a huge bleeding another ripple has a more significant effect than if you are healthy

The government is going to have to further intervene I think, so its not that pretty yet IMHO

 

Just Cash for Clunkers and the New Homebuyer Credit have helped two of the hardest hit industries alone.

I'll wait for unemployment to start getting near 5% before I feel relief.

 

The economy will make you dizzy trying to understand it, if you don't believe me go to this website and stare at the screen

http://www.usdebtclock.org/

 

shot in the dark question here. what would raising the minimum working age do to unemployment. Make the minimum age 18 years old instead of 16.

For example, I manage a putt-putt golf place, and there are plenty of kids that work just because they are bored and want something to do. There parents are loaded and only use the money at the mall and whatnot. I think kids should not be able to work if there parents make a certain amount of money. I know at my company there would be about 35 jobs out of a staff of 75 available to people who actually need the money.

Any thoughts?

 

It's all about der jobs.