US economy grows 2.4 percent in second quarter 2 hours, 48 minutes ago Add Top Stories - AFP to My Yahoo! WASHINGTON (AFP) - US economic growth shot to an annual pace of 2.4 percent in the second quarter, shattering sluggish expectations. Defying forecasts for growth closer to 1.5 percent, the US economy gave the clearest sign yet it is shaking off Iraq (news - web sites) war-inspired shock and gathering speed, with business investment finally back. The return in business investment, a 52-year record surge in defense spending, robust consumer spending, and a red-hot housing market powered growth, early Commerce Department (news - web sites) estimates showed. "This is a very positive confirmation that the economy is turning the corner," said BMO Financial Group economist Sal Guatieri. Gross domestic product, which had grown at a sickly 1.4-percent pace in the first quarter, appeared to be responding to a double dose of tax cuts and 45-year record low interest rates. Businesses, long cowed by the Iraq war uncertainties, lifted non-residential fixed investment by 6.9 percent, with spending on structures such as factories up by a 43-year high of 4.8 percent and equipment/software expenditure up 7.5 percent. "The economy truly does look to be on the mend," said Naroff Economic Advisors president Joel Naroff, noting that investment in buildings had climbed for the first time since 2001. Defense spending roared 44.1 percent higher, the sharpest increase since 1951 during the Korean war, as President George W. Bush (news - web sites)'s administration conducted the Iraq war and a terrorism offensive. As a result, federal government expenditure advanced 25.1 percent, the steepest increase since 1967, even as state and local governments trimmed spending by 1.5 percent. Consumers stepped up spending 3.3 percent despite lingering agony in the labor market. People ploughed 22.6 percent more money into big-ticket, durable items such as cars or washing machines. Residential fixed investment, coaxed by rock-bottom mortgage rates, surged 6.0 percent. The US unemployment rate hit a nine-year high of 6.4 percent in June. The unemployment tally for July is due Friday. Recovery hopes were bolstered by a separate Labor Department (news - web sites) report showing the seasonally adjusted number of new jobless benefit claimants shrank 3,000 to a five-month low 388,000 last week. The bullish news tallied with a Federal Reserve (news - web sites) Beige Book survey, released Wednesday, indicating the economy had picked up speed by "a notch" in the past six weeks. Factories, which had shed 2.7 million jobs during a three-year contraction, were finally coming out of the doldrums, it said. "Consistent with the generally more positive assessments of economic activity, several districts noted increased optimism about economic prospects in coming months," the Federal Reserve said. Bush, who has passed a 350-billion-dollar tax-cut package told a news conference on Wednesday that he saw "hopeful signs" the economy was accelerating and would generate more jobs. His chief economic policymaker, Treasury Secretary John Snow, has forecast economic growth of more than three percent in the third quarter of this year, 3.5 percent in the last quarter and four percent in 2004. The latest figures showed international trade was a drag on the economy, however, with exports sliding 3.1 percent in the second quarter. Imports, which detract from economic output, leapt by 9.2 percent. Businesses trimmed their inventories by 17.9 billion dollars in the period, eroding 0.77 percentage points from the overall economic growth pace, the data showed.
no we'll be able to use Bush's tax cuts, budget blunders etc as blame for why it will take 10+ years to get out of this hole he is digin us in.. but to say that there is growth and that these tax cuts, that arent even in people's hands yet has anything to do with growth in the 2nd Quarter is stupid
i know for a fact people have gotten their child credit checks. Those are somewhere around 400 bucks at least
Unemployment is coming down again at present, but it is always going to lag behind the growth. As long as the economy can keep on a decent upward pace, employment should follow.
Back to normal is good. You don't want it too low, or too high. It should be juuuussst right. That's why this is a good sign.
I know, that's why we all thought it was horrible when, in the 2nd quarter of 1995, the economy grew at only a 0.8% rate. Of course, we did rebound and get a 2.7% growth rate for the year 1995. And we unelected a President during a year in which the economy grew 3.0%, and that was said to be the worst economy in 50 years. Seriously, though, 2.4% isn't all the great, but it's an improvement over what we've been seeing. So it's reason for optimism.
