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Economy Watch - 10.30.2008
ECONOMY WATCH....I guess it's now official that the economy sucks:
The U.S. economy shrank by .3 percent in the third quarter, government data released this morning shows, confirming an economic slowdown that was already showing itself through steady job losss and declining consumer sales.
....The drop in personal consumption was a particular drag on growth. Consumer spending accounts for about 70 percent of U.S. economic activity, and it dropped at a 3.1 percent annualized rate between July and September — the biggest quarterly decline in more than 20 years.
....It was in large part a jump in government spending — at the federal, state and local levels, with a more than 18 percent annualized increase in defense spending — that held off an even steeper decline. Overall government spending added 1.15 percent to GDP.
With his usual impeccable timing and sense for the public mood, John McCain naturally took this moment to....stop talking about the economy and instead try to suddenly "steer the presidential-campaign conversation to national security." Nice work, Senator.
As for the economy itself, I think everyone now agrees that we're in a recession. But did it start in the third quarter, or did it start last December? It almost feels like we need a new word here. High schools now call their advanced algebra classes "precalculus," and the first half of this year feels like it was a "prerecession." There really didn't seem much doubt about where we were headed, but technically we weren't quite there. Now we are.
How about "precession?"
And here's hoping we're not now in a "prepression."
Well, I know there are many factors [most of which make my head swim] causing this, but I hope if Obama gets elected, there is a slight lift in consumer confidence. I'm a retailer and small business owner and am seeing the effects of the recession in goose-step timing with all the national signs. My clients are typically from a more insulated, affluent professional tier, so the slowing of my business says a lot about national timidity in consumption.
I like 'precession', but brings to mind a monarchical parade.
we were there actually much earlier than now. One way to monkey around with the GDP numbers is to jigger the price deflator (the adjustment made to the raw data to account for inflation) and the 2Q GDP numbers are widely considered to be overly-optimistic because an extremely unrealistic deflator was used. You remember 2Q don't you? $4/gallon gasoline, widely escalting food prices - very mild price deflator. Account gains that should have been attributed to inflation were instead considered "growth".
Couldn't have had the American people know that there was an economic issue during an election year (remember McCain's economic advisor Luskin arguing that the deteriorating economic situation was all a figment of liberal imagination) - too bad the financial meltdown sort of let the cat out of the bag before the election.
Once more I am curious about the "standard" difference between a recession and a depression and want to know why people aren't calling this a depression.
And I need to remind you that I have a copyright and trademark on "The Coming Global SuperDepression."
And finally, "High schools now call their advanced algebra classes "precalculus,"" Jeez Kevin, did you go to school in a one room schoolhouse? "Now call" is (I regret to say) at least 30 years old.
I say just call it a "slump", which occurs when the economy is unable to create enough jobs to keep up with population growth.
Well, I know there are many factors [most of which make my head swim] causing this, but I hope if Obama gets elected, there is a slight lift in consumer confidence. I'm a retailer and small business owner and am seeing the effects of the recession in goose-step timing with all the national signs. My clients are typically from a more insulated, affluent professional tier, so the slowing of my business says a lot about national timidity in consumption.
Posted by: Paul Miller on 10/30/08 at 12:12 PM Respond
AGREED. I'm a teacher, but I make a good deal of my money as a private tutor to the wealthy. I have been fielding more and more cancellations lately and sometimes I wonder whether the kid really had band practice or if Mom was looking at the checkbook and decided the family didn't have an extra couple hundred bucks laying around this week.