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GDP Jumps 7.2 Percent, Biggest Increase in Nearly 20 Years
Thursday, October 30, 2003
WASHINGTON — The economy grew at a scorching 7.2 percent annual rate in the third quarter in the strongest pace in nearly two decades. Consumers spent with abandon and businesses ramped up investment, compelling new evidence of an economic resurgence.
The increase in gross domestic product (search), the broadest measure of the economy's performance, in the July-September quarter was more than double the 3.3 percent rate registered in the second quarter, the Commerce Department (search) reported Thursday.
The 7.2 percent pace marked the best showing since the first quarter of 1984. It exceeded analysts' forecasts for a 6 percent growth rate for third-quarter GDP, which measures the value of all goods and services produced within the United States.
The economy's recovery from the 2001 recession has resembled the side of a jagged cliff; a quarter of strength often has been followed by a quarter of weakness. But analysts are saying that pattern could be broken, considering increasing signs the economy finally has shaken its lethargy and is perking up.
Near rock-bottom short-term interest rates, along with President Bush's third round of tax cuts, have helped the economy shift into a higher gear during the summer, economists say. The next challenge is making sure the rebound is self-sustaining, they say.
Democrats, however, argue that the tax cuts contributed to a record budget deficit in the recently ended 2003 fiscal year and have done little to spur significant job growth.
Although the nation's payrolls grew by 57,000 in September — the first increase in eight months — the economy needs to add a lot more jobs than that each month to drive down the 6.1 percent unemployment rate, analysts have said.
The administration has argued that as economic growth improves, meaningful job creation will follow. Bush will be counting on that as he heads into the 2004 presidential election season.
In other encouraging economic news from the Labor Department (search), new claims for unemployment benefits last week dropped by 5,000 to 386,000, a sign that layoffs are slowing. U.S. workers' wages and benefits went up by 1 percent in the third quarter, up slightly from a 0.9 percent increase in the previous quarter.
Amid signs that the recovery is regaining traction, the Federal Reserve (search) on Tuesday decided to hold a key short-term interest rate at a 45-year low of 1 percent. Super-low short-term rates may give consumers and businesses an incentive to spend and invest more, boosting economic growth.
Economists believe the economy will grow at a slower — but still healthy — 4 percent rate in the final quarter.
In the third quarter, consumers ratcheted up their spending at a brisk 6.6 percent annual rate. That was the biggest increase since the first quarter of 1988 and was up from a 3.8 percent pace in the second quarter.
Consumers in the third quarter spent lavishly on big-ticket items, such as cars, boosting such spending by a whopping 26.9 percent rate. And, they also spent briskly on "nondurables" such as food and clothes, which grew at a 7.9 percent pace, the strongest showing since the first quarter of 1976.
While consumers have been the main force keeping the economy going, there are more signs that businesses are starting to do their part.
Especially encouraging was the 15.4 percent growth rate in spending by businesses on equipment and software in the third quarter. That marked the largest increase since the first quarter of 2000 and was up from a 8.3 percent growth rate in the second quarter.
Sustained turnarounds in capital spending and in hiring are crucial to the economy's return to full throttle. Economists said business wants profits to improve and wants to be sure of the recovery's vigor before it goes on a spending and hiring spree.
The red-hot housing market, powered by low mortgage rates (search), also contributed to the strong showing on third quarter GDP. Investment on residential projects grew at a 20.4 percent rate, the biggest increase since the second quarter of 1996, and more than three times the 6.6 percent growth rate seen in the second quarter.
Federal government spending, which grew at a 1.4 percent rate, was only a minor contributor to GDP in the third quarter. Spending on national defense was flat. But in the second quarter, military spending on the Iraq war — which grew at a whopping 45.8 percent rate — helped to catapult economic growth.
A better trade picture in the third quarter also contributed to GDP growth.
But inventory reduction by businesses continued to be a drag on the economy and reduced third-quarter GDP by 0.67 percentage point. And a continuing reluctance by businesses to build up stocks suggest that executives remain wary of the rebound's staying power.
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"Don't try to threaten me Mulder! I've watched presidents die."
"If people would know the things I know, we'd all fall apart."
"Once again, tonight, the course of human history will be set by two unknown men standing in the shadows."
It's nice to see the economy right itself, though this has nothing to do with the tax cuts.
The economy is cyclical, and it fixes itself over time, with a little bit of government intervention.
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26-year-old Saermengsi last season rated average 25.1 minutes, with 7.5 hours, 2.7 times and 2.7 backboard secondary attack, he Yifusen general as the replacement came in March Yifusen injuries ever period of time, three matches in a row, his secondary attack will reach 10. By Sun team, he could strengthen outer lane line, but also as the replacement fullback scored his general customary activities in the stadium two wings. On the season Saermengsi-ball hit rate reached 30%. He was in flames and Jones made a three-year teammate, Jones said that the organizers he pitches, but he can also shooting. His shooting is deceptive.
Well, I think tax cuts have a lot to do with this. You give people some of their money back, they go out and spend it, and this happens. I understand that it's not 100% tax cuts, but it is a major part of it. The last time something like this happened, it was right after Reagan had his huge tax cut.
__________________
"Don't try to threaten me Mulder! I've watched presidents die."
"If people would know the things I know, we'd all fall apart."
"Once again, tonight, the course of human history will be set by two unknown men standing in the shadows."
