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Old 08-27-2018, 04:58 PM
 
1,306 posts, read 293,260 times
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https://thefederalistpapers.org/opin...ns-risks-ahead


Fed Raises GDP Growth Rate to a Blistering 4.6%; Warns of Risks Ahead
By Steve Straub
August 25, 2018 at 6:50am



The Atlanta branch of the Federal Reserve just announced that the third quarter GDP growth rate is projected to be a blistering 4.6%, up from 4.3% a few days ago:



The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2018 is 4.6 percent on August 24, up from 4.3 percent on August 16.

After yesterday’s releases on new-home sales and costs from the U.S. Census Bureau, the nowcast of third-quarter real residential investment growth increased from -4.5 percent to -1.1 percent.

After this morning’s advance durable manufacturing report from the Census Bureau, the nowcast of third-quarter real nonresidential equipment investment growth increased from 6.4 percent to 7.5 percent and the nowcast of the contribution of inventory investment to third-quarter real GDP growth increased from 1.92 percentage points to 2.03 percentage points.

This is economic growth and prosperity at an unprecedented pace. Something all of the “best people” said would be impossible if Trump won the presidency in 2016.

There are some warning signs on the horizon though.



The head of the St. Louis Federal Reserve says that continued interest rate increases could dampen growth in future quarters:

St. Louis Federal Reserve Bank President James Bullard on Friday raised new alarm bells over the U.S. central bank’s plan to keep raising interest rates, warning that even one more rate hike could set the stage for recession.

Bullard, who spoke to Reuters on the sidelines of a conference here for global central bankers and economists, said the yield curve on U.S. Treasuries suggests investors see slower growth after this year and no danger of inflation ahead.

Earlier in the day, Fed Chair Jerome Powell gave a talk signaling more interest-rate hikes are ahead, and the yield curve reached its flattest since before the financial crisis.

Part of Powell’s rationale for raising rates is that with unemployment at 3.9 percent, inflation will not stay low forever, so rates need to rise somewhat.

“The thing is, we would be deliberately inverting the yield curve, because we think our models are right and we think the market’s wrong,” Bullard said. “We don’t have to do that, we don’t have to walk the plank in this situation because inflation is not high, inflation expectations are not exploding.

“We can afford to wait and see and inflation does start to move up, well, we can move up,” he added.

So excellent news, but reason to be a bit wary and save and invest for future down times.


https://www.frbatlanta.org/-/media/d...kingSlides.pdf
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Old 08-28-2018, 12:22 AM
Status: "Living the good retired life." (set 28 days ago)
 
Location: Wasilla, AK
5,868 posts, read 3,148,828 times
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Bull crap. No way can GDP growth be that high. We were warned that if Donald Trump was elected the markets would crash and we'd be in a recession, if not a depression. Fake news.
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Old 08-28-2018, 07:23 AM
 
Location: Kansas City, MISSOURI
5,521 posts, read 1,659,914 times
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People, PLEASE don't take these Atlanta Fed GDP Now things seriously until we're at least halfway through the last month of the quarter. They have a terrible record before that.

In contrast, the NY Fed GDP nowcast has Q3 GDP at 1.96%:
https://www.newyorkfed.org/research/policy/nowcast

These things are really useless to be honest.
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Old 08-28-2018, 10:29 AM
 
508 posts, read 408,827 times
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That gdp now model is the bomb -NOT. Have you seen the adjustments from previous quarters? Oy.
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Old 08-28-2018, 04:54 PM
 
8,536 posts, read 2,392,842 times
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It truly amazes me that people see a 3, 4, or even 5% GDP growth as being automatically "good".....

For example, real wages actually fell over the last year (by a tiny amount) due to inflation eating up the small growth.

Then there is the nominal GDP (doesn't take inflation into account).....

Even if one has "numbers" in their eyes, you have to think about GDP.....in the following ways....

For a wealthy country where everyone is already fed (and 40% are overweight), "growth" can have some strange meanings. For example, if the price of gasoline goes up 10-20% (it did) and we buy just as much - GDP grows! If health care goes up, and it did, we spend more...and GDP goes up. If the US Budget deficit goes up...and it did VASTLY....we have more to spend, and GDP goes up.

The Tariffs will send GDP up as consumers pay more for things. Free money from the National Debt (tax cuts) free money means higher GDP.

If interest rates go up - and they have.....then loan and mortgage payments are higher and GDP goes up.
If we are in more wars and use more bombs, missiles, etc - yep, GDP goes up.

This is not a guess. This is reality.

IMHO, two other metrics...or more...are MUCH more important.....

1. Real wages - actually rise in wages for the bottom 90% of wage earners...outpacing inflation when all is figured in (benefits, etc.)....

2. Distribution of the gains - as mentioned, if I pay 10% more for health care and gas....I'm no better off. If the stock market grows because those oil companies and medical companies make larger profits, the VAST majority of those gains go to a very small percentage of Americans.....

In the end, this is a reminder...about the forgotten man and woman. 40 years....no wage growth while productivity almost tripled. Something is very wrong.....one can dance about what the Fed says but it puts no money in the pockets of most Americans. It just doesn't.

"The top 10% of American households, as defined by total wealth, now own 84% of all stock" - which means 90% of Americans all told, own 16%. So the rising tide lifts a lot of yachts but the dingys have been taking on water for 40 years and very little help is on the horizon (short of Medicare for all).
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Old 08-28-2018, 05:02 PM
 
1,306 posts, read 293,260 times
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It also doesn't take into account that the labor participation rate has started increasing again after years of declining because people gave up looking.
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Old 08-28-2018, 05:29 PM
 
Location: Kansas City, MISSOURI
5,521 posts, read 1,659,914 times
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Quote:
Originally Posted by craigiri View Post
For example, if the price of gasoline goes up 10-20% (it did) and we buy just as much - GDP grows!
Real GDP takes that into account and is more a measure of consumption of physical stuff rather than of dollar amounts.
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Old 08-28-2018, 06:19 PM
 
Location: ATX/Houston
1,817 posts, read 469,003 times
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Quote:
Originally Posted by Grlzrl View Post
It also doesn't take into account that the labor participation rate has started increasing again after years of declining because people gave up looking.

....is labor participation important again? I can't keep up.
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Old 08-28-2018, 10:51 PM
 
2,450 posts, read 2,116,493 times
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But... I was told that Trump would start a race war domestically, trade wars with each and every other country, nuclear war with North Korea and many other fancy ways to trash our economy. Paul Krugman told us so and he has a fancy Nobel Price, so he's real elite and knows so much more than us deplorables. Nancy Pelosi said Trump's policies would cause "Armageddon" for family finances, the American economy, and the stock market.
Instead, our economy is better than in decades and the envy of the world. Ask China, Turkey, Argentina or about any other country. Some more Fake News gems:
"Donald Trump's first gift to the world will be another financial crisis." Headline in the U.K. Independent. "(He) gives every impression that he will soon be hustling America — and possibly the entire world — in the direction of another catastrophic financial crisis." Same article.

"I have no stocks. I advise people not to invest in the stock market, not now. Way too dangerous." Film maker Michael Moore, August, 2017.

"It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover? A first-pass answer is never… So we are very probably looking at a global recession, with no end in sight." Paul Krugman of the New York Times the day after the election.
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Old 08-29-2018, 07:00 AM
 
Location: Kansas City, MISSOURI
5,521 posts, read 1,659,914 times
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Quote:
Originally Posted by Potential_Landlord View Post
Trump ... Instead, our economy is better than in decades...
It is not doing remotely close to doing better than it has in decades.

Here is GDP growth since Q1 of last year, when Trump took office:
Q1 2017: 1.8%
Q2 2017: 3.0%
Q3 2017: 2.8%
Q4 2017: 2.3%
Q1 2018: 2.2%
Q2 2018: 4.2%
------------------
Average of 2.3%

Anybody who calls that a "boom" has been drinking some serious Koolaid.
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