From the Houston Chronicle: Aug. 28, 2003, 7:53AM Report shows U.S. economy rebounding Associated Press WASHINGTON -- The U.S. economy emerged from the doldrums in the second quarter of this year and grew at a solid 3.1 percent annual rate, a better performance than the government thought just a month ago. The revised reading on gross domestic product released by the Commerce Department today showed the economy picking up more speed in the April to June quarter than the 2.4 percent growth rate first estimated. The 0.7 percentage-point improvement to GDP reflected more military spending for the Iraq war and more robust spending by consumers and businesses than the government previously thought. The revised second quarter reading was stronger than the 2.9 percent growth rate economists were expecting and marked the economy's best performance since the third quarter of 2002. The rebound came after two straight quarters of anemic economic growth. GDP, which measures the value of all goods and services produced within the United States, increased at just a 1.4 percent pace in the final quarter of 2002 and the first three months of this year. In a second report, new claims for unemployment benefits rose by a seasonally adjusted 3,000 to 394,000 last week, the Labor Department said. Even with the increase, claims remained below 400,000, a level associated with a weak job market. That offered hope that the pace of layoffs is stabilizing. Amid signs of an economic rebound, the Federal Reserve earlier this month decided to hold a key short-term interest rate at a 45-year low of 1 percent and hinted that the rate may stay at this low level for some time. Economists are predicting that the economy will pick up speed in the second half of this year, with some estimating that growth will clock in at an annual rate of 3.5 percent or more. Near rock-bottom short-term borrowing costs along with fatter paychecks and other incentives coming from President Bush's third tax cut should motivate consumers and businesses to spend and invest more, thus boosting economic growth. Even if the economy perks up in the second half, the job market probably will remain sluggish for a while, economists say. The nation's unemployment rate dipped to 6.2 percent in July, but that was mainly because a lot of people left the civilian labor force. Businesses cut jobs for the sixth month in a row. Economists say businesses will want profits to improve and want to feel secure about the economic rebound before they go on a hiring spree. After-tax profits of U.S. corporations fell by 3.4 percent in the second quarter, compared with a 3.8 percent increase in the first quarter, the GDP report said. The Bush administration insists the tax cuts will help the economy grow and eventually create jobs. Democrats say the tax cuts aren't putting people back to work, mainly help the wealthy and dig the federal budget hole deeper. In the second quarter, surging military spending was a major factor in the strong GDP showing. Spending by the federal government on national defense increased at a whopping 45.9 percent rate, the largest increase since the third quarter 1951. The new estimate was stronger than the 44.1 percent growth rate for such spending reported a month ago. Consumer spending grew at a 3.8 percent pace in the second quarter, up from a 3.3 percent growth rate previously estimated. Much of that pickup reflected more brisk spending on big-ticket goods, such as cars and appliances. Consumer spending on such "durable" goods grew at sizable 24.1 percent rate, the biggest increase since the end of 2001. Consumer spending has been the main force keeping the economy going. Today's report offered signs that businesses, whose reluctance to spend in previous quarters was a main factor in the economy's listlessness, may be coming around. Businesses increased spending in the second quarter on equipment and software at an 8.2 percent pace, up from the 7.5 percent growth rate previously reported, and a turnaround from the cut in such spending made during the first quarter of this year. And, after six straight quarters of cutting spending on plants and other structures, businesses increased such investment in the second quarter at a 7.1 percent rate, also stronger than the 4.8 percent growth rate first estimated for the quarter. The nation's trade deficit also was less of a drag on second-quarter GDP than the government previously thought. The trade deficit shaved off 1.20 percentage point from GDP, versus the 1.56 percentage point reduction first estimated.
Nobody here wants to hear any positive news about the Bush Admnistration or the horror of an upbeat economy. This is Doom & Gloom Central.
I would not call a 6.2% unemployment rate an "upbeat economy." Don't get me wrong, I am happy that the economy might be rebounding, but until more people start getting jobs there really isn't that much "recovery" IMO. Actually, it isn't just jobs that matter, it is jobs that people want. We have a large population of Starbucks workers who have degrees they spent years pursuing only to find that they can't find a job in their field. My father is a systems engineer and was part of the team that wrote the software for the F-16 simulator seen in "Iron Eagle." He helped design the space station simulator and had been in the aerospace industry for nearly 20 years. Until very recently, he was selling Apples for Microcenter. Finally, a job came through for him in Detroit, which leaves his wife and dog back home in Missouri. The economy is creeping upward, but it has not recovered yet. And when the Bush administration does something I am proud of, I cheer them on and give them props. It just hasn't happened in a while.
