More Good Economic News

[red states rule]

More bad news for the Dems and the economic doom and gloomers


Economy Cranks Up in 2Q at 3.4 Percent Pace, Best Showing in More Than a Year
Friday, July 27, 2007

WASHINGTON — U.S. economic growth rebounded during the second quarter to its strongest pace since the beginning of last year on a surge in business investment, more government spending and a better trade performance, the Commerce Department reported on Friday.

Gross domestic product that measures total output within U.S. borders gained at a 3.4 percent annual rate — the fastest since 4.8 percent in the first quarter of 2006 — after barely growing at a downwardly revised 0.6 percent pace in the first quarter. Previously the government had reported that first-quarter growth was at a 0.7 percent rate.

Second-quarter growth exceeded Wall Street economists' forecasts for a 3.2 percent rate of increase and showed the business sector picking up some of the slack left by consumers who cut back on their spending.

There was encouraging news on the inflation front, as so-called core prices that exclude food and energy items gained at a surprisingly low 1.4 percent annual rate, the lowest in four years since 1.3 percent in the second quarter of 2003. Economists had forecast a 2 percent rate of advance in core prices.

Nonresidential business investment climbed at an 8.1 percent rate in the second quarter, nearly four times the 2.1 percent registered in the first quarter as commercial building activity soared. Home building remained a drag, but less so, shrinking at a 9.3

http://www.foxnews.com/story/0,2933,291075,00.html

[red states rule]

Nets Barely Notice Surge in GDP Growth as They Focus on Dow Plunge
By Brent Baker | July 27, 2007 - 21:50 ET
The ABC, CBS and NBC evening newscasts on Friday all devoted full stories to the fall in the stock market, touted as “the worst two-day point drop for the Dow in five years,” but barely had time for a sentence about the 3.4 percent second quarter jump in the GDP, the biggest in over a year. In fact, neither ABC nor NBC cited the specific 3.4 percent rise in the Gross Domestic Product, the measure which the AP on Friday described as the “best barometer of the country's economic fitness.” Not one of the three evening newscasts mentioned how the Dow is still well above the 13,000 level it broke through in April and none noted fresh good news on inflation.

ABC was the most negative. “Stock slide,” World News anchor Charles Gibson teased, “Wall Street finishes the worst week of the year down nearly 600 points.” Gibson soon highlighted that news, as he only alluded to the good GDP number, when he reported “the worst week for the Dow in five years. Even positive news on economic growth wasn't enough to keep investors from selling. Among other things, they had to contend with a battered housing market.” Reporter Betsy Stark agreed as she too only made a passing reference to the GDP: “It sure is, Charlie. In fact, buried inside that positive report on Gross Domestic Product today was more evidence of what economists now describe as an outright recession in the housing sector.” ABC didn't even put the GDP number on screen as Stark devoted her entire story to the impact of the declining housing market before concluding that “it increases the odds of a downturn in the overall economy since housing now accounts for roughly one in ten American jobs.”

Over on the CBS Evening News, anchor Katie Couric suggested “Wall Street investors may be seeing stars after the beating they took this week. The Dow had another big loss today, more than 200 points. For the week, the Dow gave up nearly 600 points -- or about four and a quarter percent -- its worst week in five years.” Actually, percentage-wise, it's really the biggest drop in the Dow in four years. Reporter Kelly Wallace, formerly of CNN, began with a sentence about the GDP: “Better-than-expected economic growth for the second quarter touted by President Bush and still stocks tumbled.” But unlike ABC and NBC, CBS at least put the “3.4%” on screen. As opposed ABC's dour spin, Wallace featured brokers and investors who expect the stock market to recover over the long term. Wallace pointed out that “from 1985 to 2006, the Dow grew an average of 8.6 percent per year. If you invested $1,000 back then, you'd have over $15,000 today.”

NBC Nightly News anchor Brian Williams highlighted “the worst two-day point drop for the Dow in five years” before turning to CNBC's Erin Burnett for an explanation. After listing three reasons for the downturn, Burnett delivered one non-specific sentence about the GDP: “There is good news out there and today we found out the U.S. economy is growing a lot more quickly than people expected.”

