Economy Growing, But Less Than Expected

(CBS/AP)  The economy grew at a 2.2 percent pace in the third quarter, as the recovery got off to a weaker start than previously thought. However, all signs suggest the economy will end the year on stronger footing.

The Commerce Department's new reading on gross domestic product for the July-to-September quarter was slower than the 2.8 percent growth rate estimated just a month ago. Economists were predicting that figure wouldn't be revised in the government's final estimate on third-quarter GDP.

The main factors behind the downgrade: consumers didn't spend as much, commercial construction was weaker, business investment in equipment and software was a bit softer and companies cut back more on inventories, according to Tuesday's report.

GDP: Third Quarter 2009 (Bureau of Economic Analysis, 12.22.09)

Despite the lower reading, the economy managed to finally return to growth during the quarter, after a record four straight quarters of decline. That signaled the deepest and longest recession since the 1930s had ended, and the economy had entered into a new fragile phase of recovery.

Many analysts believe the economy is on track for a better finish in the current quarter.

The economy is probably growing at nearly 4 percent in the October-to-December quarter, analysts say. If they're right, that would mark the strongest showing since 5.4 percent growth in the first quarter of 2006 - well before the recession began. The government will release its first estimate of fourth-quarter economic activity on Jan. 29.

Yet even such growth wouldn't be enough to quickly drive down the unemployment rate, now at 10 percent. High unemployment and tight credit for both consumers and businesses are expected to continue to weigh on the economic recovery. Many economists predict the economy's growth will slow to a pace of around 2 or 3 percent in the first three months of 2010.

Growth in the final quarter is expected to be driven by companies restocking depleted inventories. Stocks of goods were slashed at a record pace during the recession. So even the smallest pickup in customer demand will force factories to step up production and boost overall economic activity in the final quarter.

Stronger sales of exports to foreign customers, as well as spending by U.S. consumers and businesses, also will help underpin fourth-quarter growth.

[nopatriot]

The reason why, simply still in war.
USA militants kill people terrorists or not, it is really old fashion to do this way, but not finding new solution so far. In 80 years, some countries became so peaceful under the USA pressure , those countries find out own peace. But USA is not . Look, some European countries used to have colony and USA claimed " USA is the freedom countries, and let you independent and help you to do." but the fact, USA army bases everywhere in the world and taking money from those countries, call parasite army.( Isn't it good joke?)
Do not get wrong way, as much as USA government stand this way, USA people are hired by the government, they are despatched to those countries, those soldiers make friendship in the countries.
But USA government are not friendly. They tend to do friendly fire but they are not friendly to other countries so far.
OK, killing USA friends with friendly fire and killing foreign friends without realize they are terrorists or not.
Randomly fire and burn the houses and kids and babies and women and men.
But they don't feel anything. It is the war.
And ... world money makers dislike USA war and don't put money on USA, that's why no jobs no money.
do you know how much yen is strong now? stronger than dollars nowadays.
Because USA did not change anything and world people put money on peaceful practical colony like Japan,
isn't it?
If USA wants to have economy , do not continue old fashion with same brain level.
Be smart be peaceful be human , be honest, should not ignore anybody want to see and talk peacefully, even it opposes to USA WAR policy.
Anti- America means Peaceful people.
Anti- America is not only meant as terrorists.

[berlinfoto-2009]

As Henry Ford discovered, he could sell more cars if his employees could afford to buy them, more pay for people who work, and more people working.
Real unemployment well it ain't 10.2 percent. As a photographer, when I was living in the United States, I was dependent on so many foreign made items. Lens made in Japan or Germany, Camera, made in Switzerland, Sweden or Japan, Studio Electronic Flash Switzerland, Camera Stand Switzerland, Light Stands and Tripods, France or Italy, also many small items are also imported. Unlike other Photographers I did use USA Film, Kodak.
Some of these Items could be sourced from manufactures in the US, but the quality simply was not there, not in the design, not in the manufacturing, if it had been then I would have use US made items.
America must get back to work, tariff will help, but that is not the total answer. America must get rid of poor leadership, and the poor leadership I am speaking of started in about 1947.
This leadership that that I am speaking of, only works by negativism, destroying what they do not like, world wide, also within the United States. There are millions of people over employed in the US that are propped up the same way as foreign dictators are. No wonder the economy does not work.

[prospector44]

WW2 did not end the Great Depression. Tariffs (import duties) and jobs for the American people ended the Great Depression. There can be no prosperity without jobs. Good paying jobs bring prosperity---nothing else. --- Regards, The Old Prospector ---

[Dreadnut]

The lukewarm 2.2 GDP is nothing but a dead-cat bounce. There had to be some "growth" eventually, as certain segments of the economy had contracted so much.
Right at this moment, the Dow has peaked at about the 10,500 level. Look at the charts, it keeps meeting resistance at this level, creating multiple peaks, a strong sign of weakness. When the big money realize they can't get anymore positive moment on equities, they will dump their holdings, your 401K will follow. Expect Dow 8000 or so six months from now. It has to re-test the significant low of 6500 reached earlier this year. It will pass this test (I hope..) and continue to climb, but at a sustainable line, not a hyperbolic curve. It will be a long road to recovery.
Politically, with unemployment at 10 percent, actual unemployment at 18 percent, disproportionately among white males in manufacturing and construction, expect major Democratic loses in 2010.

[formrusmcsgt]

However, all signs suggest the economy will end the year on stronger footing.
----
Neocons scream about the economy when dubya left it shrinking and Obama has it expanding again in less than a year.

Go figure.....

[mingy62]

Are the predictions of growth coming from the same rumpswabs who predicted the third quarter growth?

Will CBS News ask a few tough questions of the WH and (gasp) President Obama, like what he thinks now about his praise of a statistic now known to be false? Or perhaps use this as a hook to raise the issue of where the unemployment rate is now vs where he claimed it would be if he got his stimulus passed?

After all, CBS ran stories that superimposed a dropping stock market next to speeches by Bush : "As he was speaking, the markets were dropping."

Gee, as Obama claimed recovery, the numbers were being revised downward.

Fair is fair in the house that Murrow built. Right?

[krisd999-2009]

Pure fiction..which sectors of the economy grew so much to compensate for the 40% drop in real estate and autos?

[ibsteve2u]

The question, of course, is did the neoliberals among the Democrats and the entire Republican Party sacrifice fully a tenth of the American people to permanent unemployment?

Did they, in their greed, use "flood-up/trickle-down" economics, deregulation, and inequitable free trade to create a new class of disposable Americans?

lolll...sometimes when I consider this wave of vampire movies and television shows, I have stray thought that the subconscious minds of the creative types in Hollywood are screaming the truth: The right, too, are vampires (not just economic ones, but literally), and they've been working to create a class of Americans who nobody will miss...

Whacky, huh?

[sean56v]

American GDP is low due to Dubai's $60 billion debt. A chapter bankruptcy by Dubai will seriously eliminate their red ink. Conservative hedge funds are a good investment for Dubai. The Obama Admin must consider paying-off the federal budget deficit. This nation must proceed with confidence.

[zootsuithap]

w's $60B debt vs o's $700B????

[ffoulkes-2009]

not dubya..dubai...sheesh

[Empire-George-]

by Dave_P6 December 22, 2009 12:38 PM EST
You have no idea what you're talking about. Unemployment went down last month
_______________

There is nothing to celebrate, when unemployment goes from 10.2% to 10.0%

Sure, it went down....but certainly not low enough to be making any claims of recovery