Straight from the Halliburton thread-- there are many articles just like it all over the net: Defense Spending Drives Economy By Anna Willard WASHINGTON (Reuters) - Soaring defense spending is driving the U.S. economy, but not doing too much for the unemployment picture as Americans still struggled to find jobs and corporations saw their profits fall, government reports on Thursday showed. The Commerce Department said the economy grew at a revised 3.1 percent pace in the second three months of 2003, boosted by defense spending, business investment and consumers. Within the gross domestic product report, government spending on defense -- much of it to pay for the U.S.-led war in Iraq -- soared 45.9 percent, the strongest gain since the third quarter of 1951, during the Korean War.
Everyone here seems to be pretty intelligent and educated. I assume each of you know that unemployment is a lagging indicator. Please stop looking to bash Bush for petty partisan gain.
Nowhere in my post did I bash Bush, I said straight out that when Bush does things I think are positive for this country, I support him wholeheartedly.
Here is an article from the Chronicle. Keep labor in Labor Day, supply-siders By E. J. DIONNE Maybe we should just scrap Labor Day and rename it "Capital Day." After all, aren't we now a "nation of investors"? Isn't most business reporting, especially on television, about stock prices and "returns on capital"? If you care about wages and working conditions, you must be some sort of dinosaur. And, hey, who cares about unemployment? Productivity is growing, which means we're more efficient. Sure, we're losing manufacturing jobs. But worrying about manufacturing is so Old Economy. Yeah, yeah, a lot of those manufacturing jobs helped people build middle-class lives. But won't they make it all up in their portfolios? Income is old hat. Wealth is the thing. This Labor Day is as good a time as any to begin rolling back the effects of roughly a quarter-century of propaganda that sought, quite successfully, to diminish the role of labor -- which is to say, real human beings living primarily on wages and salaries -- in creating prosperity. Beginning in the late 1970s, the promoters of supply-side economics tried to resell us on the economic ideas of the 1890s and obliterate the assumptions that had dominated thinking about the economy from the election of Franklin Roosevelt in 1932 during the Great Depression. The lesson of the Depression was that if ordinary workers lacked jobs and adequate incomes, the economy would crash because too few people could afford to buy what businesses hoped to sell. This was demand-side economics and it laid heavy stress on spreading incomes and job opportunities broadly. The supply-siders insisted that supply created its own demand. In plain English, this meant we should think less about labor and more about capital -- specifically, investors who created the means to produce the goods. If the New Dealers glorified the role of the worker, the supply-siders glorified the entrepreneur. "One of the little-probed mysteries of social history is society's hostility to its greatest benefactor, the producers of wealth," wrote George Gilder in Wealth and Poverty, his influential supply-side manifesto published in 1980. "How much easier it is -- rather than learning the hard lessons of the world -- merely to rage at the rich and even steal from them." Supply-side theories on the urgency of cutting taxes on the rich were exploded when Bill Clinton raised taxes on the wealthy and -- contrary to the supply-side predictions -- helped unleash a remarkable period of economic growth. But the supply-siders have had a great run, and their latest rationales focus on how many Americans own stock. The theory is that if we're all entrepreneurs, then all of us benefit from policies that benefit investors. Our role as employees -- as workers -- is shoved up there in the attic with that old lady Ross Perot used to talk about. No one is more evangelical about the new investor nation than Grover Norquist, the conservative activist who has devoted his life to eliminating taxes, especially taxes on savings and investment -- which means taxes on the best-off Americans. Norquist speaks constantly of the 70 percent of voters who own shares of stock. But let's look at those numbers. Norquist speaks of Nvoters.) According to the Federal Reserve, half of all Americans have some connection to the stock market, which means that half do not. And even for the happy 50 percent, their major connection to the stock market is through pension funds they do not themselves control. It's still the case that most stock is owned by a small percentage of Americans. An analysis of Federal Reserve data by the Center on Budget and Policy Priorities, for example, recently found that the top 10 percent of income earners owned 70 percent of directly held equities. The bottom 60 percent of earners owned just 9 percent of directly held equities. That's why policies that benefit investors (such as the dividend tax cut) shower huge benefits on a small number of Americans. The simple truth is that the standard of living of most Americans depends on getting jobs that pay well. This means that unemployment matters not just for those out of work, but also for those whose wages are depressed when too many people are competing for too few jobs. For most Americans, the best economic policy is still low unemployment. That's why the late 1990s produced income growth for the poor and the middle class as well as the wealthy. I am all for a nation of owners and investors. But most people need jobs. For 25 years, we have been hearing that labor depends upon capital. It's time to resurrect the other, buried truth: that capital depends upon labor. Our prosperity really does require keeping the "Labor" in Labor Day.