A Friday AP dispatch by Tim Paradis differentiated between the point and percentage reductions:


The Dow fell 208.10, or 1.54 percent, to 13,265.47, with nearly 140 points of that loss coming in the final half-hour of trading. For the week, the index fell more than 585 points, or 4.23 percent. The week's point decline was the worst in five years, while the percentage decline was the largest since late March 2003.

Another AP story on Friday, by Jeannine Aversa, led:


The economy popped out of its rut this spring and grew at the strongest pace in more than a year, giving President Bush something to crow about.

The best barometer of the country's economic fitness — gross domestic product — increased at a 3.4 percent annual rate in the second quarter, the Commerce Department reported Friday....

Aversa pointed out another upbeat development skipped by the networks:


An inflation gauge closely watched by the Federal Reserve showed "core" prices -- excluding food and energy -- rose at a rate of just 1.4 percent in the second quarter. That was down sharply from a 2.4 percent pace in the first quarter and was the smallest increase in four years.

Given how the media choose to highlight bad news on the economy over good news, another fact relayed by Aversa is hardly a shock:


Bush has been trying to counter weak public-approval ratings for his handling of the economy. Only 37 percent approve of his performance, close to a record low, according to a recent AP-Ipsos poll.

The MRC's Brad Wilmouth corrected the closed-captioning against the video for the July 27 ABC and CBS evening newscast stories, I handled NBC:

ABC's World News:


CHARLES GIBSON: Well, it's been a rough week on Wall Street. The Dow closed down 208 points today. For the week, it dropped 586. That's the worst week for the Dow in five years. Even positive news on economic growth wasn't enough to keep investors from selling. Among other things, they had to contend with a battered housing market. And ABC's Betsy Stark is here. And, Betsy, the housing slump seems to be taking its toll.

BETSY STARK: It sure is, Charlie. In fact, buried inside that positive report on Gross Domestic Product today was more evidence of what economists now describe as an outright recession in the housing sector. Just a couple of years ago, housing was a major engine of growth for the U.S. economy. Now, it's a major drag. Americans spent their dollars very cautiously last quarter, spooked by the slump in the housing market.

IVY ZELMAN, Housing analyst: When the housing market hits the skids, everybody's feeling pretty concerned and house broke. And they stop spending or they slow down spending.

STARK: You don't need to tell Marsha Elliot the spigot's been turned off.

MARSHA ELLIOTT, Terrestris Development: The slowdown has been dramatic nationwide, as well as here in the Midwest. And we're all feeling it.

STARK: Last year, at this time, this Chicago homebuilder had around 35 homes under construction. This year? Only eight.

ELLIOTT: When I'm not building, that means the excavator is not working. The surveyor is not working. The engineer is not working. And that's at the very beginning.

STARK: Businesses that depend on homebuilding, from kitchen and bath retailers to furniture and carpet makers, are also getting squeezed. The International Council of Shopping Centers says the worst retail sales in four years can be summed up in one word: housing.

ZELMAN: Anything that touches housing to Wal-Mart sales are being negatively impacted. And I think that it's spread. The ripple effect is huge.

STARK: At Marvin Windows, one of the largest makers of windows and doors in the country, orders are certainly down.

DAN MARVIN, Marvin Windows: The concerns right now is how long the slump in the market is going to last.

STARK: Housing-related job cuts have tripled this year to more than 37,000, led by layoffs in construction and mortgage lending. And the consensus is the fallout is going to get worse before it gets better.

THOMAS LAWLER, Housing economist: It will probably take another year and a half or two years to work its way through.

STARK: That would mean no turnaround in the housing market until close to the end of the decade. And if that's right, it increases the odds of a downturn in the overall economy since housing now accounts for roughly one in ten American jobs, about 15 million American jobs.

CBS Evening News:


KATIE COURIC: Meanwhile, Wall Street investors may be seeing stars after the beating they took this week. The Dow had another big loss today, more than 200 points. For the week, the Dow gave up nearly 600 points -- or about four and a quarter percent -- its worst week in five years. Here's Kelly Wallace.

