Posted: Wed Jan 30, 2013 2:25 pm Post subject: Negative economic growth in 4th quarter of 2012
Growth Stall Obscures U.S. Consumer, Business Pickup: Economy
The economy in the U.S. unexpectedly came to a standstill in the fourth quarter as the biggest plunge in defense spending in four decades swamped gains for consumers and businesses.
Gross domestic product dropped at a 0.1 percent annual rate, weaker than any economist forecast in a Bloomberg survey and the worst performance since the second quarter of 2009, when the world’s largest economy was still in the recession, Commerce Department figures showed today in Washington. A decline in government outlays and a smaller gain in stockpiles subtracted a combined 2.6 percentage points from growth.
Rising auto sales boosted consumer spending last quarter as a drop in fuel prices and the largest income gain in four years enabled the biggest part of the economy to overcome superstorm Sandy and Washington budget battles. Little inflation and a stop-and-go expansion are why Federal Reserve policy makers, meeting today, are projected to press on with plans to pump more money into financial markets.
“I’m not going to say growth is particularly strong, but this is not a recessionary signal by any means,” said Paul Edelstein, director of financial economics at IHS Global Insight in Lexington, Massachusetts, whose team projected a 0.3 percent gain, the lowest in the Bloomberg survey. “This really was a story about a payback in national defense spending. Consumer- spending growth picked up, fixed investment was fairly strong.”
Funny, they said that the growth was about 1.5%, but that it was getting better and better all the time. Break out the champagne, and let's all vote for Obama to thank him for the wonderful job he's done.
The anticipation for the 4th quarter -- now in -- got up as high as 3% growth. Of course, there was an election going on, so it shouldn't be that surprising when it turns out that the US actually dipped into negative growth during that period. But how could these experts be so wrong?
Think of all the subsidies going into the economy. First, there's the almost impossibly low interest rate. Second, there's the stimulus, $900 billion or so. Third, there's the bailouts -- not the ones from three years ago, but those going on right now. The Federal Reserve is spending $40 billion a month on 'market operations', lifting the stock market, and another $45 billion a month buying toxic assets from banks.
What would it be like without all these bailouts and subsidies? What would the election have gone if people had known?
And what will happen when the increased payroll taxes, income taxes, and medical care taxes hit the American consumer? Keep tuned.
The Obama-ites respond. You may not be surprised, but it turns out it's the Republicans fault.
White House: GOP responsible for contracting economy
White House press secretary Jay Carney laid the blame for a surprise economic contraction squarely at the feet of congressional Republicans Wednesday, saying economic threats during the "fiscal cliff" negotiations had prevented important defense spending.
"Our economy is facing a major headwinds, and that's Republicans in Congress," Carney said.
The Commerce Department projected Wednesday that the nation's gross domestic product (GDP) shrank by 0.1 percent in the fourth quarter of 2012.
Carney said that was partially attributable to the threat of sequestration, which would implement across-the-board spending cuts if a long-term deficit deal is not reached.
"This is political brinkmanship that results in one primary victim. That's American taxpayers and the American middle class," Carney said, acknowledging the GDP projection was bad news.
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum You can attach files in this forum You can download files in this forum