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Us Economic Growth Beats Forecasts

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Did someone say taper?

The US economy grew at an annualised pace of 1.7% in the second quarter of the year, the Commerce Department has said.That was a faster pace than expected by economists.

It was also up from the growth rate for the first three months of 2013, which was revised lower to 1.1% from 1.8%.

A slowdown was widely expected due to the impact of federal spending cuts, but also from the continuing weakness in the global economy.

In March, $85bn (£56bn) of public spending was cut as a result of a deal between Democrat and Republican politicians.

But the Commerce Department said that the federal government cut spending by only 1.5% in the April-to-June period, compared with a sharp drop of 8.4% in the first quarter.

The US economy grew by 0.4% in the second quarter compared with the previous three months. That compares to 0.6% growth in the UK in the same period.

The eurozone's GDP figures are released on 14 August. The 18-member region shrank 0.2% in the first quarter - the sixth quarter of decline in a row.

Revisions Consumer spending accounts for about 70% of US GDP. Official figures showed that consumers spent less in the second quarter than in the first, with personal consumption expenditure up 1.8%, compared with 2.3% previously.

As well as the last set of quarterly figures, the Commerce Department also revised growth figures going back several decades.

It said the US economy now grew by 2.8% in 2012, up from its previous estimate of 2.2%. This may help to explain why growth appeared weak last year but hiring continued to improve.

The government also said that the economy contracted by 4.3% during the recession, which lasted from December 2007 to June 2009, better than the previous estimate of a 4.7% drop.

The economy expanded by 8.2% from the middle of 2009 through to the end of last year, which was more than the 7.6% previously suggested.

The latest figures showed a pick up in both imports and exports. Exports rose 5.4% in the second quarter, compared with a drop of 1.3% in the first quarter. Imports jumped 9.5%, compared with an increase of 0.6% in the previous quarter.

http://www.bbc.co.uk/news/business-23513887

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denninger has this to add:

The revisions announced by the BEA going back to the 1920s are IMHO more than a bit troubling and amount to double-counting in many cases. Specifically, intellectual property is now counted as "investment" when created. The problem with doing so is that if it pays off then it is already accounted for and the goods and services that went into the R&D has already been counted as well.

http://market-ticker.org/

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The revisions to past US Gross Domestic Product have turned out to be enormous at around US $550 billion! Below is a critique of what is going on here.

But we do have three major problems which to my mind will not go away.

1. Up to now we have counted the effect of R&D and creative rights via the products etc sold as a result of it. If we now include the costs we are surely guilty of at least some double-counting.

2. There are already problems in national accounts caused by the use of costs as a measure of output. For example the government sector is ridden with it. This problem will be exacerbated by these moves.

3. I now this is mostly a matter of presentation but telling us we were better off in 2007 via measures such as saving and investment collides with the economic reality of the credit crunch. Ooops!

http://www.mindfulmoney.co.uk/wp/shaun-richards/will-the-us-economy-really-be-3-larger-in-july/

They seem to be trying to take us all for fools.

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US CPI is 1.7% because it miscalculates the component of house price inflation.

Real house price inflation is not 2.25% p.a. but 13.5%. A true measure of US inflation should be around 7% p.a.

Bernanke has to taper, and soon.

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http://uk.reuters.com/article/2013/07/31/uk-usa-fed-idUKBRE96U13N20130731

The U.S. Federal Reserve said on Wednesday the economy continues to recover but is still in need of support, offering no indication that it is planning to reduce its bond-buying stimulus at its next meeting in September.

The central bank said after a two-day meeting that it would keep buying $85 billion (55.8 billion pounds) in mortgage and Treasury securities per month in its effort to strengthen an economy that it said was still challenged by federal budget-tightening. It also pointed to a recent run up in mortgage rates.

In a post-meeting statement, policymakers described economic activity as having expanded at a "modest" pace in the first half of the year. They had called the recovery "moderate" after their last meeting in June.

The US economy is entirely dependent on Fed heroin they can never withdrawn support without extreme cold turkey.

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It occurred to me that they will taper and raise rates soon, and that UK government are well aware of this and will raise rates in response hence all the talk here of escape velocity etc. therefore HTB is not the great risk some claim because those who can will be forced to drop their selling price soon anyway? The banks are not going under because a tiny % of the 1/3 who have some kind of mortgage can`t pay? Gidiot is just playing to all the galleries while keeping a tight grip on Uncle Sam`s coat tails?

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2Q growth numbers indicate a US recession is on the way

Recession-600x433.jpg

The 1.7% growth number was above the consensus 0.8% but was weaker than headline for three reasons:

1.Inventories — unsold goods — contributed 0.41 percentage points. Final sales rose by just 1.29%. The inventory accumulation will be a drag on future growth.

2. Q1 ’13 growth was revised down from 1.8% to 1.1% (with final sales just 0.17% — virtually flat). The lower Q1 ’13 base (1.8 minus 1.1 equals 0.7) flattered the Q2 ’13 growth number by 0.7 percentage points.

3. Adjusting for inventories and revisions, the Q2 ’13 SAAR growth number was 0.59% adjusted Q2 ’13 growth (1.7 minus 0.41 for inventories minus 0.7 for Q1 revisions equals 0.59%).

Overall, today’s low-but-actually-lower GDP growth numbers pull the US economy down to stall speed. Given the ongoing drag from Q2 inventory build, fiscal austerity, weaker global growth, and higher, taper-talk-driven interest rates, we could well see negative second-half growth.

That defines a recession.

http://www.aei-ideas.org/2013/07/2q-growth-numbers-indicate-a-us-recession-is-on-the-way/

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It occurred to me that they will taper and raise rates soon, and that UK government are well aware of this and will raise rates in response hence all the talk here of escape velocity etc. therefore HTB is not the great risk some claim because those who can will be forced to drop their selling price soon anyway? The banks are not going under because a tiny % of the 1/3 who have some kind of mortgage can`t pay? Gidiot is just playing to all the galleries while keeping a tight grip on Uncle Sam`s coat tails?

Interesting take on things. I just saw it as more bluff and bluster whilst QE continues for months.

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Interesting take on things. I just saw it as more bluff and bluster whilst QE continues for months.

Maybe, probably, but it would be better for the UK banks if those with no or low mortgage dropped their prices and allowed the housing market to move? Some thought must be given to pushing them in this direction in banking circles?

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Maybe, probably, but it would be better for the UK banks if those with no or low mortgage dropped their prices and allowed the housing market to move? Some thought must be given to pushing them in this direction in banking circles?

All those bankers are being given free money and they all own houses.

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