Sorry to interrupt the celebration...

[Kurt_and_Hunter]

The Federal Reserve created about eleventy-seven trillion dollars last year. In this quarter it is "winding down" that quantitative-easing. The Fed is also winding down its intervention in the mortgage market.

The stimulus has no power to increase growth... though not all spent it has already done all it is going to do to increase growth. Growth is a relative concept, comparing before to after. The stimulus money will not increase the growth-rate of the economy any further because it will not be disbursed at a higher rate.

The housing market is weak and shows no signs of rebound--merely a decrease in the rate of decline.

And today's gaudy GDP number of 5.7% contains actual demand growth of only 2.2%.

At 2.2% unemployment doesn't decrease at all. That's about the replacement level. The rest is inventory build that will not be there next quarter.

Do folks get this? Our rate of recovery, even with all that has been done (which on the Fed side is truly staggering) is insufficient to add a single job to the economy.


The celebratory happy talk has no effect other than making it even less likely that our Party will do needed things to address very real problems.

But hey, perhaps we can unrec our way to prosperity!

[Jennicut]

1. There is no celebration from me until there is job growth

But it is better then the GDP being negative. I posted already today that it was mostly from inventories being so low.

[Windy]

2. why don't YOU take a break, turn on the Tv and watch him EXPLAIN his thinking!

discuss his policies and directly address the obstructionists!

[Kurt_and_Hunter]

3. Who are you talking about? Obama?

Why would anyone turn on a TV to hear Obama's opinions of the economy? He is utterly clueless on the topic and has been for a long, long time.

He has made a series of statements about the economy that are among the dumbest things ever said by a non-Republican.

Do you think anyone has a fricking thing to learn from someone who said the government needs to tighten its belt in hard times?

What's next... will be be denying evolution? Will he be saying the Earth if flat because it polls well?

Don't you get it? My track record on the economy is vastly superior to Obama's. That's undeniable fact.

So I will listen to economists who know MORE than I do, rather than political hacks who know LESS than I do.

That's how one learns.

I am talking about reality. You are talking about consuming political pap as a psychological salve.

You live your way, I'll live mine.

[glitch]

8. Allow me to cheer this post. nt

:applause:

[bvar22]

12. Good response.

:toast:

[tridim]

4. "Plenty-seven" unrecs for your constant FUD.

[Kurt_and_Hunter]

6. Facts are not optional. Sorry.

I see this as a discussion forum, not group therapy.

So we differ.

[ProSense]

13. This is doom spin

The stimulus has no power to increase growth... though not all spent it has already done all it is going to do to increase growth. Growth is a relative concept, comparing before to after. The stimulus money will not increase the growth-rate of the economy any further because it will not be disbursed at a higher rate.

The fact is 2.2 percent of 5.7 percent is damn good given where we're coming from. Speculating that there will be no recovery is beyond ridiculous because a lot of factors, including the continue effects of the stimulus, will impact growth.

[Name removed]

5. Deleted message

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

[ProSense]

7. How many blips will there be?

Everything is a blip to the forcasters of doom. Krugman has his doom hat on with this one.

[Drunken Irishman]

18. Nice first post, Talia.

:eyes:

[Number23]

21. lol

http://www.democraticunderground.com/discuss/duboard.php?az=user_profiles&u_id=254266

What the...???? :rofl: :rofl:

[DrToast]

9. This recovery is killing you, huh?

Maybe you can go into a coma until the next recession.

[Name removed]

10. Deleted message

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

[formercia]

11. The boys already have a 'Do Not Revive' plaque at the foot of Uncle Sam's bed.

They will light their cigars with $1000 bills.

[bvar22]

14. K&R... Back UP to +5

Necessary reading for all,

OR

You can join the "bliss" parade.

[emilyg]

15. k/r

[NatBurner]

16. thanks debbie

way to harsh that buzz, eeyore

[CakeGrrl]

17. I hardly think unrec-ing this post will alter the course of any major real-world event

...and it's too bad that people are so unwilling to acknowledge a positive occurrence that they sidestep the POINT of the upbeatness to rain on the parade as they're so anxious to do on a daily basis.