Originally posted by SirStefan32 Well, I think tax cuts have a lot to do with this. You give people some of their money back, they go out and spend it, and this happens. I understand that it's not 100% tax cuts, but it is a major part of it. The last time something like this happened, it was right after Reagan had his huge tax cut.
But just looking at the past one hundred years, one can easily show that this is all cyclical. Many economist would argue that this is just a part of the cycle.
And BTW, the rich generally don't spend money, the poor do. If you really want to stimulate the economy, the best way to do so, is to give the poor/middle class tax cuts. Economics show, that the more money people make, the more likely they are to save. Poor Americans get money, and blow it away on consumer goods, which of course stimulates the economy.
My grandfather, a multimillionaire, would get the money and save it, and that's typical of men of his economic stature.
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26-year-old Saermengsi last season rated average 25.1 minutes, with 7.5 hours, 2.7 times and 2.7 backboard secondary attack, he Yifusen general as the replacement came in March Yifusen injuries ever period of time, three matches in a row, his secondary attack will reach 10. By Sun team, he could strengthen outer lane line, but also as the replacement fullback scored his general customary activities in the stadium two wings. On the season Saermengsi-ball hit rate reached 30%. He was in flames and Jones made a three-year teammate, Jones said that the organizers he pitches, but he can also shooting. His shooting is deceptive.
Originally posted by SirStefan32 You can't give Bush credit for anything, can you?
We are not talking only about multimillionaires here. We are talking about people, or households who make just about $90K.
Look at it Tom, Bush passed the tax cut, spending jumped, and the economy is growing. Give credit where credit is due.
When you give people some of their money and stop taxing them to death, economy grows.
This is a textbook example.
I don't know if I totally agree with that, from taking a few economics classes. I wouldn't give anyone full credit for this, because the causal relationship hasn't been fully established. If I see something that can show that, then I will agree, but until then I won't give anyone credit.
Presidents are like Quarterbacks, they receive too much credit when things are going good (Clinton) and too much blame when things are going bad (Bush senior).
My family didn't receive much at all from the tax cuts, and they are above the middle class level. They (my parents) basically said they received some money, but not enough to make much of a difference.
I'm actually a fan of giving the tax cuts, mainly to the middle class and the working class, not the super rich like this tax cut targets.
As I said in my earlier post, the middle and lower class are more likely to spend money on consumer goods than the rich.
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26-year-old Saermengsi last season rated average 25.1 minutes, with 7.5 hours, 2.7 times and 2.7 backboard secondary attack, he Yifusen general as the replacement came in March Yifusen injuries ever period of time, three matches in a row, his secondary attack will reach 10. By Sun team, he could strengthen outer lane line, but also as the replacement fullback scored his general customary activities in the stadium two wings. On the season Saermengsi-ball hit rate reached 30%. He was in flames and Jones made a three-year teammate, Jones said that the organizers he pitches, but he can also shooting. His shooting is deceptive.
Tom, the richer you are, the more money you pay in taxes, and I believe the more money you deserve to get back from the government.
That's not always true.
The CEO of my dad's company, TYCO Inc, was making 250 million a year, and was paying LESS in taxes than my father was, due to tax loopholes. The super rich have accountants that can find those loopholes so that they don't have to pay the taxes that they should.
I would agree with tax cuts, if those loopholes were closed.
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26-year-old Saermengsi last season rated average 25.1 minutes, with 7.5 hours, 2.7 times and 2.7 backboard secondary attack, he Yifusen general as the replacement came in March Yifusen injuries ever period of time, three matches in a row, his secondary attack will reach 10. By Sun team, he could strengthen outer lane line, but also as the replacement fullback scored his general customary activities in the stadium two wings. On the season Saermengsi-ball hit rate reached 30%. He was in flames and Jones made a three-year teammate, Jones said that the organizers he pitches, but he can also shooting. His shooting is deceptive.
Originally posted by SirStefan32 I guess some people just don't want to give credit where credit is due.
No causal relationship has been established.
If indeed it is established, I will have no choice but to agree with it. Economic growth isn't just spurred by tax cuts, it's spurred by many things.
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26-year-old Saermengsi last season rated average 25.1 minutes, with 7.5 hours, 2.7 times and 2.7 backboard secondary attack, he Yifusen general as the replacement came in March Yifusen injuries ever period of time, three matches in a row, his secondary attack will reach 10. By Sun team, he could strengthen outer lane line, but also as the replacement fullback scored his general customary activities in the stadium two wings. On the season Saermengsi-ball hit rate reached 30%. He was in flames and Jones made a three-year teammate, Jones said that the organizers he pitches, but he can also shooting. His shooting is deceptive.
So, if Bush said, Screw he economy and just minds his business, economy would've skyrocketed like it is now?
Funny how people attack him when the economy was down, but won't give him credit when he improves it. Tax cuts are a good thing, it gives people their money back, it worked, and it needs to be permanent.
__________________
"Don't try to threaten me Mulder! I've watched presidents die."
"If people would know the things I know, we'd all fall apart."
"Once again, tonight, the course of human history will be set by two unknown men standing in the shadows."
Here is the bottom line, as stated by a very wise man and a friend of mine:
This huge jump in the GDP is 2 years after Bush's tax cut. The last time it was this high was 19 years ago. Interestingly, that was ALSO 2 years after Reagan's tax cut.
Tax cuts not responsible, my ass.
__________________
"Don't try to threaten me Mulder! I've watched presidents die."
"If people would know the things I know, we'd all fall apart."
"Once again, tonight, the course of human history will be set by two unknown men standing in the shadows."
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