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Economic Growth Revised to 5.3 percent

The President's Statement on America's Economic Growth

America's economy is on the fast track. Today's revised report by the Commerce Department indicates our economy grew at 5.3 percent for the first quarter of this year. That is the fastest growth in two-and-a-half years and another clear sign that our economy is powerful, productive, and prosperous. I commend America's workers, small business owners, and innovators for contributing to this strong economic growth. I will continue to work to pursue pro-growth policies, make the tax cuts permanent, and restrain government spending so that opportunity reaches every American neighborhood and every American family.


Comments (32)

Sadly, his administration w... (Below threshold)
Langtry:

Sadly, his administration will get no credit for the continued economic well-being of the country.

Why should Bush get credit?... (Below threshold)
Lorie Byrd:

Why should Bush get credit? Everybody knows that his tax cuts ruined the economy.

Yeah, but the libs will arg... (Below threshold)
Sergei:

Yeah, but the libs will argue that the tax cuts contributed to record breaking deficits. I already got my ears bashed on that one. Nevertheless this economy is/was impressive. On the revenue side it brought in record numbers. If there was more fiscal spending control, just think how much better it would have been.

Spending controls? That imp... (Below threshold)
Lee:

Spending controls? That implies a thought towards the future. This is the "what can I get now?" administration. Billions blown needlessly, and tax cuts that guarantee problems in the future.

Record profits for Exxon - that's enough for the Republicans...

Why do people bash companie... (Below threshold)
Harold:

Why do people bash companies making record profits? That allows them to hire more employees and put more money back into the economy.

I was astounded when I found out that Exxon only makes 8 Cents per gallon of gas sold, 8 Cents! The goverment gets over 50 Cents. Exxon's profits are up because of increased demand. So, what should we do, tax Exxon a penny per gallon and add it to the goverment's take?

Somebody please explaing whats wrong with Exxon makeing 8 Cents on $3 a gallon gas!

Harold, Harold, Harold. A ... (Below threshold)

Harold, Harold, Harold. A person might begin to suspect that you're a capitalist.

People will believe the eco... (Below threshold)
Publicus:

People will believe the economy is better when THEY are feeling prosperous. The numbers from Washington are, for most people, just numbers.

Why do people bash compa... (Below threshold)
Lee:

Why do people bash companies making record profits?

There is an understandable concern over the inflationary effects that result from high gasoline costs. It has a ripple effect throughout our economy. With all of the justifiably proud chest-beating we're seeing over the economy to date -- we have not seen the effects yet of the higher gas prices. That takes months to work its way onto the shelves of our grocery stores, durable goods, etc.

With higher gas prices we will, for example, see declining auto sales. If you are going to tell me that Exxon will take their record profits and hire the workers who will be laid off from Ford and GM in the coming few years, you might have a good point. My guess is that they will instead invest the money overseas, in developing areas where the new growth is -- meanwhile we will all be paying higher gas and grocery prices, etc. to fund Exxon's growth in emerging markets.

Whoopee! Horray for capitalism.

Hi Lee,It has a... (Below threshold)
snowballs:

Hi Lee,

It has a ripple effect throughout our economy. With all of the justifiably proud chest-beating we're seeing over the economy to date -- we have not seen the effects yet of the higher gas prices. ..

Sure, but...

With higher gas prices we will, for example, see declining auto sales.

I'm not sure what the message is in your last post, but wouldn't you think that this might, just might, be what the U.S. automobile market needs?

Do you think that this may be prime time for the surge in AFVs? Is capatalism in such areas that horrible? After all, there are fairly substantial tax benefits for buying a hybrid vehicle, for instance.

Maybe exxon could take thei... (Below threshold)
denisej:

Maybe exxon could take their record profits and drill in the gulf of mexico...in anwr...build new refineries...oh that's right.

Drill in the gulf and ANWR,... (Below threshold)
Lee:

Drill in the gulf and ANWR, and then ship the oil off to China - what a great idea -- I'd pay more at the gas pump and the grocery store for the privilege of having our national resources shipped off to emerging nations, while we pay the freight, yesiree...

Maybe exxon could take t... (Below threshold)
snowballs:

Maybe exxon could take their record profits and ..

XOM takes those profits to pay dividends and allows that to be invested back into XOM shares.

Lee: "Drill in th... (Below threshold)
Stephen Johnson:

Lee: "Drill in the gulf and ANWR, and then ship the oil off to China - what a great idea"

More oil added to the global pool means lower prices, no matter where it ends up. And I would think, at least in the case of ANWR, Japan and Korea would be the destination, not China.