And yet another good one from the Chronicle. UNECONOMICAL Federal deficits, jobless rate bode ill for the nation An anonymous but insightful observer of the U.S. economy remarked, "If you're not confused, you're not paying attention." Rarely has the speaker's point been so apt. Bush administration officials and others publicly optimistic about the economy will take comfort in the U.S. Commerce Department's latest revised statistics. Those figures estimate the gross domestic product rose at a relatively strong 3.1 percent annual rate during the second quarter of this year. Consumer and business spending rose at annual rates of 3.8 and 7.5 percent, respectively. Many private economists predict the economy, fueled by rising wages and tax cuts, will grow during the second half of this year at a pace of 3.5 percent to 4 percent. While a look out the window reveals a newly cheerful prospect, pessimism infuses the landscape beyond the horizon. The nation's unemployment rate stands at 6.2 percent. Houston's rate is higher, around 7 percent. These statistics do not include the millions of Americans who have been unemployed so long they have given up looking for a steady job. Even during the apparent economic rebound, the country keeps shedding jobs, particularly in the high-wage manufacturing sector. The fiscal situation of cities and states grows worse. Texas Comptroller Carole Keeton Strayhorn reports that sales taxes collected in Texas dropped 4.6 percent in July, a chill that could give the state budgetary pneumonia. U.S. Rep. John Culberson, R-Houston, and Harris County Tax Assessor-Collector Paul Bettencourt, both conservative Republicans skeptical of President Bush's prediction of robust and sustained economic growth, argue that no economic recovery will be strong enough to raise sales taxes to the level required to fund desperately needed transportation improvements for the Houston area. While the current recovery might be a jobless one, at least it's growth. However, Federal Reserve Board Chairman Alan Greenspan, whose prognostications still command respect among those who can decipher them, warns that uncontrolled federal budget deficits could turn a strong economy into an anemic one. As if on cue, the nonpartisan budget office of the Republican-controlled Congress predicted that the federal budget deficit would reach $480 billion next year. That includes some reconstruction money for Iraq and Afghanistan, but no war-fighting costs. If the Bush administration tax cuts are not allowed to expire, or if Congress passes prescription drug coverage for Medicare patients, the high deficits would continue without end. In a few short years, Congress would have to raise taxes, cut Medicare and Social Security benefits as baby boomer retirements begin in earnest, or both. President Herbert Hoover, the fiscal conservative popularly blamed for the Great Depression, said, "Blessed are the young, for they shall inherit the national debt." Unless federal spending is controlled, the young will inherit the debt without the economic engine necessary to pay the interest, much less retire he principal.
Andymoon: Go out, start a business; employ people at an above average earnings; struggle against the maze of local, state and federal bureaucracies; put out a product with which customers are pleased and in which you have pride; manipulate capital investment.....uh, then we'll go out and howl at the moon together (and maybe have some ribs with RocketMan Tex and me). This is Labor Day weekend, and I'll be kicked if you don't think entrepreneurs don't labor.
Is all you read the title of that article? I would never claim that entrepreneurs don't work as I DO have my own business, employees, products, etc. I just know that supply side economics is a farce, a ruse by the rich to shower themselved with wealth.
