Economy has slowest growth since 2002

[CMF Newsman]

WASHINGTON - The economy nearly stalled in the first quarter with growth slowing to a pace of just 0.6 percent. That was the worst three-month showing in over four years.

The new reading on the gross domestic product, released by the Commerce Department Thursday, showed that economic growth in the January-through-March quarter was much weaker. Government statisticians slashed by more than half their first estimate of a 1.3 percent growth rate for the quarter.

The main culprits for the downgrade: the bloated trade deficit and businesses cutting investment in supplies of the goods they hold in inventories.

"We are still keeping our head above water — barely," said economist Ken Mayland of ClearView Economics.

story

[legaltender]

slashed by more than half their first estimate of a 1.3 percent growth rate for the quarter.

That's well outside the margin of error. Somebody lied.

How does the stock market keep setting records with flat growth and 30-year-old males making less than their dads did, in adjusted dollars?

[daworm]

Most people don't work for companies that are listed in the stock market, for one thing.

And perhaps a lot of those 30-year-old males deserve to make less than their fathers because they are no longer willing to work as hard for a living, and weren't willing to start at the bottom when they were 20-year-olds so that they could have worked their way up over the last 10 years. Oh, I don't have any "studies" or "statistics" to back that up. But it is a valid opinion, I think.

[traveler]

In large part, the slowdown can be attributed to the "New Congress" and frequent talk of tax increases and higher domestic spending. People are now hunkering down and holding on to capital....and slowing the economy in the process.

[el Gusano]

Funny to read "the economy growth is slowing" with so many people shrieking about how terrible the economy is and how we're in a recession.

I know we're not and I know the economy is good, but the MSM certainly has people scared. About half the people I work with think we're in a recession.

[Dreamwebber]

Call me naive but, could it have to do with the very high gas prices and the consumers not having as much disposible income? I know for me personally gas costing me 47 a week (now that I commute) plus the grocery bill seems so much higher lately..the money I do have left over is going to my bills.

Gas prices have to be effecting the lower financial class because sales at Walmart and some of the discount stores like Target, Kmart etc have been sluggish. In fact according to an article in the May 10th edition of the WSJ Walmart sales are the weakest in 28 years. online.wsj.com/article/SB117880185064598518.html?mod=googlenews_wsj

[daworm]

16 gallons (one tank) a week @ $2 a gallon = $1664 a year
16 gallons (one tank) a week @ $3 a gallon = $2496 a year

If $832 a year (an extra $16 a week) is breaking you, you've got bigger problems than the price of gas.

[Dreamwebber]

Well I also switched from having 2 jobs a month ago so, that has been a 1000 a month adjustment

[daworm]

I really wasn't specifically meaning "you", Dream. However, it irritates me to see so many people claim that gas prices are keeping them from doing this or that, but you never see real world numbers. Oh, you'll see something like "Gas prices up 33% from two years ago." But what does that mean? 33% more than nothing much is still nothing much.

Also, I am aware that I am only looking at the price of gas itself, not the price of goods which have gone up due to increased shipping costs or because they are made with petroleum products. But, as far as a direct impact on our wallets, gasoline prices are the biggest factor, all the others combined aren't even close.

Now, if we were in Europe (where for some reason everyone here thinks things are so much better because they have universal health care), a 33% rise would take you from $7.50 a gallon to $10 a gallon. That I can see as being more burdensome. Back when I worked at Shoney's, it would have seriously curtailed my beer drinking...

[Dreamwebber]

I can't speak for how it doesn't affect you personally but, say for instance in Chattanooga you make 10.00 hr which is a pretty good pay for most jobs that don't require a degree. If you have to put 50.00 in your car in gas a week that is 5 hours of work (give or take with taxes) a week. Lets say that gas is 3.00 gallon.

A couple years ago the gas price was 1.50. Basically you could get the same amount of gas and spend only 25.00 instead. With that extra 100.00 a month you could have gone out to eat, bought a few things at Walmart, go to the movies, pay your cell phone bill etc.

Sure 1 person not that much impact but, 10 people in that situation 1,000 a month, 100=10,000, 1000=100,000 etc etc

You get my drift. Gas is not the only economic factor of course but, I do think for some families it has impacted quite a bit.

You hear all the time that people need to switch to cars that get better gas mileage etc. In a perfect world where cars were free many people would but, in my world as long as my car runs and I don't have a car payment I am going to stick with what I got.