KELLY WALLACE: After a week of being pounded by bad news, the market couldn't even accept good news. Better-than-expected economic growth for the second quarter touted by President Bush-

GEORGE W. BUSH: It's an economy that is large and flexible and resilient.

WALLACE: -and still, stocks tumbled. Despite the Wall Street roller coaster, investors like Mary Ellen Scott are not concerned.

MARY ELLEN SCOTT, Investor: Well, I've been in it long enough to see it go up and go down and come back, so that's what I'm thinking it's going to do.

WALLACE: History is on her side. From 1985 to 2006, the Dow grew an average of 8.6 percent per year. If you invested $1,000 back then, you'd have over $15,000 today. Are the phones ringing off the hook?

ALYCE ZOLLMAN, Charles Schwab: Surprisingly, no.

WALLACE: Alyce Zollman, a Charles Schwab financial consultant, says she tells her clients to think long-term, and not to panic by short-term swings like we saw this week.

ZOLLMAN: But ultimately, I think the most important point is to understand that investing is a lot like the weather. We can't predict the weather. We can't control the weather. The only thing that we can do is prepare for it. And investing's really no different.

WALLACE: After a turbulent week, the market can now catch its breath for a few days. The next big economic report, which could determine whether Wall Street continues its wild ride, is the unemployment rate, and, Katie, that comes out next Friday.

NBC Nightly News:


BRIAN WILLIAMS: Now we move to Wall Street and a dramatic end to a brutal week for the markets: The worst two-day point drop for the Dow in five years. The sellers came out in force. The last half hour of trading today the Dow finished down another 208 points. You combine that with yesterday's 300-plus point drop, that put the loss over 500. We're joined tonight from CNBC by Erin Burnett.

Erin, a lot of dire predictions today, downward spirals, corrections, bad hedge funds out there. What's doing this?

ERIN BURNETT: Yes, I mean, it has been an amazing week, Brian. You said it, the worst we have seen in five years for the broader markets here in the U.S. and you say, why so much pain so suddenly? Alright, Brian, I broke it down. Three reasons: One, home prices, they are falling more than expected, and two, easy credit. It's simply gone. Loans are harder to come by for everyone. Third, energy prices. You talk a lot about those there, they are up and tonight oil prices closed a penny shy of a record. It is a perfect storm for stocks. But Brian, the truth is it's never quite that simple. There is good news out there and today we found out the U.S. economy is growing a lot more quickly than people expected, despite all of those head winds. I spent all day talking to money managers, the vast majority still firmly believe while the market will be very volatile in the short-term, we could have many more days like this though, they do believe we could end the year higher. So, we'll be talking a lot more about this story.

WILLIAMS: Everybody gets to take a breath over the weekend. We'll check back in on this on Monday as you will. Erin, thanks a lot for that.

http://newsbusters.org/blogs/brent-baker/2007/07/27/nets-barely-notice-surge-gdp-growth-they-focus-dow-plunge

[red states rule]

The Stock Market Corrects, Why Not the Media?
By Dan Gainor | July 27, 2007 - 17:27 ET
The Dow dropped again today.

Scary.

And that's exactly how the mainstream press treated it. What goes down, must go down further. Even with the sour coverage on NBC and CBS on July 26, there were voices of reason that warrant commitment to the markets.

"So this is not a crash, if anything, it's a correction," said CNN "American Morning" business correspondent Ali Velshi. "It might not even be a correction; it might just be a stop on the way."

Wow, good news, even on CNN.

Others experts point at signs our economy is still in tact and still moving in the right direction as evidence not to panic.

"Right now, we have the tailwinds of a very good U.S. economy, we have the tailwinds of an incredible global economy ... So that's gonna, I think, mitigate what's going on in the housing market," said Fox News business correspondent Terry Keenan on the July 26 "The O'Reilly Factor."