This will bring the economy crashing right back if nothing is done about it. Reuters Refinancing Wave Breaks as Rates Rise Wednesday July 30, 11:47 am ET By Aleksandrs Rozens NEW YORK (Reuters) - Demand for mortgage refinancings -- a lifeline for the anemic U.S. economy -- sank last week to lows not seen since last December, an industry survey reported on Wednesday. Fewer consumers applied for loans to buy homes, and the jump in borrowing costs fanned concern among economists that a rapid rise in borrowing costs over the past six weeks may hobble the economic recovery. "Where's the fork? Refis are done," Drew Matus, economist at Lehman Brothers, quipped in a report. Rates for 30-year loans, the most commonly used home mortgage, rose to 5.87 percent in the latest week from 5.72 percent in the previous week, according to the Mortgage Bankers Association of America. Demand for refinancings as measured by the trade group's refinance index plummeted 32.9 percent to 4,145.8 in the week ended July 25. The percentage decline was the largest since January 2002, but in points it was the largest drop ever. The refinancing index is at lows not seen since Dec. 20, 2002, and is now 58 percent below the record 9,977.8 set in the last week of May. "The drop in refi activity could be a major blow to the recovery if rates remain high," Chris Low, economist at FTN Financial, warned in a report. And economists at BNP Paribas pointed out that the drop "is a dent in household cash flow." "The 30-year contract rate is at highs not seen since December 13 of 2002 when it was at 5.91 percent," said Douglas Duncan, the trade group's chief economist, adding "there is no question we're past the peak (in refinancings)." The association also reported its purchase index, a measure of demand for loans to buy homes, fell 3.5 percent to 426.9. Record home sales and refinancings have been a key support for a struggling economy in recent years because they encourage spending as owners outfit their new homes with furniture and appliances. Low rates have allowed home owners to cut borrowing costs by refinancing their mortgages. Many homeowners have squeezed equity out of their homes with the help of cash-out refinancings and used the money to pay down debt or spend it on goods and services. In the first half of this year about $50 billion of consumer spending was due to cash-out refinancings, according to Freddie Mac. For all of 2002 the amount totaled $96 billion. "Obviously, there is a strong relationship between refi activity and mortgage rates. The refinance market is going to take a hit," said Richard Green, principal economist at Freddie Mac. But he said there are factors other than low borrowing costs that drive demand for homes. "It is not just interest rates, but about people's expectations about home prices in the future, the cost of rent and alternative investment opportunities," Green noted. "The stock market uncertainties will cause people to put money into the housing market." Looking ahead, FTN's Low said home sales could jump in July as stragglers look to buy homes before rates rise further. "Some people will have rate locks they'll push to get done," he said, adding "you will see a rise in home sales, then activity should peter out pretty quickly after that." The Mortgage Bankers Association's Duncan agreed, pointing out that his greatest concern for the housing market is a "a rapid and substantial run-up in rates." Such a run-up -- to 8 percent -- in a very short period of time could not only evaporate demand for refinancings, but impact home sales, he said. As refinancings peter out, the benefits to the economy will diminish. "In coming months, cash flow to homeowners will start to dry up," said Low. "Refis will be a negligible component of the economy if rates are at this level or higher by year-end."
You might have also overpaid for it. High rates = less demand= lower housing value. Id rather have a lower purchase price and a higher mortgage rate. The property taxes will kill you.