[snarkalicious]

Not to mention that the price of groceries, services, etc are going up in response to inflated gas prices.

[daworm]

Dream, 1 person is all that I am talking about here. 10 people, 100, etc. might affect an industry, but I am talking strictly on a personal level. Of course, here is where I have to pick on you a little...

With that extra 100.00 a month you could have gone out to eat, bought a few things at Walmart, go to the movies, pay your cell phone bill etc.

All luxuries. And all a result of someone making "10.00 hr which is a pretty good pay for most jobs that don't require a degree." In other words, poor decisions lead to poor outcomes. Imagine that! Who would have thunk it? Which brings me back to my original statement:

If $832 a year (an extra $16 a week) is breaking you, you've got bigger problems than the price of gas.

- - -

Not to mention that the price of groceries, services, etc are going up in response to inflated gas prices.

Snark, did you even read my post? Paragraph two specifically mentioned just those things.

[Dreamwebber]

Well surely everyone has a right to some type of luxury. Some can have luxury cars like ONE others of us can have a single burger from Wendy's

Anyway, my original post was in regard to the original post and why the economy might be slowing. Hey I have heard dumber reasons than mine from economic analyists on Fox news who get the big bucks ;D

[el Gusano]

If your car gets 15 MPG and you buy a new Corolla that gets 42 MPG, how much does that save you per month? Could you buy a new car with what you save?

[Deleted]

But when the time comes for you to finally replace that 15 mpg car, why not replace it with a 42 mpg car? Please.

[el Gusano]

But, if you assume you drive 200 miles per week, at 15 MPG, that's about 13.3 gallons of gas. At 40 MPG, that's only 5 gallons. At $3 per gallon, that's a savings of about $25 per week, or $100 per month. That's 130 months to completely pay for the new car just on that savings alone.

What about vacations? What if the price goes up? What if you drive 400 miles per week? Etc., etc.

So, it may not be worthwhile to do it while your car is running well, but before you put $2000 worth of work into a $3000 car, think about it. Right now, I'm planning on keeping my van until it needs some major repair. But, if I can get $2500 out of it, I'd probably take it.

Edited to add: Of course, Oregon is cashing in on this and trying to impose a mileage tax, based upon your GPS info from your little black box, to make up for the loss in gas taxes from these new efficient vehicles.

[Deleted]

Since when do the little black boxes have GPS info? Citation, please?

[el Gusano]

They have only been installed on 400 cars so far.

But, a liberal has never met a tax he didn't like, so Washington is thinking of following suit, but in addition to the existing tax.

Oregon's Mileage Tax Idea

[TNBear]

As another way to look at the situation: in 1970 I was pumping gas at 19-20 cents per gallon. I was earning $1.75/hour, a dime above minimum wage because my older brother owned the station.
Today I earn about 10 times that wage but gasoline, depending on the part of the country, is running 15 to 20 times what I was selling it for then.
Somehow this seems like a net loss to me, but perhaps an economist or oil company apologist can explain it to me.
Oh yeah, and how long has it been since an oil company has built a new refinery?

[Dreamwebber]

My car gets about 27-30 mpg...or it did...as it ages I think it gets closer to 25-27. When I do need another I plan to go diesel.

But, until I am paying more than a car payment to get it fixed each month I am going to drive it until it dies.

[daworm]

Oh yeah, and how long has it been since an oil company has built a new refinery?

They are not allowed to, at least not in the US.

[legaltender]

Congress passed legislation in 2005 to streamline the permitting process to encourage new investment in domestic refineries. Bush offered military bases to house them.

Investors don't see the long-term benefits when overseas refineries undercut their margins.

[daworm]

They also don't see building refineries far, far away from where the oil is either. But we can't drill where the oil is, either.

[legaltender]

What? The crude is still either off-loaded in U.S. ports or manufactured here. Bush offered closed military bases for new refineries and got no takers. Higher margins and better returns are the absent incentives, not exploration.

[daworm]

Read: Alaska

[legaltender]

Tell us how ANWR solves the refinery shortage. If you're saying environmentalists are responsible for refining capacity shortage, I'd agree, but only in part. The degree of energy-intensive growth in developing economies is by far the most important factor driving energy prices today.

[daworm]

Oh, I'd agree with that. But the fact is, we are not utilizing our resources, and that makes our dependence on foreign oil worse. Opening up ANWR or nearer to shore offshore sites won't eliminate our foreign dependence, but it would mitigate the effects.