"US Economy is growing once again"

[Setzer]

http://news.bbc.co.uk/2/hi/business/8331497.stm

The US economy grew at an annual pace of 3.5% between July and September, its first expansion in more than a year.

The growth was helped by a substantial government spending plan, including a scrappage scheme to boost car sales.
The official figures indicate recession has ended, but some economists think there could be further setbacks.
President Obama said while "welcome news", the US was still a "long way" from recovering from the "deepest downturn since the Great Depression".
"This is affirmation that this recession is abating and the steps we've taken have made a difference, but I also know that we've got a long way to go to fully restore our economy."
Mr Obama said there were other benchmarks for measuring economic progress, such as "whether we are creating jobs, whether families are able to pay their bills and whether businesses are hiring and doing well."
Compared with the previous three months, the US economy grew by 0.9%. In the same period, and on the same measure, the UK economy unexpectedly stayed in recession after it shrank by 0.4%.
Japan, Germany and France have recently climbed out of recession.

ANALYSIS
By Michelle Fleury, New York business reporter

The US, the world's economic powerhouse, joins Japan, Germany and France as the leading economies that have emerged from recession.
While economists may be celebrating, it is too soon for the rest of us. The recent weakness of the dollar won't help Americans buy goods from the rest of the world and with the unemployment rate in the US currently at 9.8%, life is still very hard.
Government schemes such as the "cash for clunkers" programme helped consumers and manufacturers but given the weakness of the last retail sales data, shoppers are still limiting their spending.
All the same, this GDP reading is a milestone regardless of how fragile the recovery is.

Global good news

BBC chief economics correspondent Hugh Pym said the 3.5% annualised growth rate - which takes the change over a three-month period and works out what it would be if it continued over a year - was better than had been expected by most commentators.
"The sheer scale of the stimulus in the US has made a big difference, it was much bigger in percentage terms than that in the UK," he said.
It is the first time the US economy has expanded since the second quarter of 2008, when it grew at an annual pace of 2.4%.
US Treasury Secretary Timothy Geithner stressed times were still hard for millions.
"Unemployment remains unacceptably high for every person out of work, for every family facing foreclosure, for every small business facing a credit crunch, the recession remains alive and acute," he said.
Official confirmation of whether the US is in or out of recession will come from the National Bureau of Economic Research, the agency which considers a number of factors in coming to its decision.

Numerous boosts

The figures from the Commerce Department showed that a number of factors helped to lift the economy during the third quarter. HAVE YOUR SAY There can be no genuine recovery, where there are no jobs. We continue to lose jobs, and none are being created Rick McDaniel, Lewisville, TX USA
Spending on durable manufactured products soared at an annualised rate of 22.3%, the highest quarterly amount since 2001, led primarily by the impact of the cash for clunkers scheme lifting car sales.
The housing market also improved, with spending on housing products up 23.4%, its largest quarterly jump in 23 years.
Analysts said this big leap was sparked by the government's $8,000 tax credit for first-time house buyers.
Meanwhile, total government spending was up 7.9%, as the wider stimulus spending continued to take effect.
In addition, exports were also up strongly, increasing 21.4%, the biggest rise since 1996.

'Distorted by stimulus'

"It's good to have the economy growing again," said Brian Bethune, economist at IHS Global Insight.
"But we don't think that rate of growth is sustainable because it is distorted by all the government stimulus.
"The challenge here is to get organic growth - growth that isn't helped by fiscal steroids."
Analysts cautious about the slow nature of the US economic recovery point to the fact that the unemployment rate currently stands at 9.8%, and that the labour market traditionally lags behind any wider economic recovery.
They also highlight the fact that the big car firms have already reported a sharp fall in September sales following the conclusion of the popular $3bn cash for clunkers scheme at the end of August.
"You can say that the recession is over, but it sure won't feel like that," said Dean Baker, co-director of the Centre for Economic Policy Research.
"There is a lot of downward momentum that isn't going to go."

So what's the board's opinion? Have we begun to recover, or is this simply the proverbial eye of the hurricane?

[Sea Skimmer]

A lot of people have been saying expect a GDP recovery but no jobs growth for a long time to come, and that is fully what I expect. Its also pretty certain that we have in fact not seen the true fallout from the banking crisis, we just kind of buried it under a wave of free money and its bound to poke back through.

[J]

There's something fishy going on, I'll get to that a bit later.

Spending on durable manufactured products soared at an annualised rate of 22.3%, the highest quarterly amount since 2001, led primarily by the impact of the cash for clunkers scheme lifting car sales.

And that's a bit of a problem, cash for clunkers is dead and the pulled forward demand for autos which it created will now leave a sucking hole for the next few quarters.

The housing market also improved, with spending on housing products up 23.4%, its largest quarterly jump in 23 years.
Analysts said this big leap was sparked by the government's $8,000 tax credit for first-time house buyers.

This is a complete lie unless finished homes are counted as "housing products", which would make the number highly misleading at best since July to September is the peak housing sales season, of course a ton more homes will be sold in this quarter just like church attendance will be many times higher on Sunday than Saturday.

