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GDP falls 2.9%, some panic about another recession

(Economic News) With new economic data out today, some are bracing for another recession, while others are saying the data should be taken with a grain of salt.

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GDP empty wallet

GDP empty wallet

The GDP fell in the first quarter; what now?

According to the Bureau of Economic Analysis, the first quarter of 2014 have been analyzed, and it appears that the economy has contracted significantly more than previously estimated, declining at an annual rate of 2.9 percent, which is relative to the fourth quarter of 2013, when the real GDP grew 2.6 percent.

Despite the contraction, the DOW is up 50, and given that the slump erased the gains seen in the final quarter of last year, some believe that as quickly as we saw these losses, we could see gains next quarter, putting us back at the starting line.

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But not everyone sees it that way, and some economists care saying this surprising data could spell another recession, just as the nation emerges from the economic crash that began in 2008.

Let’s face it – the GDP news is bad. But it’s not the only damning data, as exports declined 9.0 percent in the first quarter, Americans ate out significantly less in the same period, healthcare spending declined, and business orders fell for things like technologies. But on the other hand, job growth is still improving.

In other words, the economy is sending out mixed signals, which is why this GDP news has so many on opposite sides of the issue, citing various data points to portray the economy as healthy or crashing, typically dependent upon their political leanings.

How did this happen?

CNN points out that “Some economists take this GDP number with a grain of salt because it will be revised again next month when the Bureau of Economic Analysis makes historical revisions, going back to 1999.”

Fox News cites a PNC economist who dispels the idea that this is solely a weather-related dip, noting that only $15 billion can be blamed on the weather – a drop in the bucket.

The truth is that whether we’re crashing or recovering, the economy is sputtering. The White House calls the recovery “incomplete,” and it must be noted that a strong GDP in the next quarter could regain lost ground, but for now, many are flinching after being socked by the crash, and why wouldn’t they?

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11 Comments

11 Comments

  1. It Will Never Be Right

    June 25, 2014 at 10:12 pm

    2.9% !!!!! An out of control federal government that is taking more and more of it is to blame, not weather, not feelings, not anything else, but a totally undisciplined ruling party and their unquenchable thirst for bigger government and more. Obama’s DeathCare alone has allocated some 15%+ of the economy. It would be a compliment to call this over-regulation. This is blatant will to overwhelm our nation’s economy.

  2. west129

    June 25, 2014 at 10:35 pm

    “… the nation emerges from the economic crash …”? Well, I am glad to get informed about that. From where I stand I never would have noticed.

    But what is one to expect when too many of the know it all are either Freudian who engage heavily in dream-work or are just busy cooking the books in an attempt to substantiate something of no substance. However, don’t worry. The trick is in. By being informed that the 1st quarter was really very bad paves the way that the next quarter could regain lost ground, of course.

    I don’t see mixed signals in all that revised information since it is merely an infantile attempt to manipulation the report for the next quarter by setting a lower reference line: Let me guess the news for the next quarter: “We regained 80% of the ground we lost in the 1st quarter”. Same old, same old worthless propaganda!

  3. JimmyZ

    June 25, 2014 at 11:35 pm

    When did we recover from 2008? Last time I checked we still had millions unemployed. 47 million on food stamps 10 million over 2008 levels. Fed reserve had to install new printing machines to feed and hyper inflate the stock markets. EPA was attacking the coal industry literally working to shut down the same industry that kept america warm over the harsh winter. Nuclear power plants at the same time shutting down because they are going bankrupt. GM the too big to fail company is loosing billions left and right. Housing market still flat except Obama is pushing the FHA to give out more loans to broke people. Good move, reminds me of a similar move Clinton did that started the housing bubble that crashed the economy in 2008. The US is producing massive amounts of oil yet we are still paying $2.50 more at the pump then in 2008. In 2006 a Big mac value meal was 2.71+tax today its 4.99+ tax. Prices have doubled yet incomes have actually decreased in the US. Please explain this recovery I am eager to understand your definition of recovery

    • Maiden

      June 25, 2014 at 11:47 pm

      Liberal propaganda, that’s what it is. One particular outrage: the government originally stated that GDP grew in the first quarter, then it was revised to -1%, now to -2.9%. Our agencies and the civil service have become corrupted, especially at the senior level. Many of the people in the agencies are left-wing and may seem to support Barack Obama by massaging numbers. But why complain folks? How about the GOP files some electable candidates and simply gets the socialists out of office, instead of always just complaining. Not more Ken Cuchenellies please!

