Obama recession update

[Mornac]

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Recovery loses speed as consumers turn cautious
Recovery slows in second quarter to weakest pace in nearly a year as consumers turn cautious

Jeannine Aversa, AP Economics Writer
July 30

WASHINGTON (AP) -- The recovery lost momentum in the second quarter as growth slowed to a 2.4 percent pace, its most sluggish showing in nearly a year and too weak to drive down unemployment.

Weaker spending by consumers, less growth coming from companies restocking shrunken stockpiles and a bigger drag from the nation's trade deficits were the main factors behind the second quarter's slowdown.

The Commerce Department's report released Friday shows the economy grew at a 3.7 percent pace in the first three months of this year. That was much better than the 2.7 percent pace estimated just a month ago. Even so, the recovery has been losing power now for two straight quarters, raising concerns about whether it will stall.

http://finance.yahoo.com/news/Recovery-loses-speed-as-apf-2286906230.html?x=0&.v=6

[Velleity]

I have seen no logical argument that supports your accusation of an "Obama recession". None. Zero.

If you have a logical argument then please provide it. Otherwise you're just spewing more bullshit talking points and disinformation here.

[JC]

We can't verify that this was an actual Mornac post because it didn't have the words gay, homosexual, cross dressing, or novus ordo in it.

[Velleity]

We can't verify that this was an actual Mornac post because it didn't have the words gay, homosexual, cross dressing, or novus ordo in it.

Ha!

Good one JC. Thanks for the laugh on this fine morning.

[johnhp]

We can't verify that this was an actual Mornac post because it didn't have the words gay, homosexual, cross dressing, or novus ordo in it.

It does, however, blame the wrong person for the problem being discussed.  M.O. maintained.

[Pepsi]

so, Mornac, what are the causes of the recession, your opinion?

[johnhp]

so, Mornac, what are the causes of the recession, your opinion?

Good one.  You are definitely funny.

[dagon]

Good one.  You are definitely funny.

remember, mornac ALWAYS answers questions, so expect a concise response any time now.  i'm sure we'll all be wowed by his arguments

peace

[johnhp]

remember, mornac ALWAYS answers questions, so expect a concise response any time now.  i'm sure we'll all be wowed by his arguments

peace

Stop, you're killing me.

[Mornac]

I have seen no logical argument that supports your accusation of an "Obama recession". None. Zero.

--What accusation? I merely identified the recession with an adjective derived from the name of the person presiding over it.

If you have a logical argument then please provide it. Otherwise you're just spewing more bullshit talking points and disinformation here.

--There’s no “argument”. This is a news story based on the the Obama Commerce Department's report. You’re free to disbelieve their figures if you wish.

[Mornac]

so, Mornac, what are the causes of the recession, your opinion?

1) Federal taxes

2) Federal spending

3) Federal bailouts

[dagon]

1) Federal taxes

2) Federal spending

3) Federal bailouts

1. federal tax breaks for the wealthy were put in place under bush and remain in place as we speak so to the extent that this is what you mean, you've got a point.  not a sign of an "obama recession"

2.  federal spending under bush for unnecessary wars skyrockeded under bush and was in place WHEN THE RECESSION BEGAN.  again, not a sign of an "obama recession"

3.  federal bailouts were proposed and the first round implemented under bush AFTER THE RECESSION BEGAN.  again, not a sign of an "obama recession".

peace

[Mornac]

1. federal tax breaks for the wealthy were put in place under bush and remain in place as we speak so to the extent that this is what you mean, you've got a point.

--This is not what I mean. Federal tax breaks and federal taxes are two very different things. If you need me to explain the difference to you I will, but if you have to ask, chances are you won’t understand.

not a sign of an "obama recession"

--Federal tax breaks? No, you’re right. Those wouldn’t be a sign of the Obama recession (except in cases of those who don’t pay taxes).

2.  federal spending under bush for unnecessary wars skyrockeded under bush and was in place WHEN THE RECESSION BEGAN.

--Just so I understand. You accept my reasoning that federal spending fuels a recession. Is that correct?

3.  federal bailouts were proposed and the first round implemented under bush AFTER THE RECESSION BEGAN.

--Just so I understand. You accept my reasoning that federal bailouts fuel a recession. Is that correct?

[Mornac]

July 30, 2010
With Recovery Slowing, the Jobs Outlook Dims
By CATHERINE RAMPELL

There is no more disputing it: the economic recovery in the United States has indeed slowed.

