US economy comes to virtual standstill

[questionmark]

US economy comes to virtual standstill

Larry Elliott, economics editor

guardian.co.uk,

Wednesday January 30 2008

The US economy came to a virtual standstill in the final three months of 2007 as the deepest slump in the real estate market for a quarter of a century acted as a brake on expansion, according to data released in Washington today.

Official figures showed that gross domestic product increased at an annualised rate of 0.6% between October and December, only half as fast as Wall Street had been expecting.

Today's news meant that the US economy grew by 2.2% in 2007 as a whole - the weakest expansion seen since the 1.6% growth recorded in 2002, when the economy was affected by the dotcom collapse and the aftermath of the September 2001 terrorist attacks.

The weakness of the data was seen by Wall Street as clinching evidence that the Federal Reserve, America's central bank, will cut interest rates by 0.5 percentage points to 3% tonight in a bid to boost flagging growth.

Spending on new-home building dropped at an annual rate of 23.9% in the fourth quarter, the biggest quarterly drop in 26 years, after falling 20.5% in the third quarter. Over the course of the full year, residential spending fell 16.9%, the worst annual performance since the deep decline of 1982, when double-digit interest rates were used to bring down inflation.

Today's data suggested the US may be suffering from a mild dose of stagflation - weakening activity plus higher inflation. A gauge of prices favoured by the Fed - personal consumption spending excluding food and energy items - gained at a 2.7% annual rate in the fourth quarter. That was well ahead of the third quarter's 2% increase and Wall Street expectations. It was the biggest increase for any three months in one-and-a-half years.

Full story, Source: The Guardian

[Pinky Floyd]

Well questionmark..

I'm sure that made your day..

At least we have an economy..

[questionmark]

Well questionmark..

I'm sure that made your day..

At least we have an economy..

Made my day? sh**, what this crap already cost me this year I have to work for the next five.

[Fluffybunny]

Well, virtuall standstill is a bit melodramatic; it goes in cycles as it always has. I recall the last time it did this; I lived through it; I dont think I will be jumping out any windows anytime soon...Eh...did I mention I am bought gold and silver at the right time?

[Stardrive]

It's costing everyone questionmark, me included. The problem I see is, everything is based on oil prices. From the utilities we use, the groceries we buy, and any commodity that needs to be transported [that covers about everything].

But because the end user ends up paying for the higher fuel cost and on top of that heating the homes and fuel for cars to commute, there is little if any left over to purchase other goods or services. Most of our money is being spent on fuel in one form or another.

[IronGhost]

On top of it all -- I think the latest bipartison plan to cut all Americans a $500 -- $600 check is a joke. We have a $9 Trillion debt -- so where is the money coming from? The U.S. is basically going to print some money, give to the people, and hope they use it to feed the corporate beast, which will gobble up this $150 billion of printed money -- and then what?

I think we need to reverse course -- start paying down the debt, put all Americans not on a spending spree, but on an imported oil diet, especially from easy credit and oil.

If we stop using so much oil, there will automatically be more money in people's pockets because they won't be driving as much, the balance of trade will improve, America's bottom-line fiscal situation will improve, the doller will regain its strength on the international market, etc.

Congress should pass sweeping reforms on credit card interest rates -- there used to be laws against "usary" -- we could save billions of dollars by reducing everyone's interest rates -- the only one who will be hurt will be the banks -- but they'll still profit, just not as much.

In short, we all need to face some short-term pain -- belt tightening, less spending across the board, less government spending etc.

I wrote a letter to my Congress people beseeching them to vote against the current mindless "stimulous" package. It's a no-pain handout to a spend-thrift public and greedy banks and corporations.

Edited January 30, 2008 by IronGhost

[Mr Honeybadger]

I would like to think this is just a cycle. But I have my doubts. Foreign manufacturing companies have driven down the American wage. And with the lower wages, Americans are forced to buy the cheap low quality products made by those same companies that drove down their wages to begin with.

[Moon Monkey]

The ammount the US has invested in Iraq, they should be getting oil for free. They are paying twice. The UK too, or what was the point ?

[questionmark]

Eh...did I mention I am bought gold and silver at the right time?

No, but a smart move, my move is to expand my bee-keeping. You can always sell food, or trade it for other food.

[questionmark]

The ammount the US has invested in Iraq, they should be getting oil for free. They are paying twice. The UK too, or what was the point ?

Oil for free because someone wanted a war?

[Spurious George]

Well it almost made my day, then I read these articles....

US dollar policy is Zimbabwe economics — Forbes

http://www.businessday.co.za/articles/worl...x?ID=BD4A691664

Statism Beats Capitalism; Gazprom Squeezes Exxon, BP

http://www.bloomberg.com/apps/news?pid=206...&refer=news

Citigroup chief says Chinese, Russian sovereign funds are top worry

http://www.marketwatch.com/news/story/citi...948E765829B8%7D

... and I laughed. And now my day is made

[Moon Monkey]

Oil for free because someone wanted a war?

I thought that was the point or have I been mis-reading these forums for 5 years ?

[questionmark]

Well it almost made my day, then I read these articles....

US dollar policy is Zimbabwe economics — Forbes

http://www.businessday.co.za/articles/worl...x?ID=BD4A691664

... and I laughed. And now my day is made

Neither the Fed nor the treasury has bought dollars since August 1995 and last stepped into foreign-exchange markets in September 2000 when they sold dollars to buoy the euro

Now, with what are they supposed to buy other currencies. Taking a credit?

[Mr Honeybadger]

The ammount the US has invested in Iraq, they should be getting oil for free. They are paying twice. The UK too, or what was the point ?

Excellent point. Being the policemen and the protectors of safe oil passage through the Middle East, a little discount would be nice.

[Aztec Warrior]

On top of it all -- I think the latest bipartison plan to cut all Americans a $500 -- $600 check is a joke. We have a $9 Trillion debt -- so where is the money coming from? The U.S. is basically going to print some money, give to the people, and hope they use it to feed the corporate beast, which will gobble up this $150 billion of printed money -- and then what?

I think we need to reverse course -- start paying down the debt, put all Americans not on a spending spree, but on an imported oil diet, especially from easy credit and oil.

If we stop using so much oil, there will automatically be more money in people's pockets because they won't be driving as much, the balance of trade will improve, America's bottom-line fiscal situation will improve, the doller will regain its strength on the international market, etc.

Congress should pass sweeping reforms on credit card interest rates -- there used to be laws against "usary" -- we could save billions of dollars by reducing everyone's interest rates -- the only one who will be hurt will be the banks -- but they'll still profit, just not as much.

In short, we all need to face some short-term pain -- belt tightening, less spending across the board, less government spending etc.

I wrote a letter to my Congress people beseeching them to vote against the current mindless "stimulous" package. It's a no-pain handout to a spend-thrift public and greedy banks and corporations.

As usual, I mostly agree with your points, except about a stimulus package. This goes right back to our discussion about consumerism and what the economy of the future will look like. Unfortunately, our capitalistic society is consumer driven and the only way to keep it going is for consumers to buy.

For me, the biggest macroeconomic issues are the trade imbalance with China (not just the US, but the entire world) and oil. If there was one smart politician, he (ha, ha) would mandate homes (with gov't assistance) to be self-sufficient by imploying residential wind and solar power. Also, cars should be fuel cell based on hydrogen. Electric cars simple move the problem from the pump to the power station. Except for plastics and other goods, oil needs to eliminated from the greater economy.

I would like to think this is just a cycle. But I have my doubts. Foreign manufacturing companies have driven down the American wage. And with the lower wages, Americans are forced to buy the cheap low quality products made by those same companies that drove down their wages to begin with.

The economy does operate in a cycle and American wages have gone up, including mfg wages. The higher quality US products cost more and are sold for more, and the employees make more than their counterparts (except in parts of the EU).

No, but a smart move, my move is to expand my bee-keeping. You can always sell food, or trade it for other food.

I have thought about a bee-keeping op, but the recent bee disease has me leery.

Edited January 30, 2008 by Aztec Warrior

[questionmark]

I have thought about a bee-keeping op, but the recent bee disease has me leery.

We always have some disease or another, so far, and because hygiene is top on the list, we got through them all.

[supercar]

At least we have an economy..

Yep. And unlike questionmark's country,we don't drown illegal immigrants:

September 28, 2006

Illegal migrants rescued by the Turkish Coast Guard in the Aegean Sea claimed Greek officials had thrown them overboard. If their story is true, it's an international scandal. It also calls attention to another hotspot for immigrants trying to reach Europe.