According Lawrence Kudlow of CNBC, with 50 percent of Standard & Poor companies reporting - their profits have increased an incredible 15.3 percent from one year ago. He also pointed out the Dow Jones really only lost 2 percent on July 26.

And let's not forget, the gross domestic product numbers released today indicated the economy grew at a 3.4 percent rate.

I think I'll go find a ledge and beat the rush.

http://newsbusters.org/blogs/dan-gainor/2007/07/27/stock-market-corrects-why-not-media

[Joe Steel]

More bad news for the Dems and the economic doom and gloomers

You shouldn't post anymore.

You're just embarrassing yourself.


This quarter's GDP data, while better than the anemic growth in the first quarter (the slowest growth since the last quarter of 2002), provide little reason to be complacent about the economy going forward, especially given the continuing drag that a cooling housing market will place on the economy.

Net export growth pulls up GDP in second quarter (http://www.epi.org/content.cfm/webfeatures_econindicators_gdppict_20070727)

http://www.epi.org/images/20070727gdppicture.gif



Get it?

This is the worst recovery in a long, long time.

[red states rule]

You shouldn't post anymore.

You're just embarrassing yourself.



http://www.epi.org/images/20070727gdppicture.gif



Get it?

This is the worst recovery in a long, long time.

Libs are something else

Under Clinton, libs bellowed how the US economy was great

Pres Bush has similar or better economic numbers, and the libs now bellow who rotten the economy is

Tax cuts have helped the economy get through 9-11, a series of storms hitting our cties, high oil prices, and a war on two fronts

Get over it Joe

[Joe Steel]

Libs are something else

Under Clinton, libs bellowed how the US economy was great

Pres Bush has similar or better economic numbers, and the libs now bellow who rotten the economy is

Tax cuts have helped the economy get through 9-11, a series of storms hitting our cties, high oil prices, and a war on two fronts

Get over it Joe

Stop.

Look at the chart.

Bush DOES NOT have better numbers. Bush's are the WORST in YEARS. The recovery is not that good.

Do you understand?

Can you understand?

[red states rule]

Stop.

Look at the chart.

Bush DOES NOT have better numbers. Bush's are the WORST in YEARS. The recovery is not that good.

Do you understand?

Can you understand?

Libs love to tell people how rotten things are - it is the only thing they ahve left. Remember how they ran in 04 on the "jobless recovery'?

Look at your 401K (if you have one) and mutter how rotten things are

Low inflation and unemployment, a growing economy, record tax collections (we need MORE tax cuts) a shrinking federal budget deficit, and record home ownership

Even with a war, and high oil rpices - the US economy is moving along well

[red states rule]

Profits Matter
By Lawrence Kudlow

Stock market bulls like myself were on the losing side of this week's trading, as the Dow gave back roughly 4 percent from its 14,000 peak. The big story was a wave of high-anxiety credit fears over the value of corporate and housing loans. Credit circuits blew a fuse, lending markets temporarily froze, and a number of buyout deals were postponed as analysts and traders worked through their problems.

But this is no time to lose faith. The economy has found its legs with a 3.4 percent GDP growth report for the second quarter, a much-needed surge from only 0.6 percent in Q1. Moreover, core inflation came in at a rock bottom 1.4 percent.

Most importantly, second quarter corporate profits are flowing in two to three times better than expected. Much of this reflects the huge global economic boom that Treasury Secretary Henry Paulson describes as the greatest worldwide surge in his professional lifetime. These rising profits inject new value into the stock market.

Doomsday seers on Wall Street take notice: At 15 times forward earnings, the S&P 500 yields about 6.5 percent, a very high equity risk premium compared to a 4.8 percent yield on 10-year Treasury bonds.

Be it loan worries or the stock correction, the key point in all this is the steady stream of rising profits. Profits matter. They are the best guarantee for the credit worthiness of corporate loans and the value of stocks.

As classical economist Benjamin Anderson wrote in the 1920s when he was the top economist at the old Chase National Bank, "Profits are the heart of the business situation." Down through the years, I've paraphrased that as profits are the mother's milk of stocks and the economy. It's time to add creditworthiness to that list.

