U.S. Economy Expands Amid Biggest Gains in Consumer Spending in Four Years

[impik]

The U.S. economy accelerated in the fourth quarter of 2010, driven by the biggest gain in consumer spending in more than four years and rising exports.

Gross domestic product climbed at a 3.2 percent annual pace from October through December, falling short of the 3.5 percent median forecast of 85 economists surveyed by Bloomberg News and restrained by the biggest drag from inventories in two decades, Commerce Department figures showed today in Washington. Final sales, which includes all categories except stockpiles, rose at a 7.1 percent pace, the most since 1984.


http://www.bloomberg.com/news/2011-01-28/u-s-economy-expands-amid-biggest-gains-in-consumer-spending-in-four-years.html

[jaxx]

1. Very good news.

[spinbaby]

2. How are consumers spending more?

Everyone I know has less money.

[dmallind]

4. fortunately "everyone you know" is not a representative sample of 300 million+ consumers

not everyone I know or even everyone DU knows. Thy would all be skewed samples, and the first two way too small to boot.

[Drunken Irishman]

11. It's not?!?

Cause I thought America was made up of mostly white, 20-something atheists who work at call centers and live in their parents' basement while going to the local community college.

:D

[Hawkowl]

14. Gasoline alone

I know I'm spending more on gas and food. If the Fed keeps creating money, we will continually spend more and get less.

[dmallind]

3. So much for the "it's all inventory building" doomer rationalizations of recent mfg gains. nt

[fasttense]

5. This is weird:

Inventories last quarter were stocked at a $7.2 billion pace, down from a $121.4 billion rate in the third quarter. That's a 94% decrease.

Most every corporation and business had gone to just-in-time restocking and inventories. That was done long before the crash. If they didn't, they became less competitive and less successful. So, I don't buy that this huge (94%) decrease in stocked items is some kind of new innovation. Just-in-time stocking has been around for decades.

Something is happening.

[ProSense]

7. "Something is happening. " What do you think it is? More info:

<...>

A few key numbers:

• The change in real private inventories subtracted 3.70 percentage points from the fourth-quarter change in real GDP after adding 1.61 percentage points to the third-quarter change.

GDP would have been very strong without this change in private inventories. This was offset by a postive contribution from Net exports of goods and services of 3.44 percentage points.

• Real personal consumption expenditures increased 4.4 percent in the fourth quarter, compared with an increase of 2.4 percent in the third.

• Investment: Nonresidential structures increased 0.8 percent, equipment and software increased 5.8 percent and real residential fixed investment increased 3.4 percent.

<...>

The key leading sector - residential investment - has lagged this recovery because of the huge overhang of existing inventory. Usually RI is a strong contributor to GDP growth and employment in the early stages of a recovery, but not this time - and this is a key reason why the recovery has been sluggish so far.

link

[DrToast]

8. You might be reading that wrong

Inventories increased $7.2 billion.

They weren't cut.

Firms decided that current inventory levels were close to final demand, so they didn't see the need to increase inventories massively as they had in quarters past.

[ksoze]

6. Upcoming Republican Spin: We did it cuz we took over

[impik]

9. Wow, look at the overwhelming enthusiasm about good news! 2 recs!!

Pathetic board.

[Name removed]

10. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ipaint]

12. “The heavy lifting is being done by the upper-income households,”

Rich shoppers are spending money
Many less affluent Americans aren't joining in

“The heavy lifting is being done by the upper-income households,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “They're the ones benefiting the most from the stock market rally, and they're spending.”

Consumer purchases reflect bigger gains among high-income households and "financial pressures on those of more-modest means," according to minutes of the Fed's Dec. 14 meeting. Feroli estimates the top 20 percent of wage earners account for about 40 percent of spending, while Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, puts their contribution at closer to 50 percent.

...Sentiment data reflect the stock-market gains. The Conference Board's consumer-confidence index for households making more than $50,000 a year climbed in December to a seven- month high, while the gauge fell for lower income groups.

http://www.telegram.com/article/20110119/NEWS/101190360/1237

Half of the households in the country make under 50,000.00. No recovery for them.

[eridani]

13. Now you know why the bottom 80% is less than thrilled. n/t

[mikekohr]

15. Graphs on Current Progress & Historical Comparison and Perspective

?

?

?

FDR inherited the historic standard of economic failure. With a little historical perspective it becomes
clear that President Obama has mirrored the economic accomplishments of President Roosevelt as far as these
differing scenarios allow for comparison.
FDR had critics on the right and on the left, and his administration like President Obama's was not perfect, but
then nothing touched by human hands ever is. The key sentence in the above time-line and link http://www.huppi.com/kangaroo/Timeline.htm is under 1934,
"A long road to recovery begins." And the adjective "long," is the key word in that key sentence.

If we want to avoid the drawn-out, agonizing pain of economic recovery we have to quit electing the people, whose economic policies have been in place when 9 of the last 10 recessions began: Republicans.
http://bureaucountydems.blogspot.com/p/history-of-recessions.html

mike kohr Bureau County Democrats http://bureaucountydems.blogspot.com