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GDP on the rise

GR2010012902038.gifGDP growth was rocking last quarter, soaring to a 5.7 percent annualized rate. As you can see on the graph to the right, that's a big change from recent trends. But many economists are advising that we ignore the topline number, which was driven primarily by the restocking of diminished inventories and is thus a temporary phenomenon, and focus instead on so-called "final demand," which is the more stable basis for economic growth. And that was a less impressive 2.2 percent.

What we're seeing is improvement. But it's not clear how much we can extrapolate about recovery. Jobs are still lagging far behind. And the big question mark is whether demand will settle at a new, lower level as households end the unsustainable credit binge that drove spending for the last decade. If that happens, then growth, and jobs, will be anemic far into the future.

By Ezra Klein  |  January 29, 2010; 11:31 AM ET
Categories:  Economy  
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Comments

Prediction #1:

Dems will take 100% of the credit for this bottoming out of the negative GDP

Dems will continue to blame George Bush for the low job numbers even though those similarly have "bottomed out".

Proving politically you can have your cake and eat it too!

Posted by: visionbrkr | January 29, 2010 11:45 AM | Report abuse

Prediction #2:

Republicans will forget these figures (that are an improvement) and continue to point to jobs as the true figure of how the economy is doing.

Posted by: visionbrkr | January 29, 2010 11:49 AM | Report abuse

This ANNUAL rate is like,
taking an advance on your
credit card, and putting
it in your checking account.

your checking balance looks
great. your real situation.
bleak.

This is a BB big brother,
barack o Bama attempt to
trick people into feeling
better and spending.
unwisely, like they are doing.

Posted by: simonsays1 | January 29, 2010 11:50 AM | Report abuse

Inventories were REDUCED less
then had been projected.
the only thing Rocking,
is all your empty heads.

where is the journalism?
these numbers come out,
and get 'revised' down,
look at our Rocking GDP
last quarter.

revised down 37%.

washington is lying.

Posted by: simonsays1 | January 29, 2010 11:53 AM | Report abuse

The loons are out today! Next, we'll hear:

The stimulus didn't do anything!

And GDP growth shows we need to stop the stimulus!

Posted by: AZProgressive | January 29, 2010 12:00 PM | Report abuse

It's still booming compared to Britain, which had a 0.1% rise in the last three months.

Posted by: KathyF | January 29, 2010 12:02 PM | Report abuse

Investors big and small, who put their money on the line and have "skin in the game", know that these numbers do not indicate much good about the economy. NPR hacks trumpet that "economy came roaring back." If that were so the Dow would not be up a miserable 3 points. Big whoop.

Posted by: truck1 | January 29, 2010 12:02 PM | Report abuse

Guys- I work in finance. The reason the market is not moving today is that this was very well forecast.

In general it's inaccurate to point to a one-day price movements.

Posted by: Quant | January 29, 2010 12:15 PM | Report abuse

Remember that last quarter's figures were initially very high and then were revised way down. This quarter's may be as well.

Posted by: tomtildrum | January 29, 2010 1:14 PM | Report abuse

True demand growth will be limited, since incomes are not increasing (1.5% in past year, including benefits -- so after health care, basically nothing). Chicken/egg. Incomes won't increase without more jobs, demand for workers -- thus rising wages.

Unless, we can figure out how to get everyone to BUY ON CREDIT!!! Brilliant! I should run the fed.

Posted by: rat-raceparent | January 29, 2010 1:20 PM | Report abuse

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