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Ok so U.S. GDP grew at 3.9 percent and inflation is lower than expected this quarter. And though I'm not going to argue with the numbers themselves. I have to tell you, that to me something just isn't sitting right with me. Also if the economy is doing so well why did the fed just cut interest rates again? I know that the downward pressures are still there but if we actually grew at 3.9 percent this quarter. Then shouldn't the next quarter be down but somewhat close? Or maybe the Fed see a big downturn heading our way and is trying "to save the economy." Like I said something to me does not feel right.
But hey. I could be wrong. I my opinion Finance is a lot of lucky/educated guesses anyways.
Last edited by baystater; 10-31-2007 at 12:43 PM..
It is my understanding (although we have not seen the Fed statement yet) that the credit markets remain tight and continued downward pressure on the economy (from housing and energy issues) prompted the rate cut. I see no reason to be suspicious.
IMO this cut was for the market and that is it. The Fed felt the pressure and if they did not cute they would be blamed for a landslide in the S&P and Dow. They are signaling that the rate cuts are over for now, but they are still concerned about the inflation risk from the commodities.
Here's a better article about today's GDP report that discusses the quirks of national income accounting and how it turned a 10.3 percent rise in the price of imported goods into the lowest inflation figure in four decades.
They do similar things in the CPI with energy prices. They subtract the rising cost of utilities from rents and housing inflation. I suspect that they do this in quite a few product/service categories where commodities are an input.
Another way in which inflation may be being missed by the authorities is the treatment of rising costs as surcharges by certain industries. They may be being ignored altogether by the authorities. A fuel surcharge is quite a common practice.
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the article
Quote:
Originally Posted by lchoro
Here's a better article about today's GDP report that discusses the quirks of national income accounting and how it turned a 10.3 percent rise in the price of imported goods into the lowest inflation figure in four decades.
They do similar things in the CPI with energy prices. They subtract the rising cost of utilities from rents and housing inflation. I suspect that they do this in quite a few product/service categories where commodities are an input.
Another way in which inflation may be being missed by the authorities is the treatment of rising costs as surcharges by certain industries. They may be being ignored altogether by the authorities. A fuel surcharge is quite a common practice.
Excellent article. Thanks much for it. I was trying to give you a rep point but they said I have to spread the rep around to about a bazillion other people. I make sure I give you it at a later date when I can.
Baystater.
The offical economic figures don't adequately explain peoples day to day reality of being overworked, high debt, it takes two people to support a family, etc.
The Fed rate cuts are trying to pump more air into the balloon, but the balloon is going to eventually burst no matter what they do.
Yes comrade. I will question no longer. I will only speak of the greatness of the Sovie........................I mean America.
Last edited by baystater; 11-01-2007 at 09:31 AM..
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the article
