US Economy Grows Faster than First Thought!

Imran Siddiqui · February 28, 2003, 14:02

http://story.news.yahoo.com/news?tmp..._fi/economy_30

The economy grew at 1.4% in the final quarter of 2002, which is twice as much as estimated earlier. Perhaps the economy isn't 'going down the tubes' after all, and we'll continue with sluggish growth instead of recession.

Urban Ranger · February 28, 2003, 14:03

It all now depends on whether there will be a Gulf War II.

Az · February 28, 2003, 14:13

Did the economy grow 1.4% on an annual rate, or just the quarter?

DuncanK · February 28, 2003, 14:19

Quote:

Originally posted by Azazel
Did the economy grow 1.4% on an annual rate, or just the quarter?

For the quarter. The years growth is slightly higher.

DuncanK · February 28, 2003, 14:22

The thing that I noticed was that business spending increased, but only for new equipment. Business spending on new facilities to increase capacity continued to fall. This means there will be more lay offs as businesses try to improve productivity to cut costs. They are trying to get lean for a recession. This could be the reason the consumer confidence is so low. People are losing jobs.

Az · February 28, 2003, 14:23

IF it continues, it is actually a very healthy rate of growth.

DanS · February 28, 2003, 14:34

The years growth is slightly higher.

2.4%. Not that great, but not that bad.

Az · February 28, 2003, 14:54

It is OK, esp. in relation to other economic powerhouses.

Nubclear · February 28, 2003, 14:56

I read somewhere than Chinas annual growth is up at 6-9 percent.

el freako · February 28, 2003, 15:42

Quote:

Originally posted by Azazel
Did the economy grow 1.4% on an annual rate, or just the quarter?

That 1.4% was at an annual rate - I think that DuncanK got confused and thought you meant the growth rate over the same period the previous year (which was 2.9%).

And please remember that, due to differences in measuring inflation (and thus growth), that the US's growth rate is overstated by around 0.5% relative to most other major economies (France and Australia excepted).

Sten Sture · February 28, 2003, 15:51

(delayed simul-post)

China was 8.2% for '02 and 6.6% for '01, and is projected to run 7-8% for the next couple of years. It helps that they are starting from a very small base.

The Q4 US number of 1.4% is the seasonally adjusted growth rate for the quarter if it is annualized (and after inflation) which is a little different than saying that the economy grew 1.4% during the quarter. It can also stair-step a little because of the difficulty in doing seasonals.

Overall the 2.4% for the year (adjusted down from 3.7% by inflation) is not too bad, and definately better than the economy 'feels' which is typical for the early stages of recovery.

also edit: the inflation difference that el freako mentions are called Hedonic Deflators, and basically mean that there should be a quality adjustment for a price increase - if you buy a car that costs 10% more than a car did 5 years ago, but it gets twice the gas milage and has more do-dads, then maybe the price didn't really increase 10%, you just got more stuff. This is especially troublesome with computers, due to the dramatic changes in technology.

Az · February 28, 2003, 15:59

Quote:

That 1.4% was at an annual rate - I think that DuncanK got confused and thought you meant the growth rate over the same period the previous year (which was 2.9%).

And please remember that, due to differences in measuring inflation (and thus growth), that the US's growth rate is overstated by around 0.5% relative to most other major economies (France and Australia excepted).

1.4% annual: now that makes sense! because 1.4% growth in a quarter is actually a very good growth rate. I think.

Sten Sture · February 28, 2003, 16:04

It makes you really cool to use the word SAAR, for seasonally adjusted annualized rate.

I work with a bunch of dorks!!

DuncanK · February 28, 2003, 16:20

Quote:

Originally posted by el freako

That 1.4% was at an annual rate - I think that DuncanK got confused and thought you meant the growth rate over the same period the previous year (which was 2.9%).

And please remember that, due to differences in measuring inflation (and thus growth), that the US's growth rate is overstated by around 0.5% relative to most other major economies (France and Australia excepted).

The economy grew faster that 1.4%. It seems like 2.9% is about right for last year. The number is 'annualized' not annual. I'm not exactly sure what that means, but the economy certainly grew faster than 1.4% for the year. The annualized growth rate for the third quarter was 4%.

edit: I just realized that Sten already stated that the annual growth rate for the year was 2.4%.

el freako · February 28, 2003, 16:57

Quote:

Originally posted by DuncanK

The number is 'annualized' not annual. I'm not exactly sure what that means

According to the
BEA GDP was $9,485.6bn in the 3rd quarter and $9,519.5bn in the 4th (seasonally adjusted at an annual rate and at constant 1996 prices) - a rise of 0.36% on the quarter.

Annualized growth is what would happen if that 0.36% happened for four quarters (i.e. a for a year) - that equates to the 1.4% you have seen quoted.

GDP in the 4th quarter of 2002 was 2.9% higher than in the 4th quarter of 2001.
GDP in 2002 (the total for the whole year) was 2.4% higher than in 2001.

I hope this enlightens you as to what is meant by the various ways of measuring the growth in GDP.

That said please remember that is is a first estimate of GDP growth for the year as a whole and in previous years the first estimate has been revised down substantially.

Year, 1st estimate of growth, estimate after 1 year, estimate after 2 years

1999: 4.4%, 4.1%, 4.1%
2000: 5.0%, 4.1%, 3.8%
2001: 1.1%, 0.3%
2002: 2.4%

Wraith · February 28, 2003, 17:28

Just thought I'd toss this e-mail out for those who haven't seen it. Although, this link will probably be Slashdotted very soon.

Wraith
"There are two times in a man's life when he should not speculate: when he can't afford it, and when he can."
-- Mark Twain

DanS · February 28, 2003, 17:53

This one's funny...

- US unilateralism is seen as arrogant, bullyish. If the U.S. cannot behave in partnership with its allies -- especially the Europeans -- it risks not only political alliance but BUSINESS, as well. Company leaders argued that they would rather not have to deal with US government attitudes about all sorts of multilateral treaties (climate change, intellectual property, rights of children, etc.) -- it's easier to just do business in countries whose governments agree with yours. And it's cheaper, in the long run, because the regulatory envornments match. War against Iraq is seen as just another example of the unilateralism.

Oh, like they're going to remove themselves from the largest market in the world. Riiiiiight. Sounds like they can't hack the competition to me.

I learned that the US economy is the primary drag on the global economy, and only a handful of nations have sufficient internal growth to thrive when the US is stagnating.

We're the drag? Riiiiight. Couldn't be Germany or Japan, could it?

DuncanK · February 28, 2003, 18:55

el freako,

I should have said annualized growth rate.

Wraith · February 28, 2003, 20:33

--"We're the drag? Riiiiight. Couldn't be Germany or Japan, could it?"

I did find that line particularly amusing. The way she phrases it makes it sound more like she considers the US to be the one driving the global economy, and is upset that everyone isn't being dragged along in our wake at the moment.

Wraith
Maybe I don't FEEL like smiling

DuncanK · February 28, 2003, 20:55

It's part of the Anti-US feeling. They hate that we have the biggest market and they have to play our game. They would like to see another market come to dominate.

Comrade Tribune · February 28, 2003, 21:11

Quote:

Originally posted by Imran Siddiqui US Economy Grows Faster than First Thought!

The US Economy grows faster than your first thought?

Why doesn´t that surprise me?

Just joking, not trolling.

DanS · February 28, 2003, 21:15

Even if another market came to dominate (possible), only a broke fool wouldn't focus a large amount of resources on the US market.

They're just pissed with bad experiences in the US. It's a tough market. But it's also extremely rewarding if you succeed.