The nation’s economy has been growing for a year, with few new jobs to show for it. Now, with growth at an annual rate of 2.4 percent in the second quarter and federal stimulus measures fading, the jobs outlook appears even more discouraging.

“Given how weak the labor market is, how long we’ve been without real growth, the rest of this year is probably still going to feel like a recession,” said Prajakta Bhide, a research analyst for the United States economy at Roubini Global Economics. “It’s still positive growth — rather than contraction — but it’s going to be very, very protracted.”

A Commerce Department report on Friday showed that the economy had grown at a faster pace earlier in the recovery, expanding at an annual rate of 5 percent at the end of 2009 and 3.7 percent in the first quarter of 2010. Consumer spending, however, was weaker than initially believed.

Many economists are forecasting a further slowdown in the second half of the year, perhaps around an annual rate of 1.5 percent. That is largely because businesses have refilled the stockroom shelves that they had whittled down during the financial crisis, meaning there will not be much need for additional inventory orders.

Fiscal stimulus policies are also expiring, which may further drag on growth. And individual stimulus programs like expanded unemployment benefits have faced huge political battles each time they have come up for extension in Congress.

The approaching midterm elections may further entrench the political stalemate after Congress returns from its August recess. As a result, pressure will probably increase on the Federal Reserve to use its tools to prevent a double-dip recession. Recent reports from Fed officials suggest the central bank has become increasingly worried about where the economy is headed.

American businesses, if not American households, seem to be hanging on.

The crucial driver of growth in the second quarter was nonresidential fixed investment, which covers items like office buildings and purchases of equipment and software. This sector rocketed up at an annual rate of 17 percent in the second quarter, compared with a 7.8 percent increase in the first. The equipment and software category alone grew at an annual rate of 21.9 percent, the fastest pace in 12 years.

“We’re seeing a sort of handover from consumer spending to capital spending,” John Ryding, chief economist at RDQ Economics, said “The consumer also looks to have saved more than we thought before, which means they’re perhaps further on the road to financial adjustment than we thought they were previously.”

Growth in consumer spending, which is usually a leading indicator of a recovery and which accounts for most economic activity in the United States, has been leveling off. It grew at an annual rate of 1.6 percent in the second quarter after an annual increase of 1.9 percent in the previous quarter.

The personal savings rate in the second quarter was estimated to have been 6.2 percent of disposable income, significantly higher than the 4 percent that had been estimated earlier.

A separate report released Friday by the University of Michigan and Reuters showed that consumer sentiment tumbled in July.

The fact that businesses seem to be investing more in equipment than in hiring may be a reason households have been reluctant, or perhaps unable, to pick up the pace of their spending.

“There are limits on the degree to which you can substitute capital for labor,” Mr. Ryding said. “But you can understand that businesses don’t have to pay health care on equipment and software, and these get better tax treatment than you get for hiring people. If you can get away with upgrading capital spending and deferring hiring for a while, that makes economic sense, especially in this uncertain policy environment.”

Data revisions covering the last three years were also released on Friday. These showed that, over all, 2009 and 2008 were slightly worse than previously reported, but that the first quarter of 2010 was better.

As the global economy recovers, America’s trade activity has picked up. But imports once again grew faster than exports last quarter, presenting a drag on growth. Imports spiked at an annual rate of 28.8 percent, the biggest jump in a quarter-century, compared with an annual increase of 10.3 percent in exports.

Government spending shot up more than many anticipated, growing at an annual rate of 4.4 percent after a decline of 1.6 percent in the first quarter. Public spending was broad-based, with even state and local spending increasing for the first time in a year. This may be in part because of federal stimulus money transferred to the states.

“You could see this in the monthly number for state and local construction spending,” said Nigel Gault, chief United States economist at IHS Global Insight. “Construction slows down during winter months, so stimulus may not have been doing as much earlier this year.”

Other policy initiatives, like the expiring homebuyer’s tax credit, also appear to have lifted demand. Residential fixed investment spending on items like new homes grew at an annual pace of 27.9 percent in the second quarter, after falling 12.3 percent the previous period.

“This will almost certainly reverse hard next quarter,” Jay Feldman, director of economics at Credit Suisse Securities, wrote in a note to clients.

http://www.nytimes.com/2010/07/31/business/economy/31econ.html?_r=1&hp

[IM2]

Mornac is an idiot. The only thing in recession are his brain cells.

This is what we call the Obama inheritance.