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U.S. Economy Grew 5.7% in Fourth Quarter, Topping Estimates

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jefferson_dem Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 07:33 AM
Original message
U.S. Economy Grew 5.7% in Fourth Quarter, Topping Estimates
Edited on Fri Jan-29-10 07:35 AM by jefferson_dem
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onehandle Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 07:36 AM
Response to Original message
1. That was me. I bought some headphones. nt
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Jennicut Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 07:39 AM
Response to Original message
2. Inventories were dropping too much.
Economy in U.S. Grew at 5.7% Pace, Biggest Gain in Six Years

By Timothy R. Homan

Jan. 29 (Bloomberg) -- The economy in the U.S. expanded in the fourth quarter at the fastest pace in six years as factories cranked up assembly lines to prevent inventories from plunging.

The 5.7 percent increase in gross domestic product, which exceeded the median forecast of economists surveyed by Bloomberg News, marked the best performance since the third quarter of 2003, figures from the Commerce Department showed today in Washington. A smaller decrease in stockpiles contributed 3.4 percentage points to GDP, the most in two decades.

Manufacturers such as Intel Corp. may keep leading the recovery as increasing sales prompt companies to restock. A slowdown in consumer spending last quarter is a reminder that 10 percent unemployment is causing Americans to hold back, one reason why the Federal Reserve is keeping interest rates low and the Obama administration is proposing new plans to create jobs.

Business are now feeling confident enough to deploy a larger portion of the recent strong corporate earnings rebound into new investment spending, Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts, said before the report. This is a key development to support a strong, non-inflationary recovery.

The economy was forecast to grow at a 4.7 percent annual pace, according to the median estimate of 84 economists in a Bloomberg News survey. Estimates ranged from gains of 3 percent to 7.5 percent.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aAW...
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paparush Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 08:10 AM
Response to Reply #2
5. In any sector beside defense/war production? nt
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unblock Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 07:50 AM
Response to Original message
3. when you've gone down so much, big percentage gains are easy
and not as significant as they would otherwise seem.

besides, anyone wanna bet on what the ultimate, REVISED number is gonna be?
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babylonsister Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 08:03 AM
Response to Reply #3
4. Way to go. When will you ever be happy that something positive
is finally going on?
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scheming daemons Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 08:12 AM
Response to Reply #4
6. They won't. They're either A) part of the "let it fail" far left movement or B) GOPers in disguise

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unblock Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 08:53 AM
Response to Reply #4
9. i'm sorry, i must have skipped my kool-aid this morning. let's take a look at more of the numbers:
most of the increase was inventory declines. final sales only went up 2.2%.

consumer spending went down to 2% from 2.9% last quarter.

investments in structures plunged 15.4%.


there's good news in there as well, of course, and the economy is certainly in much better shape than it was a year ago. but no one should think that a high headline number means we're out of the woods yet. this economy still has a long way to go, and we shouldn't get ahead of ourselves. in better times, a 5+% headline number would be solid grounds for hiking interest rates and putting the brakes on. we don't want anyone to think that's appropriate now.

i *am* happy that the number is 5.7% rather than 2.7% or anything negative. sorry if my more nuanced reaction is less appealing than a mindless rah-rah.
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Clio the Leo Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 08:30 AM
Response to Original message
7. Good news and new jobless claims fell yesterday....
.... unlike the first three weeks of this month when they rose (shutter!) (The January numbers are probably not going to be good, everyone brace yourselves.)

Hopefully that will be the last "stop" and we're on the road to nothing but "starts" thanks to the legislation being proposed.
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Clio the Leo Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 08:32 AM
Response to Original message
8. "the worst recession since the 1930s ended last year"
"The Commerce Department report is the strongest evidence to date that the worst recession since the 1930s ended last year, though an academic panel that dates recessions has yet to officially declare an end to it."

http://www.politico.com/politico44/wbarchive/whiteboard...
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taught_me_patience Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 01:44 PM
Response to Original message
10. This farcical number destroys government's credibility
From Rosenberg:

If you believe the GDP data remember, there are more revisions to come then you de facto must be of the view that productivity growth is soaring at over a 6% annual rate. No doubt productivity is rising just look at the never-ending slate of layoff announcements. But we came off a cycle with no technological advance and no capital deepening, so it is hard to believe that productivity at this time is growing at a pace that is four times the historical norm. Sorry, but we're not buyers of that view. In the fourth quarter, aggregate private hours worked contracted at a 0.5% annual rate and what we can tell you is that such a decline in labour input has never before, scanning over 50 years of data, coincided with a GDP headline this good. Normally, GDP growth is 1.7% when hours worked is this weak, and that is exactly the trend that was depicted this week in the release of the Chicago Feds National Activity Index, which was widely ignored. On the flip side, when we have in the past seen GDP growth come in at or near a 5.7% annual rate, what is typical is that hours worked grows at a 3.7% rate. No matter how you slice it, the GDP number today represented not just a rare but an unprecedented event, and as such, we are willing to treat the report with an entire saltshaker a few grains wont do.

http://www.zerohedge.com/article/skeptical-rosenberg-gd...

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taught_me_patience Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-29-10 01:52 PM
Response to Reply #10
11. Oh yeah... it doesn't look like the street is buying it either
The yield on the 10yr FELL to 3.6% today. T-bills are still trading at 0% interest.
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