LA Times: 6-7% economic growth in third quarter / but will it be enough?

[CMT]

This link was found in ABC's The Note under the headline: GAUZY GROWTH NUMBERS SO BIG YOU'LL FORGET ZOGBY

Snip:
As 2003 winds down and the presidential campaign ramps up, most mainstream economists agree that the US economy is expanding at its fastest pace in four years. When the gross domestic product for the July-September quarter is announced Thursday, it is expected to show the economy barreled foward at an annual rate of 6% or perhaps even 7%--a performance unmatched since the glory days of the '90s boom.

but

Some prominent forcasters, for example, think that the economy will grow quickly ini the first half of 2004, but then slow in the second half. Others say that it will grow like gangbusters the entire year, but do little to bring down unemployment.

"Politicians would love some certainty about which way the economy s going, but they're not getting it," said Karlyn Bowman, a polling expert with the American Enterprise Institute in Washington. "It makes it terribly hard to plan a campaign."

http://abcnews.go.com/sections/politics/TheNote/TheNote.html
choose LA Times Link.

The article also mentions that Treasury Sec. Snow believes teh economy will add jobs at a pace of 200,000, a month to the end of next year for a net gain of 2 million jobs (still not enough to erase the more than 3 million jobs lost under Bush).

Will Bush have the economy on his side in 2004?

[LoneStarLiberal]

1. He Might. He Might Not.

About the only definite thing right now is that the economy will be very important to the 2004 Presidential campaign.

If the government can keep credit expanding at a white-hot rate and hold the rest of the world hostage into continuing to buy more and more U.S. debt (the old "if you don't do it I'll blow my brains out!" routine), then the economy could very well be on his side.

Ceteris paribus with a strong economy Bush will not be defeated.

However, I cannot forsee how the "perfect storm" of conditions that the government needs to continue this wacked-out credit expansion we've undergone are going to come together for them. The REAL question then is can they weather one or more conditions they need failing as opposed to succeeding.

I do not think so. If I am right, we're all in deep shit.

[Midwest_Doc]

4. Econimic Growth Without Jobs Means NOTHING

Economic growth will be due to "increased productivity" (fewer people doing more work); any newly created jobs will be in developing nations where the cost of labor is cheap.

The silver lining is that the unemployed and underemployed will not vote for the incumbent.

[LoneStarLiberal]

5. I Agree, But There Is Still Perception To Fight...

I think the wildcard in this whole situation is based on my opinion that most Americans don't understand economics. The President can get up in front of the nation, mumble about growth and productivity, and most people will not be saavy enough to understand that jobless growth and increased productivity due to layoffs still mean that we are stuck.

Same goes for that nebulous term "corporate earnings." Most people aren't financially saavy enough to understand that when that little two sentence blurb comes tumbling across the ticker about (for example) GE lowering guidance for their next quarter and then being rewarded with a bounce for meeting their guidance in the next quarter that they are only meeting lowered expectations, not doing anything wonderful and great as you might believe if you only watched CNBC.

Right now it is easy and convenient for the government to point to the market and say "all is well and getting better" since most people do not fathom the difference between the stock market and the economy, much less the almost totally unreported difference between the credit market and the debt market.

I think the house of cards will tumble based on the credit markets.

[dkamin]

2. no

as the NY times pointed out this weekend, Snow's prediction was still below the rate of population growth, so it's a net negative in terms of unemployment rate.

they can and will spin the numbers, but at the end of the day it'll be pretty obvious that the economy sucks.

the current bubble fueling a lot of this is the zero-interest rate fueled spending boom. talking anecdotally with my friends and family, many of whom are in real estate, they all believe that the low interest rates have been refueling a lot of the high value in real estate, as well as consumer spending (i.e. one of my parents' tenants just bought himself a $20K stereo system financed on a new 0% for 20 months credit card).

when interest rates start to rise, which is virtually inevitable with any growth, you'll see a serious drop in real estate prices which will cause a panic. i think this thing is gonna get much uglier before it gets better.

[E Pluribus Unum]

3. Its looking more and more likely.

[ProfessorGAC]

6. Nonsense With Statistics

There was no such thing in the 3rd qtr. That's just a made up number. The nominal GDP growth was about 1.5% which compounds to well under 6% if sustainable.

However, if one goes back 20 years one will find that every 3rd quarter sees an uptick because the 2 largest retailers and 5 of the 10 largest consumer product companies in the U.S. all have fiscal years that end June 30. So, to help improve the bottom line they all do inventory thinning from the 2nd half of Q1 to the end of Q2. It reduces their unproductive asset base, reduces liabilities, and improves their cash position and cash flow.

Then, in Q3 they rebuild inventory to normal levels. So, this uptick in Q3 is completely predictable and quite normal. Don't expect this to indicate a single thing about the actual economic trends.

In addition, this is typical of far too many in the economic profession. (Much to my chagrin.) Basing predictions and setting expectations with one data point, out of context of the larger whole is bad statistics and worse economics.
The Professor