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The Fed has succeeded in its efforts to slow down U.S. GDP growth.

If today's initial estimate holds up after revisions, then the trend line for inflation-adjusted growth over the past year will look like this:

2.6 - Q2 2006
2.0 - Q3 2006
2.5 - Q4 2006
1.3 - Q1 2007

Source: Dept. of Commerce, BEA.

Comments (17)

Of course everyone knows th... (Below threshold)
nogo postal:

Of course everyone knows the Federal Reserve Board is no closer attached to our Federal Govt. than say Fed X is...
My biggest disappointment involving Republicans and the Democratic Party has been their turning away from these Bankers(with perhaps a vested interest)dictating our economy...

Of course those that truly believe that the FRB raises or lowers interest rates based on what is best for us..and not their banks...well..that's cool

WASHINGTON -- The worst eco... (Below threshold)

WASHINGTON -- The worst economic growth in four years is raising concern that troubles in the U.S. housing market will spread and throw the country into a recession before the year is out.

The economy practically crawled at a 1.3 percent pace in the opening quarter of 2007, the Commerce Department reported Friday. That was even weaker than the sluggish 2.5 percent rate in the closing quarter of last year.

So how are you spinning this as good news?

Who appointed the current h... (Below threshold)

Who appointed the current head of the Fed? It's a good thing the Bush administration has no influence over the economy.

Given the sharp drop in hou... (Below threshold)

Given the sharp drop in house sales, and in car sales, it becomes a bit more convincing to say we are heading into recessionary times. Indeed, by the time the 2008 presidential debates ought to be going on (rather than the premature adverts now being done), the Democratic party candidates will have plenty to hammer on:
- rising unemployment
- house foreclosures
- maybe even stagflation (true prices rising because of energy, but with a decline in consumption.)

There is a type of self-delusion appearing in some (types of) "conservative" blogs, that I have noticed. Namely, that "the economy" is fine. Perhaps it is because it is feared that Democratic party talking-heads will take advantage of rising concern about jobs, etc. Probably true....

But it needs to be said - there are some rotten things going on throughout the US economic system: too many poor loans, lack of savings (any at all!), inflation through decreased quality (rather than the prima facie pricing), etc.

Soso -Re the lack ... (Below threshold)

Soso -

Re the lack of savings - BankofAmerica's offering a whopping .5% annual interest on their savings accounts. Not 5%, but one half of one percent.


Hardly worthwhile to save money - a 1% inflation rate would wipe out any gains.

Paypal's offering 5.04%, ING Direct is offering 4.5% - but I don't know if they're being surveyed by the folks reporting lack of savings. Supposedly there's over 100 million Paypal accounts - no telling how many of them have large balances.

And then there's 401k's, Roth IRAs and the like... makes me wonder if that 'lack of savings' is reported by firms like BoA who have miniscule interest rates... which wouldn't exactly have depositors flocking in to open savings accounts.

Amazing. According to the D... (Below threshold)

Amazing. According to the Drive-By Media we went from recession to recession without ever having a good economic period in between.

"there are some rotten thin... (Below threshold)

"there are some rotten things going on throughout the US economic system: too many poor loans, lack of savings_SoSo"

I don't even try to keep up with symptoms. All I know is that job growth is being FAR outpaced by population/immigration growth. We haven't had a net real job increase in YEARS.

And like I keep baiting Jayson the Economist (who isn't interested):

Fed Chmn Bernanke testified, the US economy is now:

20% manufacturing jobs
80% service-related jobs

and in those manufacturing numbers are included service personnel employed there (HR, engineers, draftsmen, etc.)

(And who can forget being in hock to Red China. Kudlow and the neocons say it's a "good thing")

Here's a sobering assessment by former Reagan Asst.Secretary of Treasury Roberts from last year (anything but Dry): http://www.counterpunch.org/roberts02112006.html

The economy is clearing cra... (Below threshold)

The economy is clearing crashing and burning right now. We've only just seen the tip of the iceberg of the troubles in the housing market.

Meanwhile, China's economy is racing ahead at growth rates above 11%. The average world GDP growth rate is 5%. Japan, Germany and the UK are all forecast to have stronger growth than we are this year.

What this all means is that we are gradually losing our dominance as the world's economic superpower. Every year our economy as a percentage of the overall world economy shrinks. It's also only a matter of time before China with 4 times as many people and growth rates that are 5 times ours will become the world's largest economy.

The 20th century truly was the "American" century. The 21st won't be.

Up until the economic crise... (Below threshold)

Up until the economic crises of the late '70s, the FRB operated as a Presidential purse. When the President needed an economic upturn, they inflated. Since Presidents never need a downturn, they rarely contracted the money supply.

When thing got awful under Carter, he was forced to appoint a strong Chairman of the FRB. Volcker was the universal choice, but wouldn't take the job unless fully independent of political influence.

Greenspan followed up on Volcker's lead, and the government no longer dictates Fed policies. The only problem is the Fed is as risk-averse as large company Human Resource officers, so they seek to stamp out inflation, not only when it manifests itself, but when they think it might threaten to.

