U.S. Economy Slows To A Crawl

Weak First-Quarter Growth Rate Reflects Housing And Credit Woes

(AP)  The bruised economy limped through the first quarter of this year with only an 0.6 percent growth rate, as housing and credit problems forced people and businesses alike to hunker down.

The country's economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday.

The statistic did not meet what economists consider the classic definition of a recession, which is a retraction of the economy. This means that although the economy is stuck in a rut, it is still managing to grow, even if modestly.

Many analysts were predicting that the gross domestic product (GDP) would weaken a bit more - to a pace of just 0.5 percent - in the first quarter.

Earlier this year, some economists thought the economy would actually lurch into reverse during the opening quarter. Now, they say they believe that will likely happen during the current April-to-June period.

Gross domestic product measures the value of all goods and services produced within the United States and is the best measure of the country's economic health. Voters are keenly worried about the country's economic problems and so are politicians - in Congress, in the White House and on the campaign trail.

The housing situation turned more bleak in the first quarter, as record-high foreclosures dumped more unsold homes on the market, adding to builders' headaches. Builders slashed spending on housing projects by a whopping 26.7 percent, on an annualized basis, the most in 27 years. That was the big drag on the economy.

Consumers - whose spending is vital to the country's economic health - turned much more cautious, also restraining overall economic growth in the first quarter. Their spending rose at just a 1 percent pace. That was down from a 2.3 percent growth rate and was the slowest since the second quarter of 2001, when the United States was suffering through its last recession.

Soaring energy and food prices are walloping people's pocketbooks, leaving them with less to spend on other things. The credit crunch also has made it harder for people to finance big ticket items, such as cars and homes. And, many homeowners - watching their homes - often their single-biggest asset - slump in value, also are feeling less wealthy and less inclined to spend.

Businesses, meanwhile, cut back spending on equipment and software at a 0.7 percent pace, the most since the final quarter of 2006. And, they trimmed spending on commercial construction at a 6.2 percent pace, the most since the third quarter of 2005.

However, businesses boosted their investment in building up stocks of supplies in the first quarter, a big force adding to GDP. Exports of U.S. goods and services also helped first-quarter growth. U.S. exports are being helped by the falling value of the U.S. dollar, which makes U.S. made goods and services less expensive to foreign buyers.

Spending by the government was another factor helping out GDP in the first quarter. That spending rose at a 2 percent pace for the second quarter in a row.

To bolster the economy, the Federal Reserve is expected to lower a key interest rate by one-quarter percentage point to 2 percent later Wednesday. That would mark a more moderate-sized rate reduction after a recent string of hefty cuts. Many economists believe the Fed, which started dropping rates last September, may be nearing the end of its rate-cutting campaign because policymakers don't want to aggravate inflation. Those rate reductions, which take months to affect economic activity, can sow the seeds of inflation down the road.

An inflation measure linked to the GDP report showed that prices grew at a rate of 3.5 percent in the first quarter, down from a 3.9 percent pace in the prior quarter.

Another gauge showed that the core prices excluding food and energy rose at a rate of 2.2 percent in the first quarter. That was a lower than the 2.5 percent pace registered in the fourth quarter but still outside the Fed's comfort zone. The upper level of the Fed's inflation tolerance is 2 percent.

Gas and food prices, however, have moved higher since the start of the year, adding to inflation pressures. Gasoline prices, which have recently set new record highs, have climbed to $4 a gallon in some parts of the country.

A growing number of economists believe the economy is in a recession and is indeed contracting now.

Under one rough rule, if the economy contracts for six straight months it is considered to be in a recession. That didn't happen in the last recession - in 2001- though. A panel of experts at the National Bureau of Economic Research that determines when U.S. recessions begin and end uses a broader definition, taking into account income, employment and other barometers. That finding is usually made well after the fact.

During the first three months of this year, job losses neared the staggering quarter-million mark. The unemployment rate has climbed to 5.1 percent and is expected to move higher in the coming months.

Fed Chairman Ben Bernanke, earlier this month, acknowledged for the first time that a recession this year was possible.

President Bush on Tuesday said the country was dealing with "difficult times." Bush said he understood Americans' anxiety over soaring gas prices, record-high home foreclosures and other economic woes.

The government's $168 billion economic-stimulus package - including tax rebates that started flowing to bank accounts on Monday - should help energize the economy in the second half of this year, the Bush administration and Federal Reserve officials say.