Hmmmmm... Defense Spending Drives U.S. Recovery By Glenn Somerville WASHINGTON (Reuters) - The strongest wave of federal defense spending since the Korean War helped fuel U.S. economic growth at a stronger-than-expected 2.4 percent annual rate in the second quarter, the Commerce Department (news - web sites) said on Thursday. U.S. gross domestic product increased at a 2.4 percent annual rate that handily outstripped Wall Street's expectations. The GDP (news - web sites) number, taken with a separate report showing a third straight weekly fall in new claims for jobless benefits, sent stock prices and the dollar soaring. "The economy truly does look to be on the mend," said economist Joel Naroff of Naroff Economic Advisors in Holland, Pennsylvania. He noted especially the solid pickup in business investment, which had lagged noticeably since a tepid recovery from the 2001 recession began. Strengthened second-quarter GDP figures follow anemic growth of 1.4 percent in each of the two prior quarters. It was the best pace of expansion since a 4 percent surge in the third quarter of last year. The Labor Department (news - web sites) said new claims for unemployment benefits declined last week by 3,000, to a revised 388,000 -- well below the psychologically important 400,000 level. CAUTIOUS OPTIMISM Most private analysts, as well as Bush Administration officials, said the data was heartening and implied stronger growth ahead. But they cautioned that growth remains below the economy's long-term sustained potential of around 3 percent a year and was too low to generate jobs quickly. "I think it indicates clearly the economy is turning and recovery is well underway,' Treasury Secretary John Snow said when questioned by reporters after a Capitol Hill appearance. But he added that it is "well short of a full recovery." Spending on defense, much of it to support the war in Iraq (news - web sites), shot up at a 44.1 percent rate -- the strongest since 110 percent in the third quarter of 1951 -- after falling 3.3 percent in the first three months of the year. That accounted for much of the unexpected surge in GDP expansion. "Without the voracious winds of government spending, the USS Economy might have been a rudderless dinghy," said Rich Yamarone, an economist at Argus Research Corp. in New York. He added that federal tax cuts now showing up in lower withholding rates on employee pay stubs should be a boost. Similarly, economist James Glassman of J.P. Morgan Chase said second-quarter GDP and jobless claims were "quite promising" in their implication that consumers and businesses saw better times ahead, even if growth is still below what is needed to reduce the unemployment rate. "On GDP the trend is not impressive and no one was expecting it to be impressive. But the composition of growth is, and it just reinforces the optimism about a second-half pickup," Glassman said. BUSINESS KICKS IN Business investment, which has lagged during the slow expansion from the 2001 recession, showed definite signs of revival in the spring quarter. Non-residential spending -- a broad gauge of business spending -- rose at a 6.9 percent annual rate after decreasing 4.4 percent in the first three months of the year. A third report on Thursday, on manufacturing activity in the Chicago area, buttressed other reports that the hard-pressed sector was beginning to show signs of new life that could mean more investment on expanded operations. The National Association of Purchasing Management-Chicago index climbed to 55.9 in July, its highest level since January, from 52.5 in June. Analysts said it represented "a significant comeback" for manufacturers in the Midwest region that boded well for the broader economy. "Manufacturing has typically been a leading indicator in economic recoveries," said economist Maria Forres of Griffin, Kubik, Stephens & Thompson. "Continued growth in the Chicago sector will boost national levels." Financial markets welcomed the economic data as promising for a stronger second-half GDP performance. The Dow Jones industrial average (^DJI - news) was ahead more than 150 points, or 1.6 percent, at mid-day and the Nasdaq composite index (^IXIC - news) was up more than 30 points, or 1.9 percent. The dollar climbed against other major currencies, reflecting investors' belief that U.S. investment opportunities may be relatively brighter than in Europe and Asia.
Just in the last two days… Anadarko to Cut 400 Jobs, Close Offices http://story.news.yahoo.com/news?tmpl=story&u=/ap/20030731/ap_on_bi_ge/anadarko_cost_cutting_4 Comcast Posts Loss, Cuts 2,000 More Jobs http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030731/media_nm/media_comcast_earns_dc_7 Pep Boys to Close 33 Stores, Cut 860 Jobs http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030731/bs_nm/retail_pepboys_dc_1 Siemens Mobile Unit to Cut 2,300 Jobs http://story.news.yahoo.com/news?tmpl=story&u=/ap/20030731/ap_on_hi_te/siemens_mobile_cuts_5 Reader's Digest Posts Loss, to Cut Jobs http://story.news.yahoo.com/news?tmpl=story&u=/ap/20030730/ap_on_bi_ge/earns_reader_s_digest_3 Trucking Company Ruan to Cut 100 Jobs http://story.news.yahoo.com/news?tmpl=story&u=/ap/20030730/ap_on_bi_ge/ruan_job_cuts_2 Tri-State Employer To Cut 300 Jobs http://story.news.yahoo.com/news?tmpl=story&u=/ibsys/20030730/lo_wlwt/1719221 VF Jeanswear to Cut More Than 1,800 Jobs http://story.news.yahoo.com/news?tmpl=story&u=/ap/20030729/ap_on_bi_ge/vf_job_cuts_3 Verizon Sees Up to 5,000 More Job Cuts http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030729/bs_nm/telecoms_verizon_dc_1 BMC Software Posts Loss, Cuts About 900 Jobs http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030728/tc_nm/tech_bmc_earns_dc_6 Across every sector, across every industry jobs are being cut and there are still over two million Americas who can’t find work.
