With all the talk about Social Security flying around, hardly anyone is talking about what is going on with the economy these days. Truth is, it's still in the shitter.
And no one seems to notice:
The U.S. economy grew at its softest pace in two years during the first quarter 2005, slowing to a slowing down 3.1 percent annual rate of expansion as consumers and businesses curbed spending in the face of rising oil and raw material prices, the Commerce Department said on Thursday.
The expansion in GDP (Gross Domestic Product), which measures total output within U.S. borders, was the weakest since a 1.9 percent pace during the first quarter of 2003. It also was a surprisingly sharp deceleration from the 3.8 percent rate registered in the fourth quarter of 2004.
Stock market experts had forecast first-quarter GDP would grow at a relatively more robust 3.6 percent rate.
More below the fold.
And then, there's always the specter of
STAGFLATION!
What prompted me to talk about such a troubling -- and farfetched -- scenario? It was today's report that gross domestic product grew just 3.1% in the first quarter. Economists were expecting 3.5% growth. It's increasingly clear that both businesses and consumers have slowed their spending -- at least for everything except real estate --at the same time that prices across the board have continued to rise (mainly due to higher oil).
So where is this recovery that we were promised 2 years ago? Apparently it's with the Chinese:
China's economy is expected to grow by 8.3 per cent this year, much lower than the searing 9.5 per cent witnessed in 2004 but well within the range set by the government, the World Bank said here.
According to its quarterly report on the Chinese economy, the bank said it expects further easing of domestic demand growth, notably investment, on the back of limited credit growth and sliding profits.
"Inflation is likely to remain within the government's target range, whereas China will retain its strong fiscal and external positions. We project a gross domestic product (GDP) growth of 8.3 per cent and inflation of 3.5 per cent," the bank said.
It noted that the domestic demand is cooling down, but external demand keeps China's GDP growth high.
Real fixed asset investment growth was 17.2 per cent year-on-year in the first quarter of 2005, which is down from 24.9 per cent in the year 2004, although up from the 15.5 per cent in the final quarter of last year, the report said.
It said investments are shifting away from sectors previously considered as overheated such as steel and cement. Retail sales growth is gaining momentum, although consumption growth is still likely to lag GDP growth for the year.
"Tax revenues also suggest slowing in domestic demand, and trade data confirm this trend. At the same time, the rising trade surplus is boosting industrial production and kept GDP growth rate at 9.5 per cent in the first quarter, the same as that in the fourth quarter of 2004."
Does anyone else think we're in trouble here? Maybe I'm just scared because I'll be graduating from college in one year and probably won't be able to find a job. But then again, maybe Bushco just isn't willing to recognize that Trickle-Down Economics just doesn't work.