Democrats in Congress insist more relief needs to be provided, including additional unemployment benefits to cushion the pain of joblessness. The administration has resisted, saying the rebates and other stimulative efforts should be sufficient once they fully kick in.

[perceptions5]

Well this proves that we are in a "slow down" but not a recession.

To be in a recession there has to be "two quarters" of negative growth in the GDP.

So far we haven''t had one quarter of negative growth.

Does anyone know if our 110th Do Nothing Democrat Congress has any plans to address the economy.
So far they haven''t done anything....................................which is really sad indeed.

Are the making the American people suffer in order to gain more power in November?

Is the most corrupt institution in America, our mostly liberal MSM wolfpack press helping their close pals?

[rocketjl]

Maybe this report indicates we are not in a recession, because that is what they were told to say. You think.

[singingrick]

Thanks Bushies!

[lewiston14]

Does anyone know if our 110th Do Nothing Democrat Congress has any plans to address the economy.
So far they haven''''t done anything................................
....which is really sad indeed.


How can they vhen Buse vetoes everything

[oscarez]

In two are three weeks, after the impact of these stats has passed, all these numbers will be adjusted down. This is how the Bush administration works.

[mbcsmith]

Thanks Bushies!





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Posted by singingrick at 09:58 AM : Apr 30, 2008


When the LIBS took office, GDP growth was 4.5%, unemployment at 4.3%, gas was $2.35 a gallon. You''re doing a heck of a job LIBS. Keep up the congressional investigations of baseball and anything Republican. You really don''t have much else to do, right?

[lewiston14]

Get ready for $300 to $400 of more oil because Bush wont veto bombing iran. Airlines allready said if oil hits the $140 $150 range they are going to park airplanes in the deserts because even if full they loose money on every flight. A bit off topic but interesting and I can see their point. Wind power and all these other ideas wont even scratch the surface. Better start drilling somewhere very fast cause we are running out and your just seeing the start. You people are smart and can see it coming

[omega39-2009]

Does anyone know if our 110th Do Nothing Democrat Congress has any plans to address the economy.
So far they haven''''t done anything................................
....which is really sad indeed.

Posted by perceptions5 a

Riggghhhttt, ten years of Republican rubber stamping, outsourcing, war mongering, borrow and spend policies have gotten us to this point and you are blaming the Democrats that have been continually filibustered or vetoed when they have tried to implement changes. The American people are watching and the majority will know where to lay the blame come November.

[r9119111]

There is no doubt that this administration has been business oriented. We might argue that what has been done in recent years is good for business. Lower wages and benefits are good for business. Globalization is good for business. For some, business isn%u2019t doing as well as it can if ordinary people are living well and enjoying life.

Now take this administration one step beyond what is good for business. Let%u2019s consider the fine art of the shady deals, crimes and cover-ups. Now we are talking about one of the best administrations in world history. We should be very proud America, our government is doing a great job. God Bless America!
We are such a good example for the rest of the world. Aren%u2019t you proud? Doesn''''t it make you feel great knowing that your business is going great?

War is good for busines. Let''s have more of it. War! War! War! Heck of good job guys!

[lewiston14]

To be fair its not just Bushes fault its also the tree huggers. Just drill and build refineries and ignore everybody else. JUST DO IT. Heck you can build a refinery in my back yard. Two rules don%u2019t blow me up and I get to visit once in a while.

[houballfan]

Dang....what happened to that recession you keep predicting? Well, keep at it. If you talk about it long enough, people will believe the gloom and doom and you will be right.

[ora734]

Ex inflation fighter Bernacke becomes, inflation creator, the healthy of an ill banking system is paramount to inflation, but as we all knowthey don''t calculate food and gas into inflation calculations; (cooking the books) something learned from Enron. We need to take the medicine and get on with it Bernacke..... Banks and people over bought because of cheap money and your solution is more cheap money. Pure embecility, cure an ill with what causes the ill..

[lewiston14]

lewiston14 IDIOT

posted by jerryomara

Gee Jerry I always liked you

[haoli25]

A CRAWL?!?!? The economy has ''Fallen and it can''t get up''!

[lovegetpeace]

Hey omega39,
Let''s join together with 38 other states and pass a new Amendment to the US Constitution to abolish Filibuster and Veto Powers so that our Majority Congress can help us.

Then, our great leader Bush can take all the credits for what our Congress did to save us from hell. A bad leader just blames others.

[lovegetpeace]

Folks,
I am on my way to Wal-Mart to spent my Tax Rebate of $600.

Just sit and watch how our Economy is going to burn tires on the road.

[lewiston14]

Interesting NASCAR Simple answer to a complex problem

Not so hard just drill

[drinuk]

Something going on here! BBC have just reported a rise in the US economy of 0.6%, higher than expected.
Seems to me like they are giving you folks a "Snow Job" Are they lying to you or to the rest of the world AND have they yet come to terms with the WWW ?

[coppertales]

Pelosi said the new Democrat congress was going to lower gas prices when they came to power. This was supposed to happen in 100 days, remember?

As far as the housing market goes, way too many idiots bought way too much house than they could afford in their wildest dreams. The greedy bankers are at fault too by giving these idiots the money to do so.
We could do something about the gas prices if the tree huggers could be eleminated and we could commence drilling and building more refinerys.

Then we have Al Gore and his phony balony global warming. Just follow the money here.....

[lovegetpeace]

Folks,
Let''''s join together with 38 other states and pass a new Amendment to the US Constitution to abolish Filibuster and Veto Powers so that our Majority Congress can help us.

Then, our great leader Bush can take all the credits for what our Congress did to save us from hell. A bad leader just blames others.

[JJASMAN]

Thanks Bushies!

[jersupporter]

Interesting NASCAR Simple answer to a complex problem..... Posted by FloydZepp
-----------------
Typical answer from the biggest coward on this board. Never served anything but his own self-interests and burgers, fries and hot apple pies. Leaders provide recommendations and solutions, cowards like you just provide idiotic statements.

[lewiston14]

Well Floyd Learn to get over it

[quetzal0666]

Mexicos, Economi grew leaps and bounds compared to this 8 year bad streak..

[mudrose-2009]

Pelosi said the new Democrat congress was going to lower gas prices when they came to power. This was supposed to happen in 100 days, remember?

As far as the housing market goes, way too many idiots bought way too much house than they could afford in their wildest dreams. The greedy bankers are at fault too by giving these idiots the money to do so.
We could do something about the gas prices if the tree huggers could be eleminated and we could commence drilling and building more refinerys.

Then we have Al Gore and his phony balony global warming. Just follow the money here.....
Posted by coppertales

You''re catching on. See, they can''t lower gas prices - nobody can. What we can do is shore up the dollar. The dollar needs to be made stronger and I wish the Feds would stop lowering the interest rates. Al Bore and his phoney balony global warming ********* and ethanol production nonsense is driving up food prices and throwing everyone into a panic. I wish he falls into a melting glacier and freezes to death as it freezes right back. He''s making 100s of millions by pushing his ********* and Pewlosi and the rest of them have no found a new way to control the american people. Wasn''t enough coming from the EPA.

[usbrit-2009]

We could do something about the gas prices if the tree huggers could be eleminated and we could commence drilling and building more refinerys.

Posted by coppertales

Opening up ANWAR will only gain us 1-2% of the oil we need, so basically that''s a waste of time apart from lining the oil companies'' pockets a little morre. The oil shale regions of Montana hold much more oil, but it''s difficult to get at. Oil refineries assentially have to be built by the ocean or on large rivers - have you been to Louisiana lately? - precious little room there. Bazillions of people spend a lot of money to live by the coast and they''re about the NIMBY''est people I''ve ever met. So most of the coastline is out. Not much left huh?

[mudrose-2009]

We could do something about the gas prices if the tree huggers could be eleminated and we could commence drilling and building more refinerys.

Posted by coppertales

Dems won''t let it happen. Like the Fems who need to have little babies circumsized, the Dems like to have their lands prestine. Clean organs and green earth. They go hand in hand ya know.

[randynason]

Thanks, George. You''ve shown us what is truly important and meaningful in our otherwise drab and uneventful lives. You''re really cool, Bush. By the way, if the economy is so slow and the people are so poor, how come you''re so rich? Where did you get all YOUR money, buddy? Huh? What''s that?

[noloyalisti]

The only thing that is keeping our economy afloat (although I think a lot of people have already sunk) is government spending on the military occupations.

The government purposely did what it took to drive up the price of oil so the SUV-driving, suburban-dwelling, over-consuming American sheeple would support more drilling. Great, global warming is a myth anyway (according to the GOP and their corporation masters Exxon).

