Economy slows in 4th Qtr

[Jimmy Higgins]

The economy slowed to a 1.1% annual growth (http://news.yahoo.com/s/nm/20060127/bs_nm/economy_gdp_dc) in the 4th quarter. This caught many by surprise. Some blame Katrina and Rita for the slowdown, though 3rd quarter growth was much more robust. First quarter numbers will be interesting. With very high energy prices, both gasoline and oil/natural gas for heating, how consumers will be able to spend when putting so much money into being warm and driving is yet to be seen. Add this to the ballooning deficit in DC thanks to Bush's tax cuts first, spending cuts never or neglible approach, and we've got a recipe for a continuing flat economy for some years to come.

Then add on that interest rates are increasing will slow down the housing market and auto sales, and also effect consumer spending as credit debt becomes more expensive to manage. Newer college graduates will also have less money to spend as interest rates on their own college loans will take more from their pockets.

The US has some serious economic issues to deal with. Bush is still of the mindset that tax cuts solve economic problems despite the fact we still haven't paid off Reagan's cuts yet! Anymore tax cuts and this country is in a heap load of trouble. We, as a nation and as individuals, can afford no more debt.

[Pilgrim]

AS of yesterday at 3 pm our national debt was $8,192,013,210,211.28. Yikes!

[SteveF]

Almost as much as my student debt.

[Rubia Warren]

I am curious to see what is going to happen to those with semi-shady credit who have been handed over mortgages in this boom we've had (with an ARM, of course). I am curious to see if in two years from now, Crazy Larry's E-Z credit shacks were such a great idea for everybody.

In other words, I am curious to see the impact of easy credit and subprime lending in the longterm- especially regarding homes. Wondering if there will be some smooth deals on lots of foreclosed homes.....

[Ryokan]

I am curious to see what is going to happen to those with semi-shady credit who have been handed over mortgages in this boom we've had (with an ARM, of course). I am curious to see if in two years from now, Crazy Larry's E-Z credit shacks were such a great idea for everybody.

In other words, I am curious to see the impact of easy credit and subprime lending in the longterm- especially regarding homes. Wondering if there will be some smooth deals on lots of foreclosed homes.....
It'll be a problem, but it can be seriously exaggerated, I think.

[Ryokan]

The economy slowed to a 1.1% annual growth (http://news.yahoo.com/s/nm/20060127/bs_nm/economy_gdp_dc) in the 4th quarter. This caught many by surprise. Some blame Katrina and Rita for the slowdown, though 3rd quarter growth was much more robust. First quarter numbers will be interesting. With very high energy prices, both gasoline and oil/natural gas for heating, how consumers will be able to spend when putting so much money into being warm and driving is yet to be seen. Add this to the ballooning deficit in DC thanks to Bush's tax cuts first, spending cuts never or neglible approach, and we've got a recipe for a continuing flat economy for some years to come.

Then add on that interest rates are increasing will slow down the housing market and auto sales, and also effect consumer spending as credit debt becomes more expensive to manage. Newer college graduates will also have less money to spend as interest rates on their own college loans will take more from their pockets.

The US has some serious economic issues to deal with. Bush is still of the mindset that tax cuts solve economic problems despite the fact we still haven't paid off Reagan's cuts yet! Anymore tax cuts and this country is in a heap load of trouble. We, as a nation and as individuals, can afford no more debt.
Most analyst seem to thing that the slow down was largely Katrina related. and that things will pick up.
Also, the debt, while bad, isn't the highest, or one of the highest, in the first world in terms of of debt to GDP, and at this time probably won't cause serious problems if we aren't really dumb.
That said, more tax cuts are probably one of the dumbest things we could do right now.

[Pilgrim]

I am curious to see what is going to happen to those with semi-shady credit who have been handed over mortgages in this boom we've had (with an ARM, of course). I am curious to see if in two years from now, Crazy Larry's E-Z credit shacks were such a great idea for everybody.

In other words, I am curious to see the impact of easy credit and subprime lending in the longterm- especially regarding homes. Wondering if there will be some smooth deals on lots of foreclosed homes.....
Reminds me of the "Good Times" theme song: temporary lay off...good times!...Easy credit rip off...Good Times...ain't we lucky we got 'em...got times.

Anyway, the forclosure thing is already happening. We are closing on a house in Michigan this month (the one we moved out of to come to New Jersey) and we are the first house to sell for more than the asking price in 18 months. In that community there have been 90 foreclosures in the past 2 years.

The houseing boom is, if not imploding now, at least returning to reality. And that's going to hurt people who baught at the high moment.