Aside from the oil companie... (Below threshold)
snowballs:

Aside from the oil companies, there is a quiet roar from companies like Starbucks that are reported to be opening something like 3000 stores worldwide in FY 2006 - simply astonishing.

Bank of America is on track for a great year, Walgreens, McDonald's, Ebay, Google, GEICO, Citigroup, P&G not to mention tons of privately owned companies that are doing the same - I mean, the list goes on and on, and these are huge, huge companies that continue to grow in the face of "Chimp-o-nomics" and Sarbanes/Oxley "limitations".

Sure there are industries that are stumbling, but they are simply outweighed by large, wholesome American companies that employ a lot of people and continue to make gigantic strides in the US economy. Small and medium businesses have benefited as well.

With higher gas pr... (Below threshold)
SCSIwuzzy:
With higher gas prices we will, for example, see declining auto sales.

No, until oil/gas costs get much, much higher, we'll see different auto sales. Fewer SUVs, more sedans and coupes. More incentive for automakers to build better engines and transmissions. More investment in ethanol and other fuels. Go into a car dealership, and look at the folks that are trading in older cars sooner than they would have, to get a new more efficient model...

Right now in London, the cost of a gallon of gas is about 6.80 USD. And yet... people are still buying cars in the UK, despite the fact that the average citizen has less disposable income than Americans.

Drill in the gulf and ANWR, and then ship the oil off to China - what a great idea -- I'd pay more at the gas pump and the grocery store for the privilege of having our national resources shipped off to emerging nations, while we pay the freight, yesiree...
So, you're a racist that doesn't want to see the yellow, brown and red people of the developing world get a fair shot? At least, that's what a lefty would say if a righty made the same complaint... LOL
Sergei ~ "record deficits?"... (Below threshold)

Sergei ~ "record deficits?" You must hang out with moonbats . . . the deficits are only slightly over the post-WWII average when considered as % of GDP - which is the only rational way to measure them.

Nonetheless, if present trends continue, we will balance the budget on April 4, 2008. After that, we will be in surplus again.

What we NEED is another tax cut!

What we NEED is another ... (Below threshold)
snowballs:

What we NEED is another tax cut!

You might be on to something there Adjoran, after all, the least productive entity on the planet to hold a surplus is the U.S. Government.

"More oil added to the g... (Below threshold)
Lee:

"More oil added to the global pool means lower prices, no matter where it ends up"

That explains why the price of oil rises and falls on political events. Some third-world poser decides he wants growl at his neighbor and the price of oil moves up.

"Right now in London, the cost of a gallon of gas is about 6.80 USD. And yet... people are still buying cars in the UK, despite the fact that the average citizen has less disposable income than Americans."

Inflation effects people psychologically, as well as monetarily. That's why consumer confidence is such an important indicator. It's even self-fulfilling.

The initial stages here in the U.S. will be a consumer spending pullback. A number of years from now people will be used to the gas prices. Also - Americans are much more car dependent and drive more average miles than Brits, I would estimate. High gas prices hurt more when you have 50-100 mile daily commutes.

High gasoline prices, if not brought into check, will sideline the U.S. economy for a number of years.

Lee: "That explai... (Below threshold)
Stephen Johnson:

Lee: "That explains why the price of oil rises and falls on political events. Some third-world poser decides he wants growl at his neighbor and the price of oil moves up."

Doesn't that make the case for the US to look at alternatives to "third-world posers" for energy? Such as drilling on our own land and - yes - nuclear power?

Right now, 20% of our power comes from nuclear energy. If we could get it to 60% or greater, we wouldn't be whining about high gas prices.

Hey Lee,I still do... (Below threshold)
snowballs:

Hey Lee,

I still don't understand your message here - are you saying that the entire U.S. economy revolves around the current/future price of gasoline alone? No offense, but you're sort of all over the place on this...

If so, I don't agree - Sure, we are a "driver's society" as opposed to a mass transit society as a whole, but the U.S. economy, being market driven, is much more resilient than that, surely.

It *has* to be about oil ot... (Below threshold)

It *has* to be about oil otherwise the motivation for our adventuring in the middle east collapses, donchaknow.

And I can't believe someone brought up *gasp* nuclear power. EVIL!!! BAD!!! EVIL-BAD! (A relative of Strong Bad.)

My mom is the most "liberal" person in my family (okay, I'm excluding my baby sister) and I just realized that she has traits that might explain it. She always sees the negatives. When I was a kid my sibs and I would get her to curse stuff for us because results always turned out better than she said... my brother planted a seeded grape once, the fact that she told us it would never grow guarenteed we had this huge grape vine in a pot in the house in very short order.

The economy isn't perfect by any stretch but it's good. Unemployment is low. My computer geek husband actually got a head-hunter call a few weeks ago, the first since the dot-com bust, prior to which I'd field a couple of calls per week. Things are looking good.

