posted on July 31, 2003 10:59:59 AM newUS economy grows 2.4 percent in second quarter
WASHINGTON (AFP) - US economic growth shot to an annual pace of 2.4 percent in the second quarter, shattering sluggish expectations.
Defying forecasts for growth closer to 1.5 percent, the US economy gave the clearest sign yet it is shaking off Iraq war-inspired shock and gathering speed, with business investment finally back.
The return in business investment, a 52-year record surge in defense spending, robust consumer spending, and a red-hot housing market powered growth, early Commerce Department estimates showed.
"This is a very positive confirmation that the economy is turning the corner," said BMO Financial Group economist Sal Guatieri.
Gross domestic product, which had grown at a sickly 1.4-percent pace in the first quarter, appeared to be responding to a double dose of tax cuts and 45-year record low interest rates.
Businesses, long cowed by the Iraq war uncertainties, lifted non-residential fixed investment by 6.9 percent, with spending on structures such as factories up by a 43-year high of 4.8 percent and equipment/software expenditure up 7.5 percent.
"The economy truly does look to be on the mend," said Naroff Economic Advisors president Joel Naroff, noting that investment in buildings had climbed for the first time since 2001.
Defense spending roared 44.1 percent higher, the sharpest increase since 1951 during the Korean war, as President George W. Bush's administration conducted the Iraq war and a terrorism offensive.
As a result, federal government expenditure advanced 25.1 percent, the steepest increase since 1967, even as state and local governments trimmed spending by 1.5 percent.
Consumers stepped up spending 3.3 percent despite lingering agony in the labor market.
People ploughed 22.6 percent more money into big-ticket, durable items such as cars or washing machines. Residential fixed investment, coaxed by rock-bottom mortgage rates, surged 6.0 percent.
The US unemployment rate hit a nine-year high of 6.4 percent in June. The unemployment tally for July is due Friday.
Recovery hopes were bolstered by a separate Labor Department report showing the seasonally adjusted number of new jobless benefit claimants shrank 3,000 to a five-month low 388,000 last week.
The bullish news tallied with a Federal Reserve Beige Book survey, released Wednesday, indicating the economy had picked up speed by "a notch" in the past six weeks.
Factories, which had shed 2.7 million jobs during a three-year contraction, were finally coming out of the doldrums, it said.
"Consistent with the generally more positive assessments of economic activity, several districts noted increased optimism about economic prospects in coming months," the Federal Reserve said.
Bush, who has passed a 350-billion-dollar tax-cut package told a news conference on Wednesday that he saw "hopeful signs" the economy was accelerating and would generate more jobs.
His chief economic policymaker, Treasury Secretary John Snow, has forecast economic growth of more than three percent in the third quarter of this year, 3.5 percent in the last quarter and four percent in 2004.
The latest figures showed international trade was a drag on the economy, however, with exports sliding 3.1 percent in the second quarter. Imports, which detract from economic output, leapt by 9.2 percent.
Businesses trimmed their inventories by 17.9 billion dollars in the period, eroding 0.77 percentage points from the overall economic growth pace, the data showed.
posted on July 31, 2003 12:24:05 PM new
You find these numbers heartening? Munitions sales up. State spending down. Unemployment rising, underemployment expanding and consumer confidence down. The housing bubble about to burst. Our trade deficet reaching new heights. The only reason spending by consumers has increased is the continual surge in the cost of energy.
posted on July 31, 2003 12:25:29 PM new
ebayauctionguy - That's good news. Many positive indications [there] that things are swinging back the other way now. It's a good beginning. [Keeping fingers crossed here that it continues.]
posted on July 31, 2003 02:08:32 PM new
The war in Iraq provided a one-time spike in defense spending (and therefore GDP) of about $40 billion, all of it deficit spending.
Without the war, GDP would have increased by only $16 billion, an annualized rate of .67%. That's not so hot.
WASHINGTON -- Senate Republicans and Democrats lambasted Bush administration officials Tuesday for refusing to provide cost estimates for rebuilding Iraq, and for ignoring other threats while insisting that Saddam Hussein's regime played a central role in fomenting worldwide terrorism.
In aggressive, sometimes hostile, questioning of Deputy Defense Secretary Paul Wolfowitz, members of the Senate Foreign Relations Committee also accused the administration of misleading Americans on its justifications for going to war in Iraq, and on how long U.S. troops will be needed in the country.
