otterinbham 0 Posted October 31, 2007 Share Posted October 31, 2007 AP Economy Logs Brisk 3.9 Percent Growth Wednesday October 31, 9:20 am ET By Jeannine Aversa, AP Economics Writer Economy Grows at Brisk 3.9 Percent Pace in Summer, Best Performance in 1 1/2 Years WASHINGTON (AP) -- The economy picked up speed in the summer, growing at a brisk 3.9 percent pace, the fastest in 1 1/2 years and an impressive performance even as a credit crunch plunged the housing market deeper into turmoil. ADVERTISEMENT The latest snapshot of the country's economic health, released by the Commerce Department on Wednesday, suggested that the economy is demonstrating much resilience and thus far holding up well to the strains in the housing and credit markets, which had intensified during the third quarter and rocked Wall Street. Individuals ratcheted up their spending. U.S. businesses sold more goods abroad and boosted some investment at home. Those were some of the main factors helping to push up overall economic activity in the July-to-September quarter. The third quarter's growth rate was up slightly from a 3.8 percent pace logged in the second quarter. It marked the strongest showing since the first quarter of last year. The increase in third quarter gross domestic product exceeded analysts' forecasts for a 3.1 percent growth rate for the period. Gross domestic product is the value of all goods and services produced within the United States and is considered the best barometer of the country's economic fitness. The strong performance came despite the worsening housing slump. Builders slashed investment in housing projects by 20.1 percent, on an annualized basis, in the third quarter, the largest drop in a year. That was even deeper than the 11.8 percent annualized cut made in the second quarter and provided stark evidence of the problems in the housing market. The new figures on the economy come as the Federal Reserve meets for a second day Wednesday to weigh whether it needs to lower a key interest rate to protect the economy down the road from the ill effects of the ailing housing market. Wall Street investors are betting on a smaller, one-quarter percentage point cut. That would follow up on a bolder half-percentage point reduction ordered in September, the first rate cut in more than four years. The ill effects of the housing slump and credit crunch, however, didn't deter consumers. Consumers, whose spending is an important ingredient for the economy's good health, actually rediscovered their appetite to spend in the third quarter. Their spending rose at a 3 percent pace, a considerable improvement from the second quarter's rather weak 1.4 percent growth rate. One of the reasons why people are continuing to spend is because the nation's employment climate has managed to stay fairly sturdy through all the problems. Wage and job gains have served as shock absorbers for some of the negative forces of an ailing housing market, weaker home prices and more restrictive credit. In other economic news, the Labor Department reported that employers' costs to hire and retain workers rose by 0.8 percent in the July-to-September quarter. That was down a bit from a 0.9 percent increase posted in the second quarter but marked a solid showing. Still, the carnage in the housing meltdown has been painfully felt, especially in the area of higher-risk "subprime" mortgages made to people with spotty credit. Home foreclosures have soared. Lenders have been forced out of business. And, financial institutions have wracked up huge losses. Businesses, meanwhile, increased their spending on equipment and software at a 5.9 percent pace in the third quarter, up from a 4.7 percent growth rate in the prior period. They also boosted their investment in inventories, another factor that added to GDP. Strong sales of U.S. exports to foreign buyers was another big factor in the good third-quarter showing. Exports of goods and services grew by 16.2 percent, on an annualized basis, during the quarter. That was the biggest increase since the final quarter of 2003. Business investment in commercial structures, such as office buildings and factories, grew at a 12.3 percent pace in the third quarter, a good showing but down from a sizzling 26.2 percent growth rate in the second quarter. Government spending also contributed to third quarter GDP growth. Such spending rose at a rate of 3.7 percent, following a 4.1 percent pace in the second quarter. As the economy picked up a bit of speed, so did inflation, although the rise wasn't seen as worrisome.. An inflation gauge closely watched by the Federal Reserve showed "core" prices -- excluding food and energy -- rose at a rate of 1.8 percent in the third quarter. Although that was up from a 1.4 percent pace in the second quarter, it was still within the Fed's "comfort zone." Still, skyrocketing oil prices, which have reached record highs in recent days, may pose a risk to the economy. If it causes prices of other goods and services to rise, inflation could spread. If more expensive energy prices chill consumer spending, it could add to the forces threatening to slow economic activity. The meltdown in the mortgage market has made it harder for people to obtain financing to buy homes. That's aggravating problems in the housing market and leading to a mounting pileup of unsold homes. Given that, the housing slump is expected to drag on well into next year. The Fed's overriding worry is that problems in housing and harder-to-get credit could seriously crimp spending and investing by people and businesses, dealing a dangerous blow to the national economy. Many analysts are hopeful the economy can avoid a recession. Growth in the current October-to-December quarter is expected to slow to a pace of around 2 percent or less. Link to comment Share on other sites More sharing options...