Greek authorities have denied knowledge of an alleged incident in which Greek officials threw illegal immigrants into the Aegean Sea off the coast of Turkey. On Tuesday morning, some 31 illegals were plucked out of the sea near the Turkish coastal city of Izmir. They claimed that the Greek Coast Guard had thrown them into the water. They did so, said one survivor, "without even asking if we could swim," according to Turkey's state-owned Anatolia news agency. Six people have reportedly drowned; three are missing. Greek officials denied the charges in general terms. "We never throw people into the sea," said Haris Bournias, a Greek Coast Guard commander on the island of Chios. Turkey's coastline is a major transit area for illegal immigrants trying to reach Europe, and Bournias said smugglers regularly set immigrants adrift in little boats without lights. "Many people drown that way in the straits," said Bournias, and in fact early reports in the Turkish media claimed the survivors had washed ashore after their boat sank off the Turkish coast.

Still, on Wednesday Turkey's Foreign Ministry lodged an official complaint through diplomatic channels in Athens. "Greek authorities have been increasingly dumping some groups of illegal migrants in Turkish waters in violation of" a bilateral agreement to return them, said ministry spokesman Namik Tan in a statement, adding that "the mentioned practice cannot continue." According to reports, the survivors included Palestinians, Lebanese, Tunisians, Iraqis and one Algerian. Residents on the coast of Izmir had called the Turkish Coast Guard on Tuesday morning after being awakened by barking dogs and cries for help. The suvivors claimed that they had set off from Izmir province in a boat and landed on Chios. But they were captured by uniformed Greeks who placed them on a Coast Guard ship that carried them back toward Izmir, where they were tossed into the sea. "Two of our friends drowned in front of our eyes," Muhammedi Alti, a Lebanese national, told the Anatolia news agency. "I still can't believe what we have lived through ... We had thought that human rights would be more valuable in Europe."

http://www.spiegel.de/international/0,1518,439761,00.html

[Unlimited]

Thats the most blatent hijack and flamebait i've ever seen....what on earth does that have to do with the topic...

[IronGhost]

As usual, I mostly agree with your points, except about a stimulus package. This goes right back to our discussion about consumerism and what the economy of the future will look like. Unfortunately, our capitalistic society is consumer driven and the only way to keep it going is for consumers to buy.

For me, the biggest macroeconomic issues are the trade imbalance with China (not just the US, but the entire world) and oil. If there was one smart politician, he (ha, ha) would mandate homes (with gov't assistance) to be self-sufficient by imploying residential wind and solar power. Also, cars should be fuel cell based on hydrogen. Electric cars simple move the problem from the pump to the power station. Except for plastics and other goods, oil needs to eliminated from the greater economy.

Right, Aztec, I agree about the consumerism driving the economy -- my main point is that I don't see the benefit of boosting that spending by the government printing up fake paper money -- borrowing more against a $9 trillion debt -- and borrowing that money from the Chinese et al. In effect, what we're doing here is borrowing more money from foreigners, hoping consumers wil then give that money to American businessess --- it makes no sense.

It would be much smarter to get consumers to stop spending so much money on oil -- for example, here in Minnesota, in Minnapolis, if the average person switches from using his or her cars to using public transportation, they would save more than $2,500 a year on automobiles and gas. Then they would have more than a one-time government hand-out to spend -- they would save $2,500 each and every year, and they could spend that elsewhere -- and the bonus is we don't have to balloon the national debt.

So rather than bribing the American people with fake money the government does not have -- we should start a crash national campaign in ridding our habit of using cars and buying gas -- that one thing would improve the entire picture, and would require no government spending.

[questionmark]

So rather than bribing the American people with fake money the government does not have -- we should start a crash national campaign in ridding our habit of using cars and buying gas -- that one thing would improve the entire picture, and would require no government spending.

Here I agree, especially because the American automobile industry is beyond repair anyway.

But that is diametrically opposed to all the current US government stands for.

[Stardrive]

The automobile industry needs to re-think it's strategy. I would buy an electric car if there was an economical version available. An electric car would save me $3,000 a year (minimum). If they want to stick with oil, then the economy as a whole will pay the consiquences.