  4. donjeep

    June 25, 2014 at 11:40 pm

    Goods and Services are our GDP… Government spending is NOT. We are so way out of balance in so many areas of our society it scares an old guy like me. Government social programs are fine as long as we have the funds to pay for them. We do not. Our Government is trying to be a safety net for too many people and lets call them special groups of people. Our Government is dysfunctional and what I find that also scares me is that more and more people on the internet are using terms like revolt and revolution. That has to be driving the NSA and FBI watch dogs crazy. Next up, a real spike in the inflation rate. And just one more note. Government jobs that produce nothing are on the rise all around the country. That is why employment rates and GDP are out of synch.

  5. Bobby S

    June 25, 2014 at 11:41 pm

    When you have unpopular President Obama thinking he can BS his way out of economic problems, of course, we are heading towards another financial crash greater than 2008, because shrinking middle class cannot be taxed to death anymore to pay for big bank crooked schemes. Schemes openly supported by Obama himself with greedy miser near-zero interest rates holding billions of dollars of other people’s money hostage.

    • Kate W.

      June 25, 2014 at 11:54 pm

      Where are you getting your misinformation…certainly not the IRS tax tables…Obama has lowered taxes on the middle class…a little hiccup in the economy is a good sign…to avoid a boom bust type of economy…we have had 50+ continuous months of steady job growth…Dow is healthy…interest rates are low…we’re in good shape and the 2.9% hiccup insures no inflation….thank you Obama for saving the USA from the lil bush/cheney economic disaster…just like FDR, after hoover…and I remember reagan’s “Black Friday” economic crash…What is it with the GOP and economic catastrophe’s?

      • It Will Never Be Right

        June 27, 2014 at 11:07 am

        Is that grape or cherry koolaid you drank? Perhaps the news across the nation regarding how many people’s health insurance has skyrocketed or been cancelled, or the cost of DeathCare alone, or the zeros your messiah has added to the deficit. I mean, either Google it with somewhat of an appearance of objectivity, or else shop for a glass belly button so you can see where you’re going.

      • JimmyZ

        June 30, 2014 at 9:32 pm

        Bush/Cheny Disaster? Please get a grip on actual reality not reality TV. The disaster started with Clinton being lax on Home loans and lax on banking regulations and pushing fannie and freddie to give out loans to the millions of low income families that did not have the job to support their $375,000 Homes. Don’t blame the wars. We have had tons of wars and survived just fine. Wars did not cause broke people to stop paying their mortgages. Giving loans to people that didn’t have the money to pay them back in the first place did. Wars didn’t make garbage cars that nobody wanted like GM did. Wars didn’t cause the banks to risk money they did not have on unsecured gambles in the stock exchange. And BTW those 2 wars never would have happened if good ole clinton had taken custody of Osama Bin Laden when Sudan tried to hand him over twice. Or if they just killed him when the CIA had him in their cross hairs. And 50+ months of steady job growth? Prove it and government jobs don’t count because government jobs are just highly paid welfare claims. And your idea of inflation is completely skewed as most products are now 30% or higher then their price 10 years ago. Car prices have nearly doubled. In 2008 we had $18,999 new cars. Today those same cars start at $28,999. Yet household median income for the middle class has fallen $4,450 in that same time. The Dow is only healthy because the Fed has propped it up by buying mortgage backed securitys worth 85 billion a month. Yes slowly the dollar devalues and prices will rise. Wait till the fed cuts off the stock markets completely and starts taking back that printed money. Or better yet wait until other nations decide that the US has devalued the currency too much then stops collecting American dollars. And then watch the stock markets crash. You think the US government is Arming police forces and government agencies that never had weapons before with military hardware out of the goodness of their hearts?

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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