otterinbham 0 Posted October 31, 2007 Author Share Posted October 31, 2007 Another bit of good news. I think the economy is a bit fragile right now, but not nearly as bad as the Chicken Littles depict it to be. ====== ECONOMIC REPORT Private payrolls grow much more than expected ADP report points to strong showing for nonfarm payrolls data Friday By Robert Schroeder, MarketWatch Last Update: 8:42 AM ET Oct 31, 2007 Print E-mail Subscribe to RSS Disable Live Quotes WASHINGTON (MarketWatch) -- Private payrolls grew by a much stronger than expected 106,000 in October, following a revised gain of 61,000 in September, ADP reported Wednesday Economists surveyed by MarketWatch were expecting nonfarm private employment to grow by 55,000. See Economic Calendar. The ADP report suggests that nonfarm payrolls have grown more in October than the 85,000 anticipated by economists surveyed by MarketWatch. The Labor Department will report on the nonfarm payrolls number on Friday. Adding in the typical monthly gain of about 20,000 government jobs not covered by the ADP, the report suggests the government's figures on nonfarm payrolls probably grew by about 126,000. The ADP report is computed by economics firm Macroeconomics Advisers from anonymous payroll data provided by Automatic Data Processing Inc. The services sector added 134,000 jobs in October. But the goods-producing sector shed 28,000 jobs in October, ADP said. Employment in both the construction and financial-services sectors dropped in October as the mortgage market fallout continued to ripple through the economy. Jobs in the construction sector fell by 16,000, the thirteenth decline in the last fourteen months. That brought the cumulative decline since August 2006 to 173,000. Employment in the financial-activities sector dropped 1,000 in October, the third straight monthly decline after nearly six years of uninterrupted growth. Seventeen months after its public debut, the ADP report is considered by some economists to be the single-best indicator of the government's monthly nonfarm payroll report. But on a month-to-month basis, it cannot accurately predict payrolls down to the last digit. The ADP report is designed to mirror the monthly nonfarm payrolls report released by the Labor Department, after all revisions. One difference: The Labor Department statistics include government jobs, but ADP doesn't. After a few big misses compared with the Labor Department figures in its first few months, the methodology for the ADP report has been tweaked and the sample size increased. The ADP report is crafted from anonymous payroll data culled from about 383,000 payrolls representing 23 million workers. The sample is matched to the Labor Department's sample of 160,000 businesses and government offices at about 400,000 work sites. ADP is the one of the largest payroll providers in the world, with more than 570,000 business clients worldwide. Link to comment Share on other sites More sharing options...
Auburn85 432 Posted October 31, 2007 Share Posted October 31, 2007 I guess if the news media keeps talking about a recession, it will eventually happen. Link to comment Share on other sites More sharing options...
otterinbham 0 Posted November 1, 2007 Author Share Posted November 1, 2007 I guess if the news media keeps talking about a recession, it will eventually happen. Absent major economic dislocation, the economy is how people feel about the economy. Link to comment Share on other sites More sharing options...
AURaptor 1,126 Posted November 1, 2007 Share Posted November 1, 2007 I guess if the news media keeps talking about a recession, it will eventually happen. Absent major economic dislocation, the economy is how people feel about the economy. And when the headlines are full of how well or how poorly the economy is doing, that is what the people 'feel' . I hear clips from 'The View', and those over glorified hausfraus sit there and spread lies about how bad the economy is under Bush's term in office. Link to comment Share on other sites More sharing options...
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