If there is indeed a 23.4% increase in sales of housing products, this would be reflected in the revenue numbers for Lowe's, Home Depot and other building supplies stores as well as homebuilding & renovation companies. It isn't. It would also show up as an increase in shipments of wood & lumber products on railways & trucks. It doesn't. (trucking data is paid subscription only from another site, I have access to it from work though I can't reproduce it. You'll just have to take my word that it's about as bad as the railway data). Either complete homes are counted as housing products or there's some fine data cooking going on. Maybe they're counting investment bank profits from trading mortgage backed securities as an increase in housing products as well.

In addition, exports were also up strongly, increasing 21.4%, the biggest rise since 1996.

If this is true there should be a strong increase in outgoing container traffic at LA, New York, Long Beach, and other major US ports. There isn't. So either the value of the goods being shipped has gone up 20% or all the increased exports are going to Canada & Mexico. It just doesn't add up.

When I look at the underlying data; sales tax revenues, building permits, shipping traffic, and industry sector revenues, there's little I can find to suggest any growth. The government is of course spending quite a bit more, I'm just having a hard time finding where the rest of the GDP growth is coming from. The media claims this is a jobless recovery, I prefer a term coined by bloggers on the internet: it's a recoveryless recovery.

[Guardsman Bass]

A lot of people have been saying expect a GDP recovery but no jobs growth for a long time to come, and that is fully what I expect. Its also pretty certain that we have in fact not seen the true fallout from the banking crisis, we just kind of buried it under a wave of free money and its bound to poke back through.

That would be fitting with the last cycle (2001-2007), in which we had pathetic job creation even after GDP growth resumed following the drops in 2001-2002.

[Starglider]

Does this mean that the Christmas sales season will be a whole new level of marketing hell, where all patriotic citizens are urged to demonstrate that they are Real Americans by spending whatever they have left at the mall?

[TheKwas]

What exactly do you think is happening, J? Arms-length government agencies are engaged in a conspiracy to just simply make up statistics according to Obama's will?

[aerius]

Does this mean that the Christmas sales season will be a whole new level of marketing hell, where all patriotic citizens are urged to demonstrate that they are Real Americans by spending whatever they have left at the mall?

Hard to say, a bunch of marketing & ad companies have gone bankrupt and the rest of them are probably hurting so they'll likely have less money to blow brainwashing consumers. Retailers are getting toasted so their ad budgets are probably lower as well. On the other hand I wouldn't be surprised if the government releases a christmas economic spending package of some sort and has all the news outlets & media covering it nonstop from Thanksgiving till christmas. I'll have to leave the radio & TV off for a couple months starting in mid November if they do that.

[J]

What exactly do you think is happening, J? Arms-length government agencies are engaged in a conspiracy to just simply make up statistics according to Obama's will?

My best guess is the formulas that various agencies use for turning raw data into GDP numbers are broken. The assumptions & conditions which allow them to work in normal economic times go out the window in times like today.

The short version is that GDP isn't measured simply by adding up all the goods & services produced in a country, there's also a whole bunch of multipliers & adjustment variables & equations to make all the numbers fit. The problem comes when it's hit with an unusual combination of money printing, deflation, interest rates, profit percentage ratios, and so forth which doesn't make sense and causes it to spit out wonky numbers for the rest of the equations in the calculation. A similar problem with the BLS's models added around a million phantom jobs since the start of the current recession, the assumptions it makes in its formulas broke down and had to be recalibrated.

[TheKwas]

Is there any real concern about the GDP calculations within the economics field (papers, articles) that you can point to? Considering that GDP measurements were created with the purpose of analyzing recessions, I find it hard to believe that a combination of factors which are fairly typical of recessions would cause miscalculations so severe that they cause a 3% (or whatever) deviation in aggregate data.

Also, your Carrier Traffic Trends generally do show significant gains in the 3rd quarter, although granted not in the housing materials.

[Ma Deuce]

What exactly do you think is happening, J? Arms-length government agencies are engaged in a conspiracy to just simply make up statistics according to Obama's will?

More like the will of the big financial companies responsible for the recession, from whom many of the senior members of the Treasury dept, the Fed, and financial regulatory institutions, originally came or had connections to. Then throw in the fact that through bribery campaign donations these same companies effectively own a large chunk of the US government...You can figure out where I'm going with this.

[Darth Wong]

Does this mean that the Christmas sales season will be a whole new level of marketing hell, where all patriotic citizens are urged to demonstrate that they are Real Americans by spending whatever they have left at the mall?

No, because the Republicans are no longer in power. Some people will say that, but the rabid flag-waving Bible thumping people who have largely appropriated the word "patriot" in America are now in a decidedly traitorous mood, and seem to be feeding on despair and misery.

[Starglider]

No, because the Republicans are no longer in power. Some people will say that, but the rabid flag-waving Bible thumping people who have largely appropriated the word "patriot" in America are now in a decidedly traitorous mood, and seem to be feeding on despair and misery.

Oh right, you mean the 'I'm going to participate in the economy as little as possible because I want Obama to fail' crowd. I do wonder how many of them take that any further than posturing.

[Shinova]

GDP and stock numbers are growing, but if the ordinary people are still having job losses then no amount of purty DOW numbers are going to make up for how less they'll still be spending, and since consumer spending is the majority of the power behind the US economy...