U.S. Economy grows @ 1.1% in 4th quarter

[Balta1701]

Some interesting economic data today...the U.S. economy grew at a paltry 1.1% in the 4th quarter of 05, according to the first numbers (these have a habit of being adjusted by a half a percent or so a few months later). That is the weakest number in 3 years.

 

Lots of varying signs here...there was a big slowdown in consumer spending, which conveniently enough only grew at 1.1% as well, but there's a lot of things playing into that - i.e. the big auto maker discounts which ended in September, the high fuel prices, Katrina, a slowdown in government spending, etc. The question right now is how many of those will be actual blips. On the other hand, home sales still hit a record in 2005, despite suggestions of slowdowns in some markets like CA which have been on fire in recent years.

 

Markets were rising on the news in the hopes that it might signal an earlier end to the Federal Reserve's period of tightening.

 

So fire away...temporary blip, or worrying sign?

[kapkomet]

I was going to post this, thanks Balta for doing so.

 

You know, I don't know what to think is going to happen, exactly, but here are some thoughts.

 

Computer sales are slowing way down, and that's due to the market finally becoming saturated (see calculators 20 years ago).

 

Home sales (new ones, especially) are starting to slow, but I don't think this is quite as bad as everyone is making it out to be.

 

US Automakers are dreadfully bad. These effect so many more things besides Ford, Chrysler, and GM.

 

Oil companies are RAKING in the money, and I called bull s*** out on the "Katrina effect" before it happened... they STILL made record profits (see Chevron's report from today).

 

Durable goods across the board were really lacking (mostly due to cars, but other durables were down as well).

 

I'll tell you, if a "t-word" event takes place, we're in BIG trouble. Not only that, if we have weather issues (read: hurricanes) come up through our oil areas this summer, we're going to have $4.00 (at least) gas - which will cripple the economy.

 

We're on a delicate balance right now. It can go either way, IMO.