THE DEVIL IS ALWAYS...YOU KNOW WHERE - AT 8:58 A.M. ET: The economy apparently grew last quarter, but you have to look at the figures with three eyes and a microscope to get at the basic economic truth. From The New York Times:
For the first time in a year, the United States economy grew, the Commerce Department said on Thursday. But even if a recovery is technically in the offing, job-seekers likely will not begin to feel the benefits for months to come.
Gross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, a significant spike from a relatively shrunken base. The economy had contracted at annual rates of 0.7 percent and 6.4 percent in the first and second quarters of this year, respectively.
And now the details:
Robust government spending, exports, consumer durables — buoyed by auto purchases Congress’s now-expired “Cash for Clunkers” program — and housing helped finally push the measure into positive territory.
Yeah, let's look closely at that government spending, including cash-for-perfectly-good-vehicles.
Sure, it's good that the economy expanded. But it's like adding a wing to a crumbling house:
...the poor job market is discouraging Americans from increasing their spending by too much. Consumer spending on nondurable goods like food and clothing, for example, increased just 2 percent in the third quarter of this year.
And likewise, stagnant consumer demand and withering consumer confidence have left companies wary of hiring more employees — or, for that matter, taking any expensive risks. The jobless rate reached 9.8 percent in September, its highest rate in 26 years. According to Thursday’s report, business investment in structures fell at an annual rate of 9 percent in the third quarter.
We are far from out of the woods, but the Obamans, while bankrupting the country, will advertise the latest growth figures, just in time for next Tuesday's elections. Might make a difference in New Jersey.
October 29, 2009