What we're witnessing is not a true credit crunch, but a temporary credit freezing-up. Banks have a lot of loans from financing buyout deals, and right now the credit freeze has stopped them from selling these loans to institutional customers. Loan markets have been over-leveraged by private equity funds that during the past year or so have completed deals with too little cash equity and too much loan leverage.

Bond vigilantes are disciplining the buyout mavens and forcing a credit risk re-pricing that will incentivize cash equity and discourage debt over leveraging. It's a healthy market-driven correction. The key point is that robust business profitability makes these over-leveraged bank loans good paper, not bad. In due course, the dust will clear and credit markets will resume functioning. Bankers will divide up these loans and resell them in tranches at handsome interest rates to pension funds, insurance companies and money managers around the world.

Congressional Democrats could enhance this healing process if they would quit threatening to raise taxes on buyout firms and hedge funds whose ears are being pinned back by the bond market. This is no time to raise capital costs by repealing Bush's tax cuts or by raising new taxes. Case in point: Former Sen. John Edwards's bad idea to raise the capital gains tax rate to 28 percent from 15 percent, and to drive up the top personal tax rate to at least 40 percent from its current 35 percent.

Treasury man Paulson was right when he told me in a recent CNBC "Kudlow & Company" interview that if you tax something more, you get less of it. That's why he opposes the hedge and buyout fund tax hike. Millions of pensioners, including firefighters, police and teachers, will suffer lower retirement returns if Democrats have their way. Taxing capital more will throw a wet blanket over American families' income and spending power by weakening the jobs picture, which remains one of the brightest spots in our economy.

Paulson has a better idea. He recognizes that our corporate tax system is broken. Business tax reduction is occurring all over the globe. Hence, the United States is becoming less competitive in the global race for capital. Paulson believes the best solution to this is full-fledged, pro-growth corporate tax reform.

His Treasury staff is apparently preparing a plan to reduce the current 35 percent federal tax on business down to 27 percent. It's a very good idea. Paulson also favors Loews CEO James Tisch's idea to reduce the corporate capital gains tax rate. Measures like this would improve business profitability, make the United States more hospitable to global investment, spur new businesses and job creation, and enhance the creditworthiness of all that loan paper gathering dust on bankers' shelves.

The loan credit freeze-up currently plaguing corporate stock and bond markets would improve rapidly if Washington would befriend the markets, instead of waging war against them.

Lawrence Kudlow is a former Reagan economic advisor, a syndicated columnist, and the host of CNBC's Kudlow & Company. Visit his blog, Kudlow's Money Politics.
http://www.realclearpolitics.com/articles/2007/07/profits_matter.html

[Joe Steel]

Libs love to tell people how rotten things are - it is the only thing they ahve left. Remember how they ran in 04 on the "jobless recovery'?

Look at your 401K (if you have one) and mutter how rotten things are

Financial asset values don't necessarily reflect the economy. Speculation and a contrarian strategy can raise value in a bad economy.


Low inflation and unemployment, a growing economy, record tax collections (we need MORE tax cuts) a shrinking federal budget deficit, and record home ownership

Even with a war, and high oil rpices - the US economy is moving along well

Low inflation reflects the lack of economic activity.

Low unemployment is the result of a low partcipation rate.

Tax collection and government revenue almost always are at record levels. They rarely decrease.

The same with home ownership.

The shrinking deficit is an illusion created by manipulation of the statistics.

The Bush economy is a disaster as the chart shows. Get someone to explain it to you.

[red states rule]

Financial asset values don't necessarily reflect the economy. Speculation and a contrarian strategy can raise value in a bad economy.



Low inflation reflects the lack of economic activity.

Low unemployment is the result of a low partcipation rate.

Tax collection and government revenue almost always are at record levels. They rarely decrease.

The same with home ownership.

The shrinking deficit is an illusion created by manipulation of the statistics.

The Bush economy is a disaster as the chart shows. Get someone to explain it to you.

libs always see the glass as half empty when a Republican is President