We've kept inflation at a very low level ever since this reform, so that's a good thing. Inflation has been subdued even at the cost of growth, which is not a good thing. There should be a balanced approach, never letting inflation become a real threat, but realizing that inflation under 3% is almost never a threat, and is the price we must pay to avoid deflation. We can always grow our way past a little inflation, but the economy can only shrink under deflation.

I have heard from the dimme... (Below threshold)

I have heard from the dimmers, that the economy is tanking for seven years now. All the time.

Car sales are down because of all the Greenhouse hysteria. Buyers are unsure what to do. ww

There isn't one place that ... (Below threshold)
civil behavior:

There isn't one place that I frequent, from high end to the trade interior design companies selling beautiful furniture and fabrics to the average salesamn/government public works grunt who will tell me the economy is great. Not one.

The interiors business is extremely sluggish as are home sales and the guy wo has a govt job with a spouse who also works are barely getting by trying to raise one maybe two children.

I don't know what caves these neo cons in here live in but the economy is in the crapper except for those with lots of money. I deal with them too and it's time for those folks to really start paying for what they consume.

The web of life has simply gotten so intertwined anymore folks there is NO WAY to talk about one thing withut taking the whole ball of wax into consideration and it's the 10% agaisnt the 90%. Which means someone needs to start paying up.

BTW Willie, what percentage do you belong in?

A question for those gloom ... (Below threshold)

A question for those gloom and doom folks commenting: Your son has just graduated from school. Would you rather he design shoes that are made in Korea, or glue/stich/ rivet shoes in Alabama?

Growth will pick up at a mo... (Below threshold)

Growth will pick up at a moderate, sustainable pace.

What's even more important is that inflation come to heel. If it doesn't, the higher interest rates to restrain inflation may choke off the economy. Conumdrum.

You perpetual doom-and-gloo... (Below threshold)
Big Mo:

You perpetual doom-and-gloomers should spend some time reading the Beige Book report every time it comes out (8 times a year), instead of relying on media predictions. The Beige Book is a much more reliable guage of the economy than anything else out there, and right now, it says the economy is softening and definitely slowing, largely because of retail housing and a few other concerns, such as manufacturing.

But "tanking"? Ridiculous and stupid.

The last time I checked, en... (Below threshold)

The last time I checked, energy costs have soared during the past two years, due in part to natural disasters and unrest in the Middle East. (Of course, the tinfoil hat crowd believes that both of these are cunningly manipulated by Bu$$$HitlerCo.)

Rising energy costs have certainly slowed down the automobile market, which for the most part is still making cars designed for $1.25 per gallon gasoline.

Other areas are softening after years of steady gains. That is called a "normal curve." And yes, much of it probably has to do with money now being spent on energy that would have otherwise been spent elsewhere.

China's economy is "booming" largely because their businesses are not hampered by envirnmental regulations and "fairness" laws like we have here in the US. I'm not saying those laws are always bad -- China will become the world's biggest emitter of CO2 in just a few years -- but they do cost us, and we will see the difference when we have to compete against those who are not equally incumbered.

We are not headed into "disaster," but as always base conditions are changing and new challenges must be met with new solutions.

What new solutions are the Democrats proposing that will address rising energy costs and the increasing difficulty of competing with cheap unregluated global labor?

To piggy-back on what Mike ... (Below threshold)
Chris G:

To piggy-back on what Mike just said, China and other countries have expanding GDP's because all use extremely cheap labor, and keep a constant outflow of export business to other countries like the US. What we are seeing is the effects of NAFTA. Who in the hell thought up that piece of ingenuity. Because of wage laws, environmental laws, taxes, etc., it is cheaper for American companies to to send the production aspect of their business elsewhere, for products that will be sold in the US.

The auto industry is tanking as expected. Unions and sheer stupidity of the automaker execs has sunk them. I've gone through 3 Fords, while keeping the same Nissan. It's about quality. Period. Foriegn auto makers used to beknown for smaller but more fuel efficient cars and trucks. Now, Nissan and Toyota make cars (Titan, Armada, Landcruisers, etc) that are just as big as American made cars/trucks, with better gas milage.

The handwringing over the housing industry is misplaced. There is currently an over-saturation of homes in some areas. Here in Atlanta, while a new subdivision opens up every month or so on the outskirts of the metro area, a townhouse/condo/apartment building opens in the in-town area. People are choosing to stay closer to town to kill the commute from hell, i.e. impact of fuel prices to some degree.

But if my memory of history is correct, isn't a recesion every 7-9 years over the past 50 years the norm, for some reason or another?

<a href="http://ww... (Below threshold)
Weaker exports and a steady slide in spending on homebuilding helped slow U.S. economic growth to its softest pace in four years during the first quarter, the Commerce Department reported on Friday.

Gross domestic product or GDP, which measures total goods and services output within U.S. borders, increased at a weaker-than-expected 1.3 percent annual rate in the three months from January through March.

That was a little more than half the fourth quarter's 2.5 percent rate and well below the 1.8 percent rate that Wall Street analysts had forecast GDP would expand. The last quarter when growth was weaker was in the first three months of 2003, when GDP expanded at a 1.2 percent rate.

Growth has been slowing since late last year under the impact of a hard-hit housing sector where rising defaults are taking a toll on the subprime lending sector and causing builders to scale back until inventories of completed but unsold homes are reduced.






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