"Because of a combination of bureaucratic inertia, political caution, and unrealistic expectations left over from before the war, we do not appear to be confident about our course in Iraq," said committee chairman Richard Lugar, R-Ind.
Almost three months after President Bush declared that major combat operations in the country had ended, Lugar added, "We still lack a comprehensive plan for how to acquire sufficient resources for the operations in Iraq and how to use them to maximum effect."
Sen. Joe Biden of Delaware, the ranking Democrat on the committee, twice got into heated exchanges with Wolfowitz over the question of how much the Iraq operation is costing.
"I think you're going to lose the American people if you don't come forward now and tell them what you know, that (the reconstruction effort is) going to cost tens of billions of American taxpayers' dollars and tens of thousands of American troops for an extended period of time," Biden said, his voice just below a shout.
Referring to Defense Secretary Donald H. Rumsfeld's penchant for saying certain things are "unknowable," Biden admonished Wolfowitz: "Please don't waste our time or yours by saying the future is simply unknowable. Pick a number. Pick an idea."
In more muted tones, Lugar said the administration should supply "at least some idea of what is likely to be required of the American taxpayer."
But Wolfowitz and White House budget director Joshua Bolten held firmly to the administration's position that it is impossible to estimate costs because the situation in Iraq is changing so rapidly.
Bolten said "for the next couple of months" he expected costs of maintaining troops in Iraq to stay at about $4 billion per month. However, he said he would not estimate the tab after that. He predicted the administration would ask for more Iraq funds in a supplemental budget request later this year.
Wolfowitz criticized the Senate for refusing to provide $200 million the Pentagon had requested earlier this year to train Iraqi security forces.
He suggested this has led directly to the deaths of U.S. soldiers.
Wolfowitz said Iraqis instead of Americans could have been guarding a hospital in Baqubah, where an attacker dropped a grenade onto soldiers last Saturday, killing three soldiers.
The money, intended for training Iraqis for such security jobs, was "dropped, apparently because the Congress in its wisdom did not believe that it was necessary," Wolfowitz said.
"I hope that it is clear now why it is necessary," Wolfowitz said. "It is much better to have Iraqis fighting and dying for their country than to have Americans doing the job all by themselves."
The assertion by Wolfowitz was part of his lengthy opening remarks, which focused on atrocities committed by Saddam's regime.
He cited progress being made by U.S. troops in gaining the respect of the Iraqi people, in restoring basic services and in putting in place nascent democratic structures.
But the statement appeared to backfire in drawing lawmakers' sympathy.
Sen. Lincoln Chafee, R-R.I., told Wolfowitz that the evidence of state-sponsored torture under Saddam, while tragic, was just the latest in a series of "shifting justifications" by the administration for going to war against Iraq.
Chafee said that in the months leading up to the war, the administration maintained that dislodging Saddam was the only way to prevent the use and spread of weapons of mass destruction. Yet since the war, no such weapons have been found.
"It was a steady drumbeat of weapons of mass destruction, weapons of mass destruction, weapons of mass destruction. And, Secretary Wolfowitz, in your almost hourlong testimony here this morning, once -- only once did you mention weapons of mass destruction, and that was an ad lib. I don't think it's in any of your written testimony," Chafee said. "And so we're seeing shifting justifications, I think, for what we're doing there."
Sen. Russell Feingold, D-Wis., attacked Wolfowitz over his statement that "the battle to secure the peace in Iraq is now the central battle of the global war on terror.
"This administration has grossly exaggerated the connection between the war on terrorism and the Iraq situation," Feingold said. He said that on the same day that U.S. troops moved into Baghdad in April, men suspected of being responsible for the attack on the U.S. destroyer Cole in 2000 were escaping from a prison in Yemen.
"I would ask you, Secretary Wolfowitz, are you sure we have our eye on the ball?" Feingold asked.
Wolfowitz replied that rebuilding Iraq was one front in a multi-pronged war against terrorism. "I'm absolutely sure we have our eye on the ball," Wolfowitz said. "And the ball is a global one."
posted on July 31, 2003 04:02:01 PM new
2.4%? What a joke! 2.4% doesn't come close to fixing the economic damage done by this administration.