Unless you're a lefty. Then you look at that fat grape your kid has in his hand, look out at the Minnesota winter and then at the little pot of soil and say, "It's not going to grow. You know that, don't you?"

All this good news about th... (Below threshold)

All this good news about the economy! Nancy Pelosi is positively going to rupture an eyebrow over this.

-Michael McCullough
Stingray: a blog for salty Christians

The initial stages... (Below threshold)
SCSIwuzzy:
The initial stages here in the U.S. will be a consumer spending pullback. A number of years from now people will be used to the gas prices. Also - Americans are much more car dependent and drive more average miles than Brits, I would estimate. High gas prices hurt more when you have 50-100 mile daily commutes.

And the market will respond to the changes in consumer spending.
As somone with a long daily commute (45 minutes to over an hour, each way) I know I've changed my habits. I traded my pickemup for a sedan, and I am more prone to ride my motorcycle when the weather is right.
And if you go to dealership, you'll see plenty of shoppers looking at new high MPG cars, and tons of people are eyeing motorcycles.
Since you opposed to new drilling domesticly, because it might also benefit the poor brown, yellow and red poor of the world too, what would you do to offset the high cost of oil right now?
ASide from blaming Bush (which is just masturbation, since it makes you feel good but accomplishes nothing)

I think we should hold the ... (Below threshold)
Lee:

I think we should hold the oil in the gulf and NAWR as a strategic "in the ground" reserve. We will have succeeded if we never have to use it, but if we ever desparately need our own supply of oil, there it is waiting.

As to how to reduce the price of oil near term, there has to be stability in the middle east - and at least a path towards peace. There isn't much chance of that until we have a new president. I know you didn't want to heare that SCSI, but it's true.

The price of oil didn't spike over these last several months because of a supply disruption or sudden increase in demand -- the prices have been driven up by the political unrest in the region. Stabilize that, and you will see prices drop.

Hmmm.I th... (Below threshold)
ed:

Hmmm.

I think we should hold the oil in the gulf and NAWR as a strategic "in the ground" reserve.

That's ANWR, not NAWR. And we might not get a choice about leaving that oil in the ground. A good portion of Mexico's oil production is from deposits that American oil companies are legally prevented from tapping.

This same scenario applies to the Chinese oil drilling rigs that are now boring test holes 45 miles off the Florida coastline under the auspices of Cuba. American oil companies are prevented from doing this.

So just leaving oil in the ground doesn't mean that it'll stay there. And it doesn't mean that other people won't drill there themselves.

...

And the other bright spot of a well growing economy is that we might be able to afford the 20+ million illegal aliens.

Here is an interesting chro... (Below threshold)
snowballs:

Here is an interesting chronology of what has impacted oil prices up to last year. It's much more complicated than just unrest in the middle east.

http://www.eia.doe.gov/emeu/cabs/AOMC/Overview.html

And Lee goes with the mastu... (Below threshold)
SCSIwuzzy:

And Lee goes with the masturbation...
The first solution to every problem is: Get rid of Bush.

Martin Knight thinks about ... (Below threshold)
Lee:

Martin Knight thinks about my a**, and you SCSIwussy seem obsessed with the thought of me masturbating.

I'm begining to see a pattern here...

I'm heading out to start my holiday weekend, so you have free reign SCSI to bad-mouth me all you want. See you next week.

Oh, this just in: news.yaho... (Below threshold)
Lee:

Oh, this just in: news.yahoo.com/s/ap/20060526/ap_on_bi_go_ec_fi/economy

Inflation rises above Fed comfort zone

WASHINGTON - Consumer spending grew in April at the fastest pace in three months but much of that spending went to pay for higher gasoline prices. Rising price pressures pushed a key gauge of inflation favored by the
Federal Reserve up by the largest amount in 13 months.

The Commerce Department reported Friday that consumer spending jumped 0.6 percent last month, the biggest increase since a 0.8 percent rise in January. However, when inflation was removed, the increase in spending was a much smaller 0.1 percent.

"Consumers are becoming more cautious, having been body-slammed by the recent spike in gasoline prices, a cooler housing market and the cumulative impact of higher borrowing rates," said Brian Bethune, an economist at Global Insight, a private forecasting firm.

Rising energy prices were taking their toll on consumer confidence, which dropped to 79.1 in May, the lowest reading in seven months, according to the University of Michigan's survey of consumer sentiment.

Core inflation, excluding energy and food, was up 2.1 percent in April compared to the same month a year ago. This was the fastest increase in this inflation gauge since a similar 2.1 percent increase for the 12 months ending in March 2005 and was above the Fed's comfort zone for inflation.

