Economy: It could have been a lot worse

This is really nothing to feel good about. Keep in mind that 0.6% growth is essentially no growth.

The rate cuts have not taken full effect yet, and won’t for the next few months. My prediction: We may not enter a true recession (two or more quarters of economic decline) but we will probably have no growth (0-1% growth) for the rest of the year, which is almost as bad.

I still find it humorous that everyone is talking about the ‘recession’. How we are in a ‘recession’, and how bad the ‘recession’ is. the last time I looked a Recession is 2 or more quarters of negative growth. Hmmm, since the last quarter of 2007 had 0.6% growth and the the first quarter of 2008 again had 0.6% growth, where is the recession? As I see it, we are in an economic slowdown, but we are still growing. And if we are to have a recession we will not know about it for 6 more months. I say we all just relax and wait 3 more months for 2nd quarter 2008 results to come in and laugh at ourselves when it is once again positive and all this ‘recession’ fear was unfounded. Oh and please can people stop calling this economic slowdown a recession, technically it is not.

I don’t believe that .6% growth number, just like I stopped believing in the reported unemployment rate, and the reported inflation rate. Bush’s Republicans are fudging the numbers, trying to make the economy look better than it really is. They can get away with this because there really is no independent oversight to verify the accuracy of what they’re reporting. Unemployment numbers in particular are suspicious, holding at around 5% in the face of layoffs everywhere, that’s highly dubious, but the Bushies will lie to cover for their CiC’s mismanagement of the economy.

Keith said:

Everyone wants to know that question.

One thing for sure, we want to see growth, at least potential heavier than it looks spending in the third quarter, to spur shopping in the Christmas season. (That may very well make-or-break the US economy).

If I may be Prophetic, it looks like a stagnant economy exactly like you do not want, especially to send a message to consumers of a continuing saga of “is this the end of the world syndrome”. The buying public will spend to their hearts content and go into debt as never before thinking toys and computers will keep my family happy and heck with how will I pay for them, thats for the future not to-day.

“BUT”, one thing is for sure if they perceive the world will stop functioning they may in fact start putting money for a rainy day where it should have been. Our economy will grind to a halt, if that happens, we need people in debt we need them to spend monies using 28.8% credit cards.

We well know that most shoppers are in debt beyond belief, they should have stopped long ago but they were told that money does really grow on trees. (some americans actually believe that).

To believe that the subprime indebtedness is the problem is just not the whole story, it is that many people bought homes they just could not afford and the ones who sold them the mortgages are in the Carribean enjoying the sun waiting for another day to scam the uneducated, (don’t worry about how it is to be paid back, Uncle Sam will pay for you).

The US is going to once again save these people from foreclosure and giving them a new longer term lower interest mortgage “Paid with tax payers money” that they do not deserve. What about the millions who over the years struggled to pay mortgages of higher interst, who are good citizens, what about them?

“SO”, what about the economy?, well, unless the United States stops playing God Father we will never recover, it, this mortgage situation will only go away when the market has people buying homes who can afford them.

“OH”, if only we could give homes to every person, that is of course Socialism, right,

Tell the Government to get out of the bedrooms of the nation and stop making the Government larger and larger, oh well, we talk alot about thinning out Government But under the present President it is now “HUGE”,.

One day all this money we are printing can only mean one thing. Higher food costs, higher home costs, higher health care costs. THE DOLLAR WILL BECOME SO STRAINED THAT ONE DAY WE MAY FIND THE WIDOW BRINGING MONEY TO THE GROCERY STORE IN A WHEEL BARROW TO BUY A LOAF OF BREAD. History tells us that it did happen and could yet happen again in the United States.

Keith

The economy will continue to grow in the second quarter and accelerate in the second half of this year.

People are spending much less money on housing (causing prices to start coming back down to earth), and oil and gasoline consumption are dropping dramatically (down between 5 and 10% versus a year ago). This frees up money to spend on other things.

Also, US exports continue to grow strongly, which we need to balance the trade budget.

Hang in there; the end is not nigh.

I JUST LOVE THE WAY THIS ADMINISTRATION MANAGES TO ALWAYS FIND SOME RAY OF SUNSHINE IN THE DARKEST COAL MINE. WITH ALL THE BUSH TRUE BELIEVERS LODGED IN EVERY POSITION OF OUR GOVERNMENT THE FIGURES ALWAYS SEEM TO COME OUT IN A POSITIVE WAY. ALL A PERSON HAS TO DO IS TAKE A RIDE AROUND ANYWHERE USA AND LOOK AT THE ITEMS FOR SALE ON FRONT LAWNS IN THE WANT ADS AND ALL THE VACANT HOMES. HMMM WHAT DOES THIS SEEM TO INDICATE AHHH. BUT WAIT WERE ON THE BRINK OF RECEIVING OUR STIMULUS CHECKS. IF THEY THEN COUNT THIS AS A POSITIVE STIMULUS WE’LL ALL BELIEVE…

Of course the economy will grow in the second quarter – perhaps in the second quarter of 2009 or 2010!
The real farce in the .6% real growth figure is that the gov’t use 2.6% as the deflator to go from nominal to real growth – and that is laughable. If 4% or even more had been used for the deflator you still get some growth but in the neighborhood of .1% to .2%.
My real concern is not that we are going to have a bad recession, but a stagnant economy that just drags on and on.

No. Too much US industry has been packed up and offshored. Based on *what* will the economy recover? Many jobs lost, trade deficit too high, too many illegals mooching off the taxpayer. Dollar continues to devalue. Fuel prices up. War leaching money off the economy. Social security crisis looming. Foreclosures up. Presidential candidates who will either hold the status quo, or have no viable solutions.

Can someone tell me that the bright spot they see at the end of the tunnel isn’t a train heading straight at us? Where’s the good news?

We need to stop using GDP. This is getting to the point of nonsense. Like using the CPI, which ignores food and fuel to calculate inflation. (Stupid!)

GDP does not measure what we think. North Americans take GDP as the bellwether of national well-being, but GDP doesn’t track how people are, only how much they spend. Whether money is spent on vacations or hospital stays, playground equipment or car wrecks, births or funerals, it’s all the same in the GDP ledger.

The GDP cannot see much of what is important. It tells only about the growth of economic production, not of economic satisfaction or quality of life. GDP does not take disparity in incomes between the rich and poor into account. GDP counts work that produces no net change or that results from repairs. (Lots of economic activity in rebuilding New Orleans, for example, but no net gain.) GDP ignores externalities such as damage to the environment.

As Bobby Kennedy said, “t measures everything, in short, except that which makes life worthwhile.”

Time to turn to the GPI.

The only reason consumer spending is up the reported 1% is because people are spending more on gas and other energy. Not because they are buying more.

The housing bubble, and the accompanying splurging by homeowners, is what “saved” us from the last downturn.

With out a new bubble that the average American can borrow against and spend more with, getting out of this soft patch may require actual economic change. That takes time.

This year will be flat by reported numbers and down by real wealth. Maybe next year will see real improvement. If we stop scrambling and start building.

Q2 will be flat and so may the rest of the year. Inflation especially fuel prices will eat into consumer budgets and Memorial Day will show less travel both nearby and to far destinations. Another wave of mortgage resets hit at the end of Q2. Foreign earnings will keep companies afloat and save Q2 from going negative.