Examples: And, hey, who cares about unemployment? Productivity is growing, which means we're more efficient. Sure, we're losing manufacturing jobs. But worrying about manufacturing is so Old Economy. Yeah, yeah, a lot of those manufacturing jobs helped people build middle-class lives. But won't they make it all up in their portfolios? Income is old hat. Wealth is the thing. And just how do we create wealth? While a look out the window reveals a newly cheerful prospect, pessimism infuses the landscape beyond the horizon. All the government entitlements force businesses to cut back jobs, which generates even greater pessimism.
Don't you see the sarcasm the author is using in this passage? The only way wealth has been created historically is for middle and lower class people to have disposable income, which they spend, which adds to the bottom line of businesses, which increases wealth. Giving the money to the rich people just adds to their bottom line. It is like the adage of giving a man a fish or teaching him to fish. The Republicans just want to cut out the whole middle class spending thing and give the money directly to their cronies. You are either deluded or snowed by the right. Greater DEFICITS cause business owners to be leery of the economic landscape, forcing them to cut back or freeze hiring. Entitlements (reasonable ones) cause the people who receive them to have more disposable income, which they spend (see the rest above). If you look at history rather than theory, it is very clear.
Everyone here seems to be pretty intelligent and educated. I assume each of you know that unemployment is a lagging indicator. Please stop looking to bash Bush for petty partisan gain. The problem is that its lagging more than ever. <img src="http://money.cnn.com/2003/08/28/news/economy/job_outlook/the_worst_labor_market2.gif">
The Bush tax relief is cited as a major force behind *another* piece of good economic news... The liberals continue to be proved wrong. ================================================ Consumer Spending Picks Up As Disposable Income Gains By JEFF BATER DOW JONES NEWSWIRES Consumers ratcheted up their spending in July, while disposable income posted its biggest gain in more than a year, the government said. Consumer spending climbed 0.8% in July, after rising an upwardly revised 0.6% in June, the Commerce Department reported. Personal income rose 0.2% in the month after climbing 0.4% in June, it said. For June, income previously had been estimated as climbing 0.3% and spending was earlier forecast as rising 0.3%. The July report on income and spending was in line with expectations on Wall Street. The government report showed that disposable personal income, or income after taxes, climbed 1.5% in July, the biggest increase since January 2002. The government said tax payments decreased because of the Jobs and Growth Tax Relief Reconciliation Act of 2003. Excluding that special factor, disposable income would have gone up 0.2%, the Commerce Department said. Disposable income advanced 0.4% in June. Lou Crandall, chief economist for Wrightson ICAP, said the 1.5% advance was no surprise. "We knew the tax cut happened," he said. "That helps put the very strong spending numbers in perspective." Meanwhile, personal saving as a percentage of disposable personal income was 3.8% in July. In June, the rate was 3.1%, the Commerce Department said. "The basic point is that the tax cut is large enough so even if much is saved, there's still going to be a significant spending impact," Mr. Crandall said. In its report, the Commerce Department said spending on durable goods, or items meant to last three years or more, advanced 2.1% in July, following an increase of 1% in June. Spending on nondurable goods increased 0.8% after also rising 0.8% in June. Spending on services climbed 0.5% in July after a 0.4% rise in the previous month.
I disagree. This is great news. The GDP is a very unreliable (and essentially meaningless) barometer for economic strength, but it's growth could be a good sign.
Based on where we've been, I'm not sure this qualifies as an "upbeat economy" though I did read where the latest crime stats are down a bit. That's good news.
Where ARE THE JOBS????????? I dont care about consumer spending and savings rates, I CARE ABOUT JOBS, and there are none, I have a nice college degree and there ARE NO FREAKING JOBS until that changes.. liberals are not wrong...
Taken from the following link, you can easily see that the 7 widely accepted indicators of economic performace are almost unanimously pointing towards an economy showing signs of rebounding growth. As you might expect, the liberals continually point out the *one indicator* that is not positive. I would like to point out that unemployment is a lagging indicator, which will not change until after the other indicators have already turned. They are now turning. Liberals, you are dead wrong once again. http://money.cnn.com/news/economy/ THE ECONOMY: SEVEN INDICATORS The indicator what it's telling us Consumer confidence ===> Rebounding Growth Retail sales ===> Rebounding Growth Leading economic indicators ===> Rebounding growth Manufacturing Activity ===> Rebounding Growth Industrial Production ===> Rebounding Growth Unemployment Rate ===> Weak growth Consumer Price Index ===> No Inflation Threat
