U.S. economy grow's fastest since 1984

[bfp]

WASHINGTON (Reuters) - The U.S. economy rocketed ahead at its fastest pace in more than 19 years in the third quarter of 2003 as consumers, their wallets fattened by tax cuts, went on a buying spree, an unexpectedly strong government report showed on Thursday.

U.S. gross domestic product surged at a 7.2 percent annual rate in the July-September period, the Commerce Department (news - web sites) said. It was the strongest advance since the first quarter of 1984 and more than double the second quarter's 3.3 percent rate.


The increase handily outstripped consensus forecasts on Wall Street, where most economists had looked for a gain closer to 6 percent.


Consumer spending rose at a hefty 6.6 percent pace as lower tax withholding on paychecks and child tax credit checks put more cash into shoppers' hands. It was the biggest increase in consumer outlays since early 1988.


The report was certain to be heralded by the Bush administration, which has been happy to trumpet the impact its recent tax cuts have had in spurring a sluggish recovery.


Congress passed a $350 billion White House tax plan in the spring that lowered tax-withholding rates in July and pumped out about $13.7 billion dollars in child tax credit checks in July and August.


Most economists expect growth to cool but come in around a solid 4 percent in the final quarter of the year and through 2004. But some have expressed lingering concerns that growth could falter as the tax-cut impact fades, particularly if jobs growth -- which has been sorely lacking -- does not pick up soon.


Business spending, which has been lacking even as the economy climbed out of recession, rose 11.1 percent in the third quarter, the steepest climb since the first quarter of 2000 and the second straight quarterly advance. Cuts in business spending had long been the missing link for a more broad-based recovery as firms showed a reluctance to commit to long-term spending plans.


The third-quarter increase in business investment reflected a sharp pick-up in spending on equipment and software, which moved forward at a 15.4 percent annual pace. In contrast, spending on structures dipped.


A shrinking in the U.S. trade deficit also helped growth, and ensured that sales of U.S.-produced goods and services rose at an even faster pace than GDP (news - web sites) -- a 7.8 percent increase that marked the strongest performance in over 25 years.


Government spending also rose, even though defense spending was flat after giving a big boost to growth in the second quarter.


The report also offered a sign that inflation was starting to move up after a sharp slowdown earlier this year that fueled worry over the possibility of deflation. The price index for consumer spending, excluding volatile food and energy costs, rose at a 1.8 percent annual rate, accelerating from the second quarter's 1.1 percent advance.

[Adam D]

Shove $87 Billion into any economy and watch it take off. I'm still waiting for my wallet to turn fat from all those taxes my middle class income didn't get.

You can make GDP rise in a number of ways, and I think it's pretty clear that it coming from government spending rather than tax cuts. IF it were from tax cuts, in this trickle down Reaganomics, then there should be a sharp slowing down of unemployment and job loss. Clearly, that isn't the case. Even with the economy somewhat improving, it doesn't mean it's improving for the people.

[bfp]

Originally posted by Adam D
Shove $87 Billion into any economy and watch it take off.

what do you think the tax cuts are for?

I'm still waiting for my wallet to turn fat from all those taxes my middle class income didn't get.

true, but that is coming after the tax return's come the beginning of next year. the wave of tax cut's that went through as of late was for the child tax credit. just wait. in a few years the economy will be booming.

You can make GDP rise in a number of ways, and I think it's pretty clear that it coming from government spending rather than tax cuts. IF it were from tax cuts, in this trickle down Reaganomics, then there should be a sharp slowing down of unemployment and job loss. Clearly, that isn't the case. Even with the economy somewhat improving, it doesn't mean it's improving for the people.

let's not forget that job number's are the last number's to fall into place. stop crying you big baby.

[Adam D]

Tell that to people who are unemployed.

[bfp]

Originally posted by Adam D
Tell that to people who are unemployed.

hey. it's not a perfect world. come to grip's with reality. never will their be a time with a 100% employment rate.

[Adam D]

But leaving those who need the economy to improve the most to the end is just backwards thinking.

[bfp]

Originally posted by Adam D
But leaving those who need the economy to improve the most to the end is just backwards thinking.

the Evil US of A.

[Dionysos]

Originally posted by Adam D
Shove $87 Billion into any economy and watch it take off. I'm still waiting for my wallet to turn fat from all those taxes my middle class income didn't get.

<--middle class, very happy to get that $300 check

Originally posted by Adam D
IF it were from tax cuts, in this trickle down Reaganomics, then there should be a sharp slowing down of unemployment and job loss. Clearly, that isn't the case. Even with the economy somewhat improving, it doesn't mean it's improving for the people.

It isn't an immediate effect though. It happens in due time, and it doesn't happen until sometime after the consumer & business spending rises. As it is right now new jobless claims are falling and are actually at their lowest level in nearly a year. The Employment Cost Index is also up 1 percent, which means people are starting to get raises again. The Fed is also leaving their rates untouched, and don't plan to lower it at all for at least a year. The economy is improving, but it's a slow process. I think the economy you're picturing as a rabbit is more like an elephant.

[bfp]

adam just wants income redistribution. that's all. noam chomsky told him so.

[Dionysos]

Originally posted by bfp
adam just wants income redistribution. that's all. noam chomsky told him so.

It's good to want things. Coveting is what makes our economy go.

[Adam D]

Originally posted by bfp
adam just wants income redistribution. that's all. noam chomsky told him so.

Sorry, I'm not brainwashed. Maybe someday you won't be either.

[bfp]

oooooooooooooooooooooooooooooooooooooo.......

[mc E]

i didnt get any $300 US Treasury checks when Clinton was in office......i have gotten 2 with GWB....................i hope the GDP continues to rise.....the liberals will shit themselves

[Adam D]

And under Bush, as I student, I have seen my tuition double. That's a direct result of his actions here in Texas and in the White House. I didn't see that during Clinton's tenure.

We can all make those sorts of arguments. Thanks for playing.

[bfp]

And under Bush, as I student, I have seen my tuition double. That's a direct result of his actions here in Texas and in the White House. I didn't see that during Clinton's tenure.

We can all make those sorts of arguments. Thanks for playing.

what created this surge in tuition? do you have any evidence to prove this?