[bgwinnett]

This is nothing...the of the Summer is when it really starts.

[mudrose-2009]

Thanks, George. You''''ve shown us what is truly important and meaningful in our otherwise drab and uneventful lives. You''''re really cool, Bush. By the way, if the economy is so slow and the people are so poor, how come you''''re so rich? Where did you get all YOUR money, buddy? Huh? What''''s that?
Posted by RandyNason

You are really such an ***. Maybe when you get our of kindergarten and high school you can take a course in economics. You obviously don''t know jackshite about the economy.

[arlt1627]

You are really such an ***. Maybe when you get our of kindergarten and high school you can take a course in economics. You obviously don''''t know jackshite about the economy.

Posted by mudrose at 02:37 PM : Apr 30, 2008


Unfortunately we''ve tried your "trickle-down" economics which never trickled down past the middle-class Americans....who coincidentally are a dying breed in our modern American economy. Why don''t you address that one for once on her versus blasting away at all these so-called "Communists, Socialists, and welfare children" you like to defame for being understandable upset about the economy.

[mudrose-2009]

Unfortunately we''''ve tried your "trickle-down" economics which never trickled down past the middle-class Americans....who coincidentally are a dying breed in our modern American economy. Why don''''t you address that one for once on her versus blasting away at all these so-called "Communists, Socialists, and welfare children" you like to defame for being understandable upset about the economy.
Posted by arlt1627

If you''re upset about the economy then figure out the reasons for the economy taking this turn. It''s been said over and over and over and over -- HOUSING AND CREDIT CRISIS.

[forthepeopl1]

PEOPLE - - BEGIN TO RESEARCH and PROBE THIS ! ! ! !

SPECIAL "CLOSED SESSION" OF U.S. HOUSE OF REPRESENTATIVES

Word has begun leaking from last nights special,
Closed-door session of the United States House of Representatives.
Not only did members discuss new surveillance provisions as was the publicly stated
Reason for the closed door session, they also discussed :

1. The Imminent Collapse of the U.S. economy to occur by September 2008
2. The imminent collapse of US federal government finances by February 2009
3. The possibility of Civil War inside the USA as a result of the collapse
4. Advance round-ups of "insurgent U.S. citizens" likely to move against the Government
5. The Detention of those rounded-up at "REX 84" camps constructed throughout the USA,
6. The possibility of retaliation against members of Congress for the collapses
7. The Location of "safe facilities" for members of Congress and their families
To reside during expected massive civil unrest
8. The necessary and unavoidable merger of the United States with Canada
(for its natural resources) and with Mexico (for its cheap labor pool)
9. The issuance of a new currency - THE AMERO -
For all three nations as the proposed solution to the coming economic armageddon.

Members of Congress Have Been FORBIDDEN to reveal what was discussed
Several are so furious and concerned about the future of the country,
they have begun leaking info.

[arlt1627]

If you''''re upset about the economy then figure out the reasons for the economy taking this turn. It''''s been said over and over and over and over -- HOUSING AND CREDIT CRISIS.

Posted by mudrose at 03:28 PM : Apr 30, 2008


You think people should be happy about it?? It is a combination of factors. #1: People were greedy and bought more than they can chew. #2: NO Fed Regulation on mortgages/banks led to subprime companies looking to speculate for a quick buck. #3: Idiotic war has compounded gas prices & helped with inflation of prices compounding the problem. Then people like myself (savers, investors, doing all the right things)get hosed because my home value decreases because of the homes around mine have plummeted. That is why I''m upset. It''s not solely one group''s fault, and not mine, but there is nothing I can do about others'' greed and that upsets me.... But we need to regulate housing & credit in the future!! That''s a start!

[lovegetpeace]

Hey Mudrose,
Let''''s join together with 38 other states and pass a new Amendment to the US Constitution to abolish Filibuster and Veto Powers so that our Majority Congress can help us.

Just Imagine, our great leader Bush taking all the credits for what our Congress did to save us from hell. A bad leader just blames others and never take any responsibilities.

[naucoming4u]

That is why I''''m upset. It''''s not solely one group''''s fault, and not mine, but there is nothing I can do about others'''' greed and that upsets me.... But we need to regulate housing & credit in the future!! That''''s a start!

Posted by arlt1627 at 03:34 PM : Apr 30, 2008
...........

You really hit the nail on the head with that post!

I totally agree, and I am in the same boat as you.