I seriously doubt anyone here is looking for sunshine and rainbows and good times to magically appear over the President's address today, but the fact that people were happy at the outcome just seems to bother some people so much that they have to remind people that they're still angry and skeptical. As if that was EVER in doubt.

:eyes:

[Number23]

20. Says it all, doesn't it? Somebody is actually MAD and bothered that people are happy, proud

and celebratory. Amazing.

And the usual "rec'ers" and "great post" misery co-lovers have shown up as well to remind us all that no bout of happiness, no matter how small or brief, cannot be shat upon quickly enough.

[grantcart]

19. I think that it is correct that the economists you rely on did not think

that a 5.7% GDP growth was possible by the 4th quarter, although I would be interested in seeing what they actually were predicting.

If it is true that they under predicted the 4th quarter then their forcast for 2010 would also be suspect.

What economist was closest in predicting 5.7% GDP growth?

[Kurt_and_Hunter]

25. That depends how literal you want to get. Everyone predicted strong Q3 and Q4.

Part of what makes my posts so frustrating (for me) is the assumption that the gloomy scenarios are predictions of never-ending decline and thus refuted by any sunshine.

Everyone has penciled in strong GDP growth for Q3 and Q4. Nobody I read has suggested there wouldn't be.

The incredible weakness we have had since 2000 has distorted expectations. Folks don't always realize how jumpy this stuff is. In 1983 coming out of that recession we had Year-over-year growth over 8%. For a whole year, not a quarterly blip.

Did anyone predict 5.7%? Everyone certainly expected 4%. A dearth of 5.7 predictions is for a particular reason. Everyone had an inventory build assumed in but the timing was iffy so you'll find a lot of folks who penciled in Q3 as stronger than Q4 rather than visa versa.

Q3 at 2.6 percent was lower than expected. Q4 at 5.7 was higher than expected. Between the two, a couple of 4.15 quarters. That's pretty much what was expected, IIRC.

So your specific question... you are right. I doubt many people predicted 5.7 Q4 because everyone predicted a stronger Q3 and the anticipated inventory build is a one-off deal.

Did anyone correctly predict 2.2% real demand growth in Q4-09? Yeah, a few did... the very pessimistic ones.

This is a very important point: Q4 is the maximum government influenced quarter. The existing stimulus, though not all spent, cannot add any growth going forward. GDP is going to be on the private sector and barring a big surprise we are headed for 2% if we are lucky.

Here's a for instance. Krugman posted the Goldman-Sachs projections for this quarter two weeks ago which were on the money. (They had 5.8% topline number) He posted the projection as being in line, not as being unexpected. Actually, he posted it as a warning since Goldman also projected that it was an unsustainable blip laid over weak demand growth. That projection didn't change his line one bit except to make it even more pessimistic.

Nobody is dancing about this report. (Except a few politicians and DUers.)

In this sterling 5.7% report the two leading sectors, residential investment (RI) and personal consumption expenditures (PCE), both slowed in Q4. Think about that. PCE slowed from 2.8% annualized growth in Q3 to 2.0% in Q4. RI slowed from 18.9% in Q3 to just 5.7% in Q4.

If we have another 5%+ quarter with the inventory build replaced with dramatic increases in PCE and RI then we can have a party.

The pessimistic model has always been stimulus driven positive Q3-Q4, weaker in 2010, no price growth in housing, no substantial decline in unemployment.

I doubt today's number changed anyone's thinking on that.

There is no demand. The growth effect of the stimulus is done. We haven't seen a quarter that could even touch the whole YEAR of recovery from the last comparable recession and no economist on Earth is predicting that we are going up from here... everyone predicts the first half of 2010 will be substantially weaker than the last half of 2009.

People talking about a second stimulus are not just eager to burn money. A return to recession in 2010 is little less likely than it was before today's report.