The government reported that personal incomes rose by 0.5 percent in April, matching the March gain, with the strength coming from a big increase in wages and salaries.

The Fed conducts policy with a goal of keeping inflation excluding energy and food rising at an annual rate of 1 percent to 2 percent. While a 2.1 percent reading is only slightly above that target level, financial markets have grown concerned in recent weeks that the central bank may keep raising rates at coming meetings because inflationary pressures have begun to mount.

The concern is that big increases in oil prices this year could now be spilling over into other areas of the economy, upsetting the calm inflation environment that the Fed seeks to maintain as a way to spur economic growth.

To keep inflation under control, the Fed increases short-term interest rates to slow borrowing and economic activity. The Fed has boosted a key rate at 16 consecutive meetings over the past two years with the big question now being whether it will call a pause at its next meeting at the end of June or keep raising rates.

Some economists worry that the Fed could be caught in a bind with inflation rising but the economy already starting to slow. Too many rate increases in such an enviornment raise the risk of over-doing the credit tightening and possibly triggering a recession.

The 0.5 percent increase in incomes in April matched the gain in March and was propelled by a 0.9 percent rise in wages and salaries, the biggest such increase in a year.

The 0.6 percent increase in spending followed a 0.5 percent rise in March and was the strongest gain since a 0.8 percent jump in January.

However, much of that gain reflected the big jump in energy prices last month. Excluding the impact of inflation, consumer spending was up a much more modest 0.1 percent in April, matching the inflation adjusted rise in March.

The overall economy grew at a sizzling pace of 5.3 percent in the January-March quarter, the strongest rate in 2 1/2 years. But analysts are looking for that growth to slow to a more moderate 3 percent to 3.5 percent range in the current quarter, reflecting in part a slowdown in consumer spending.

Disposable incomes, the amount Americans have to spend after paying taxes, rose by 0.4 percent in April but actually fell by 0.1 percent after inflation was taken into account.

The personal savings rate, the amount of disposable income left after consumer spending is accounted for, remained in negative territory at minus 1.6 percent in April, down from a minus 1.4 percent in March. A negative savings rate means that Americans are not only spending all of their disposable income but dipping into savings and increasing borrowing.

Who's your Daddy!

" The personal savings rate... (Below threshold)
Alan Greenspan:

" The personal savings rate, the amount of disposable income left after consumer spending is accounted for, remained in negative territory at minus 1.6 percent in April, down from a minus 1.4 percent in March. "

Gosh, that means people have no savings!!!!!Oh no!!!!


Except for the fact that these endless 'negative savings rate' stories always fail to mention that they don't take into account the money that people are putting in 401k's and the like.

Typical lazy and/or lying MSM.
Typical Lee.

Typical lazy and/or lyin... (Below threshold)
snowballs:

Typical lazy and/or lying MSM.

You can say that again. I don't think that Martin Crutsinger is lazy however, I mean, he's a decent writer, but let's face it, it's his job to sell newspapers (and web hits), so selective analysis is sufficient when it's simply just FUD.

He's not quite laughable, but really just one sided. Hell, it's free "analysis" if you could call it that - so you get what you pay for I guess.

Just look at the title of the article, then he essentially attributes that to higher gasoline prices by using the word "much".

Then we read this "While a 2.1 percent reading is only slightly above that target level .." then he goes on to talk about a growing concern by financial markets because the fed might raise interest rates again. Um, they do that to get it to a sustainable level, right? It will slow down regardless of whether the Fed influences it to or not, but to go as far to say "recession" is asinine, really.

I happen to think that they will raise the rate to 5.25% in June, but a 5.25% interest rate is not a springboard for recession, sorry, but it's just not.

I happen to think that the rate will increase because the "analysts" have underestimated the quarterly GDP growth for only about the last two straight years or so? I wonder why?

Also, a negative savings may, "may" indicate that people are using their savings to reduce their debt. Naaaahhh, what am I talking about - nobody ever does that, especially since loan consolidations are at an all time high right now.

Negative Savings! Run for your lives!

Some economists worry th... (Below threshold)
Lee:

Some economists worry that the Fed could be caught in a bind with inflation rising but the economy already starting to slow. Too many rate increases in such an environment raise the risk of over-doing the credit tightening and possibly triggering a recession.

That's the key take-away on this. If gasoline prices and other inflationary pressures aren't brought under control, runaway inflation could push us into a recession.

Also - note that this blog post appeared just a few days before the release of new data which shows the present and future are not as rosy as the recent past, and the blog post points to Bush's press release on the subject. Knowing bad news was coming, Bush's office pushed a press release, dutifully picked up and spread by the neo-con blogosphere.




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