Have faith democrats! Went to a meeting for a democratic hopeful last night! Packed!! There were anthropologists, Cleveland State U professors, Tri-C professors, school teachers, librarians, retired people, activists, down-and-outers, union members, small business owners and a couple of wealthy executives as well. The socioeconomic status of these people ran the gamut. State Senator Brady was in attendance as well as our state rep and local area councilmen. We are not alone! We are joined by thousands upon thousands of fed up US citizens tired of being lied to and misled. And this was only the first meeting for only one of the local districts. These meetings are going on country wide.
P.S. - Hi, Linda! Good to see you! Hope everything is going well for you.
Cheryl
Power to the people. Power to the people, right on. - John Lennon
[ edited by CBlev65252 on Jul 31, 2003 04:02 PM ]
posted on July 31, 2003 04:21:09 PM new
Hi Cheryl - Thanks for asking. Things didn't go well but I can't talk about it here yet.
Is your 'democratic hopeful' Dennis K? Isn't he the one who wants Federal day care and plans to pay for it by taking $60 million dollars away from the Pentagon? If so...that most likely won't 'fly' with the majority of Americans who believe the first responsibility of the US government is to protect it's citizens....not pay for socialized day care.
But maybe you are referring to another 'democratic hopeful'.....
Gray Davis is another democratic hopeful who's fighting to keep his job in California because of his budget problems.
posted on July 31, 2003 06:00:35 PM new
Yes, Linda it is Dennis. The only Congressmnan in history to NEVER miss one single vote in Congress! Sorry if I opened my mouth and put my big Democratic foot in it.
Anyway, here's what he would work on to deliver (no mention of Federal daycare - we already have subsidised daycare) Universal Health Care with a Single Payer Plan; Full SS Benefits at age 65; Withdrawal from NAFTA and WTO; Right to Choose, Privacy and Civil Rights Issues; Balance Between Workers and Corporations; Guaranteed Quality Education, Pre-K through College; a renewal commitment to peace and diplomacy; restored rural communities and family farms (huge issue right now); environmental renewal and clean energy.
"America now leads the world in categories we should not be proud of. America is now the world's leading jailer with an incarceration rate higher than China. We lead the industrialized world in poverty and in the growing gap between rich and poor. And we are the only industrialized nation not to provide national health care."
You don't have to agree with everything this man stands for. I will tell you this, he may take a verbal beating, but he will not give it back. He will not bash the president (and does not want us to either) and he will not bash any political opponite during the race. So, no mud slinging will be done by him and he will not tolerate it out of any of his supporters. Thought that was a good thing.
Cheryl
Power to the people. Power to the people, right on. - John Lennon
[ edited by CBlev65252 on Jul 31, 2003 06:23 PM ]
posted on July 31, 2003 06:58:04 PM new
Cheryl - You list some great qualities he has as a gentleman [not lowering himself to mudslinging, etc], but it's his 'stands' on the issues that will be the deciding factor in whether or not people will vote for him.
He is rated as only having 1 to 3% support in his party [long way to go in a short period of time] and it's also been reported that his campaign fund account is bankrupt.
If you do a 'google' search on notes people have taken at some of his speeches, you will find several places where he is quoted as saying he wants either "Universal daycare" or "Federal day care".
Here is one for example:
First they make reference to his desire for the Federal government to pay for all college educations. Then he has been reported to have said that:
"[b]He also wants to extend public education in the other direction, to children ages three, four, and five. Pre-kindergarten or daycare education would be provided at existing public schools. [b]This program would be paid for by taking money from the Pentagon budget, reducing the Pentagon budget by 15%.
Those are Federal funds he wants to use to pay for this proposed 'pre-K daycare'.
posted on July 31, 2003 07:03:38 PM new
Linda - He's raised $3 million and will have fed dollars to match in January. Money is still coming in. Willie Nelson is doing many benefits concerts also.
Cheryl
Power to the people. Power to the people, right on. - John Lennon
posted on July 31, 2003 08:46:27 PM new
I don't think reducing the Pentagon budget would necessarily reduce protection of US citizens. The war we are currently fighting is being fought in part to protect US citizens. How would a 15% reduction of the Pentagon's budget affect this war, for example?
I like SOME of what Kucinic (sp?) has to say, but in the end I don't think he's electable. The only way the dems have a chance is to pick someone who can connect with the popular culture in this country the way Clinton did. It's the reason he still has so many fans, and detractors.
___________________________________
What luck for the leaders that men do not think. - Adolph Hitler
but I can't talk about it here yet.