[grantcart]

31. Well economists should pay more attention to dancing

I enjoy your posts and try and contribute but am don't follow the macro economic details as carefully as you do.

My point is exactly your point in the third paragraph. It is very jumpy.

And economists who are down playing 5.7 as not being significant cannot tell us where we are going to stand April 1st.

But there are important trends that are going positive. You say that there is no demand, well that might be something of an overstatement.

In any case consumer confidence and people's opinion in their personal finances are going up consistently:

http://www.reuters.com/article/idUSTRE60S3VF20100129

Consumer sentiment at 2-year high

NEW YORK
Fri Jan 29, 2010 9:58am EST
Related News


NEW YORK (Reuters) - Consumer confidence rose to a two-year high this month as the economic outlook improved, though most had a grim view of their own personal financial and employment prospects, a private report showed on Friday.

The Reuters/University of Michigan Surveys of Consumers said its final index of sentiment for January was 74.4, up from December's 72.5 and higher than analysts' expectations for 73.0.

That was the highest since January 2008 -- a month after the recent recession started -- and it also beat the preliminary reading for this month of 72.8.

The report follows government data showing the U.S. economy grew 5.7 percent in the fourth quarter, which was the fastest in six years but still failed to dispel concerns about sustainability of recovery amid a 10 percent jobless rate.

The consumer comfort index is looking alot like 1993 when things started to rebound.

So how does Krugman factor in 2010 if the President gets his mojo back and people start feeling really good about their personal economy and their President and the ability to solve complex problems. I thought that the high point of the week was not the State of the Union nor the Republican Caucus but the relaxed Obama/Biden Train Show. Whatever their worries are, they aren't showing it.

They are confident. The President is confident and when people get more confident they start going out for dinner buying presents and thinking about buying that home they like that is at a really good price.

But the key point is that we have stable political leadership. Adults are in charge. We haven't had that in 10 years and that is something that is very hard for economists to factor in.

So this is where I think the economists don't get it. Real people are tired of being down. People want to turn this around and they are just looking for an excuse to do so.

President Obama is going to give them an excuse. And if some higher than normal GDP numbers helps that along well thats OK. The CCI chart here shows 3 lines

http://abcnews.go.com/images/PollingUnit/m010310.pdf

It shows a dramatic increase in the confidence of people's personal finance, but not on the buying climate or the national economy. This shows, I believe that if people were to become more confident in their national leadership that the deamand you speak of would go up. And there is a lot of 'pent up demand'. I for one need a new pair of dancing shoes.


Now if the economists really had the ability to prognosticate as well as they project then they would have more credibility and more money than Bill Gates.

Maybe they should be looking at the "good news leads to dancing leading to consumption index" so there is, I believe, substantial other indicators that indicate that the good news will be followed by more good news. And bringing down inventories is the first step before people start reordering. I just hope they have dancing shoes in my size because, as you know, when it comes to the President, I am a dancing fool.

[Kurt_and_Hunter]

36. I agree about pent up demand

It's real. (As is pent up supply in real estate.)

People want stuff, no doubt.

And a national miracle of confidence would definitely help.

That said, I haven't put any stock in consumer confidence numbers this year one way or another. I think the metric is broken, with some evidence. What we saw often last year was: consumer confidence up, savings rate up, spending down.

Since one of those three is a psychological measure and the other two are hard data I lean toward confidence as odd man out. The word just doesn't seem to mean the same thing it used to, and why would it?

But if spending picks up, great. That's the second most important indicator to me. And it slowed down last quarter. I hope it picks up next quarter.


And... here comes sunshine boy... I think that the weather hasn't been factored into December well enough. If 1/3 of the nations population wasn't snowed in for a week before Christmas the numbers would have been better, IMO.


More generally, something funny about me is that I am not a permabear... I actually got in some nasty exchanges with the gloom-and-doom crowd and missed the boat on the collapse.