[FormerFundy]

The economy slowed to a 1.1% annual growth (http://news.yahoo.com/s/nm/20060127/bs_nm/economy_gdp_dc) in the 4th quarter. This caught many by surprise. Some blame Katrina and Rita for the slowdown, though 3rd quarter growth was much more robust. First quarter numbers will be interesting. With very high energy prices, both gasoline and oil/natural gas for heating, how consumers will be able to spend when putting so much money into being warm and driving is yet to be seen. Add this to the ballooning deficit in DC thanks to Bush's tax cuts first, spending cuts never or neglible approach, and we've got a recipe for a continuing flat economy for some years to come.

Then add on that interest rates are increasing will slow down the housing market and auto sales, and also effect consumer spending as credit debt becomes more expensive to manage. Newer college graduates will also have less money to spend as interest rates on their own college loans will take more from their pockets.

The US has some serious economic issues to deal with. Bush is still of the mindset that tax cuts solve economic problems despite the fact we still haven't paid off Reagan's cuts yet! Anymore tax cuts and this country is in a heap load of trouble. We, as a nation and as individuals, can afford no more debt.

The economy acutally is in pretty good shape. The fastest way to stop growth though is to raise taxes. You and Love Warrior seem to think that is the answer to the nation's ills--just raise taxes.

As for still paying for Reagan's tax cuts? Whats your basis for such a claim?

[Jimmy Higgins]

The economy acutally is in pretty good shape. The fastest way to stop growth though is to raise taxes. You and Love Warrior seem to think that is the answer to the nation's ills--just raise taxes.Yeah, that's my solution to everything. :ahem:

Growth... growth... growth... I swear, it's like if there is no growth, it's the end of the world. That people will do anything for growth, regardless how imaginary it could be. We saw the huge growth with internet companies. That was more hollow than a large chocolate easter bunny. Our economy isn't going to crash, but seeing that Americans aren't saving any money, that debt is high, mortgage foreclosures continue to be more common, and interest rates are increasing, I don't see why in the world people should be confident in the US economy. Energy prices are probably going to cut growth, especially in the winter, and one other thing... how much of the GDP growth has been because of Iraq.

As for still paying for Reagan's tax cuts? Whats your basis for such a claim?During the Reagan administration, we had these tax cuts. The Democrats passed budgets on average of 3% above the proposed ones by Reagan. We saw a couple trillion in debt after the Reagan administration... and an accompanying recession. We haven't been able to pay off that debt still. Not even close! So all that income it generated, all the wonders of the *cough* Laffer curve... why could they raise enough revenue from the exploding Reagan economy to cover the tax cuts and his spending?

[Jimmy Higgins]

The houseing boom is, if not imploding now, at least returning to reality. And that's going to hurt people who baught at the high moment.Jimmy Higgins basks over 5.75% mortgage rate.

*bask*

[Ryokan]

Yeah, that's my solution to everything. :ahem:

Growth... growth... growth... I swear, it's like if there is no growth, it's the end of the world. That people will do anything for growth, regardless how imaginary it could be. We saw the huge growth with internet companies. That was more hollow than a large chocolate easter bunny. That's not even true at all. The stock market was hollow from mid 1998 or there about to 2001. The economy growed actual growth at a steady clip until about 2000, and didn't go into recession for more than 2 or 3 quarters. Our economy isn't going to crash, but seeing that Americans aren't saving any money, that debt is high, mortgage foreclosures continue to be more common, and interest rates are increasing, I don't see why in the world people should be confident in the US economy. Energy prices are probably going to cut growth, especially in the winter, and one other thing... how much of the GDP growth has been because of Iraq. Basically, people are confident in the US economy because, thanks to technological inovation, productivity keeps growing..

During the Reagan administration, we had these tax cuts. The Democrats passed budgets on average of 3% above the proposed ones by Reagan. We saw a couple trillion in debt after the Reagan administration... and an accompanying recession. We haven't been able to pay off that debt still. Not even close! So all that income it generated, all the wonders of the *cough* Laffer curve... why could they raise enough revenue from the exploding Reagan economy to cover the tax cuts and his spending?
The reason the laffer curve didn't work is he didn't just cut the super riches taxes. THe laffer curve peaks at around 60% of income, I think.

[Ben Franklin]

The economy growed actual growth at a steady clip until about 2000, and didn't go into recession for more than 2 or 3 quarters.

During that time, I remember 8% interest on passbook savings accounts at my corner S&L... It was definitely a bonds-man's market then, eh...? :ahem: