White House lowers economic projections

[sabra]

http://www.dfw.com/mld/dfw/business/16067733.htm

White House lowers economic projectionsJEANNINE AVERSA
Associated Press

WASHINGTON - The White House on Tuesday lowered its forecast for economic growth this year and into 2008, reflecting the drag from the housing slump.

Even with the downgrade, though, the Bush administration is predicting that the unemployment rate will turn out to be slightly lower than previously thought.

Under the administration's new forecast, gross domestic product will grow by 3.1 percent, as measured from the fourth quarter of last year to the fourth quarter of this year. That's down considerably from a projection of 3.6 percent made during in early June, but would still represent decent growth, especially given the strain on overall economic activity from the housing slump.

GDP measures the value of all goods and services produced within the United States and is the best measure of the country's economic standing.

[Nickster]

1. Hmmm, no mention of the impending recession. n/t

[0rganism]

2. but of course they do, right after the elections

not to worry about the GDP, tho, it will be bouyed by rising gas prices in the next two months.

"Now watch this drive."

[Tight_rope]

6. My thoughts exactly...right after they lost the elections...

So who is now going to bullshit the bullshitters.

[mom cat]

8. Just a koinkydink, I'm sure.

[Tempest]

3. Growth was 1.6% last quarter

And that was before the housing market really took a dump.

[unlawflcombatnt]

5. GDP growth

The article is incredibly over-optimistic about the well-being of the economy. Also completely unbelievable.

Though the initially stated 3rd quarter GDP growth was 1.6%, it has already been calculated lower. The latest revision of September's Retail Sales was reduced by $2.2 billion. This directly subtracts $2.2 billion from 3rd quarter GDP growth. This reduces 3rd quarter GDP to 1.5%.

Many economists also believe the originally stated 1.6% should have been only +0.9%, had it not been for the artifactual (and unbelievable 26% increase in auto sales. In addition to that, the GDP deflator came in at only 1.8% (or 0.018), as compared to the 2nd quarter's 3.3% (or 0.033), and the previous several quarters' deflators of over 3 (over 0.03). Since the Nominal GDP growth is divided by {1 + the "deflator}," it means nominal GDP growth was divided by 1.018 to give the real GDP growth, while the previous quarter's Nominal GDP growth was divided by 1.033 {1 + .033} to give the real GDP The result is that the nominal GDP growth in the 3rd quarter was gave a higher real GDP than it would have otherwise.

In order for annual GDP growth to come out anywhere near 3.1%, 4th quarter GDP growth would have to be at least 3.2%, and there would have to be no further downward reductions of 3rd quarter GDP. Neither is likely. And 3rd quarter GDP growth will be downwardly revised. 4th quarter GDP growth will be much lower. In fact, some economists, such as Nouriel Roubini, are calling for 4th quarter GDP growth of 0.


Economic Populist Forum

[Roland99]

10. GDP has been kept positive due to Mortgage Equity Withdrawal (MEW)

with the housing boom dropping, that source of funding (which is debt-based) is drying up:

http://bigpicture.typepad.com/comments/2005/12/chart_of_the_we.html

[unlawflcombatnt]

12. Yes

That's exactly right. Without mortgage equity withdrawal financing consumer spending, GDP growth would be under 1%. The graph at the site was interesting. It shows a negative GDP growth (excluding home equity withdrawal) for 2001 and 2002, a 1% GDP for 2004 (ex home equity withdrawal) and nearly a 0% growth for 2005. Below is a copy of that graph:



We're probably already at a negative GDP growth rate for this year if home equity extraction is excluded.

Economic Populist Forum

[stepnw1f]

4. Breaking:"White House Lowers all Expectations"

[Straight Shooter]

7. Big surprise, there. Not.

"The soft bigotry of low expectations." Wherever bush goes, he sprinkles it like fairy dust. Even the economy lowers the bar in the Dark Ages of Dubya.

[Roland99]

9. Must be from the Department of DUH!!

[VegasWolf]

11. Hardly just housing, no manufacturing base, a 10 TRILLION deficit, an

administration dedicated to a weak dollar philosophy and an imperial foreign thrust for oil. I'm not counting on the US for my retirement, my money is already moved to euros. I don't want to watch everything I worked for turn into pesos!

[texpatriot2004]

13. 1 more Rec - then to the greatest pg nm