My biggest reason for relative pessimism is fairly specific and deduced/reasoned from events rather than from a desire for the world to fall apart... real estate. Until real estate is in a clear uptrend it's difficult to talk about where anything else is going and it hasn't even bottomed.

It is assumed that real estate will bottom but this crisis is a real estate bubble collapse so all comparisons to past events seem suspect to me. The class of assets that were in a bubble that collapsed shouldn't be expected to behave like that same asset-class did in earlier business cycle or monetary policy turn-downs. We honestly have no idea what real estate is worth... what level it is even supposed to return to.

And that, combined with the unemployment problem, suggests a non-cyclical drag of large size.

I don't know if you read my tax proposal, BTW. I assume it sunk like a stone but you might find it amusing.

[Kurt_and_Hunter]

37. As Crocodile Dundee would say, THIS is a recovery

Q1-83 looks fairly comparable to Q4-09.

If next quarter is up 9.3% we can talk.

But I doubt anyone is predicting Q1 will exceed today's figure.

The 1980s recovery was even all that awesome; IIRC, unemployment was still fairly high when Reagan ran for re-election.


_____________________

1981q3 4.9
1981q4 -4.9
1982q1 -6.4
1982q2 2.2
1982q3 -1.5
1982q4 0.3
1983q1 5.1
1983q2 9.3
1983q3 8.1
1983q4 8.5
1984q1 8.0
1984q2 7.1

[Kurt_and_Hunter]

38. Interesting Addendum about projections

I went back to see what (crackpot gloom-and-doom crank) Goldman Sach's 2010 estimates were in light of their increased projection for Q4-09.

They factored in 5.8% and were still predicting 2% growth in 2010 with unemployment not peaking until 2011. Goldman's work has been a lot more accurate than the government's so far. That doesn't mean they are correct going forward but they have an enviable track record.

In a research note released last night, Goldman Sachs raised their estimate of Q4 GDP from 4.0% to 5.8%. They cautioned that the "headline will be an eye-popper", but that this growth is mostly due to inventory changes: "More than two-thirds of our estimated increase comes from a sudden stabilization in inventories". They also noted "anything between 4½% and 7% is possible given the volatility of the inventory data".

The rest of the note cautions on 2010, and Goldman still sees sluggish growth of just under 2.0% with the unemployment rate peaking in early 2011.

http://www.calculatedriskblog.com/2010/01/q4-gdp-beware-blip.html

[buzzard]

22. It is amazing to me more are not paying attention to this, a major part of the problem I

believe was caused by the Fed and the Banks share a part of the blame. I don't think anyone has the stomach to bring in any meaningful reform and when the writing on the wall is clear to all it will be too late.

[scheming daemons]

23. Another "let it fail" proponent who is having trouble accepting good news

...

Your doom and gloom FUD is getting old.

[Change Happens]

24. You are wrong on the numbers

consumer demand/spending was 2.2% much much much much better than anticipated!

[Kurt_and_Hunter]

26. Does 2.2 not equal 2.2 on your planet?

I said 2.2. You said 2.2.

Yes, I am obviously wrong on the numbers.

[tango-tee]

27. Rec!

[Robb]

28. Your plan is to complain your way to prosperity, then?

You crack me up. :D

[golfguru]

29. You are a party pooper!

After Massachusetts we all need a little partying, donchyu?

[That Is Quite Enough]

30. Truthful post. K/R

[Cali_Democrat]

32. How much are they paying you?

[grantcart]

33. lol I just don't know what to say about that

Kurt_and_Hunter's post are so idiosyncratic that I am trying to figure out who you think he represents on a consistent basis.

Maybe you were wondering if he was free lancing?

[Kurt_and_Hunter]

34. I sold out to Big Misery

[grantcart]

35. lol remember Franken responding to charges that he was getting money from

Big Hollywood by saying that he was just getting money from Big Comedy lol

[Phx_Dem]

39. Then don't. We've had enough nastiness and infighting.

Can't we just have a couple of days of celebration? Is that too much to ask?

Trust me, the world will not fall apart.