Greed, however, can be curtailed... as you mentioned... through REGULATION!

(But the Neo-Cons do not want regulation because it curtails their greed... and they get pissy when that happens... as demonstrated by some posters on these boards).

[mbcsmith]

(But the Neo-Cons do not want regulation because it curtails their greed... and they get pissy when that happens... as demonstrated by some posters on these boards).


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Posted by NAUcoming4U at 03:45 PM : Apr 30, 2008


Nah, we just don''t like self-righteous LIBS destroying our freedoms

[mbcsmith]

Members of Congress Have Been FORBIDDEN to reveal what was discussed
Several are so furious and concerned about the future of the country,
they have begun leaking info.




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Posted by forthepeopl1 at 03:31 PM : Apr 30, 2008


Ok, who left the door to the looney bin open again?

[mudrose-2009]

Ok, who left the door to the looney bin open again?
Posted by mbcsmith

We have to be a little smarter. It''s swings both ways.

[georgew1956]

how can a president stand at a press conf- and know

that 73% of the voters hate his guts and still try to

makes silly jokes.

[inventagod2]

I really miss Clinton...

We tried to warn you, we really did...

[mudrose-2009]

how can a president stand at a press conf- and know

that 73% of the voters hate his guts and still try to

makes silly jokes.

Posted by georgew1956

Because he knows that 71% of the voters hate the Congress too.

[mudrose-2009]

Posted by lastdance116

The truth always sucks for a habitual liar. :^)

Posted by FloydZepp

[dinkydog1]

The latest rate cut will only cause the dollar to lose even more value and increase inflation, the end result of of Bush''s runaway spending.

[mudrose-2009]

The latest rate cut will only cause the dollar to lose even more value and increase inflation, the end result of of Bush''''s runaway spending.
Posted by dinkydog1

The economy is in the tank not because of bush but because of the housing crunch and credit crisis. I really wish you''d people take an economics course. You are talking out of your behinds.

[dinkydog1]

The latest rate cut will only cause the dollar to lose even more value and increase inflation, the end result of of Bush''''''''s runaway spending.
Posted by dinkydog1

The economy is in the tank not because of bush but because of the housing crunch and credit crisis. I really wish you''''d people take an economics course. You are talking out of your behinds.


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Posted by mudrose at 04:55 PM : Apr 30, 2008
+ report abuse

............

I did''t say the economy was in the tank or mention a cause. If you will take an economics course you will find massive deposite spending always leads to inflation, always has always will.

[mudrose-2009]

I did''''t say the economy was in the tank or mention a cause. If you will take an economics course you will find massive deposite spending always leads to inflation, always has always will.
Posted by dinkydog1

What''s massive deposite spending?

[hypnotoad72]

From the peanut gallery, a LOT of people are increasingly hesitant to even get a loan to go into sciences, maths, or IT. Why? Because it''s all being offshored, there''s no "profit" much less means to save, nor means to pay back the loans efficiently on top of the cost of living. $80k to get a Bachelors degree for a job that pays... $12 per hour.

Our system is choking itself. Will anybody look at the core reasons and see what can be turned around?

Oh. The last I looked into education; an Associates Degree was $40k. (Such jobs requiring one pay $30k, and many are being offshored anyway.) For the sake of crude estimation, I guessed a Bachelors degree is $80k.

People understand loans, but we also see "Return on Investment" the same way corporations do when eyeballing other countries for "cheap" labor, that gives them wages they can live on and prosper to. Those same wages can''t even let ONE individual live in this country.

Please correct me if I''m wrong.

[bobnjersey]

[The economy is in the tank not because of bush but because of the housing crunch and credit crisis. I really wish you''''''''d people take an economics course. You are talking out of your behinds.]
[Posted by mudrose at 04:55 PM : Apr 30, 2008]

so are you. the deflated dollar has little to do with the housing crunch or credit crisis. most of the increase in the cost of a barrel of oil is due to the falling value of the dollar.

the bushies are using a ''debt based model'' for paying for things ... instead of a ''income based model''. continuing to lower interest rates ... pumping more dollars into the economy is a fast track to create an unsustainable imbalance between income and assets ... as wages fall (lower income jobs) this gap increases ... until ... a reconciliaton where these align again (via recession/depression or sudden dollar devaluation).

he can always claim he didn''t understand ... and nobody would disagree ... but that doesn''t make it not his problem to address.