What is the current state of the US economy?

[Tim]

Whatever they are paying to upkeep that site... double it...

I can't imagine having to keep everything straight there... Did you see the links upon links. There must be 100's of layers of links there...

 

[NightWarrior]

Whatever they are paying to upkeep that site... double it...

I can't imagine having to keep everything straight there... Did you see the links upon links. There must be 100's of layers of links there...

Thats exactly what I was thinking. And the poor souls who must go thru all the data and extrapolate the info. Yuk.

But helpful for us in this discussion, good find!

 

[groundpounder]

We have to be careful when stripping out food and fuel costs. They are two of the biggest factors right now in this economy. Food prices climbing at more than twice the rate of inflation and I won't even talk about fuel costs.

I couldn't agree more, Tim.

We eat more and drive more than we ever have, so stripping those two components out for comparison is becoming a dated thing. It makes for good comparison, I feel, but I've actually argued with our company's economic analysts about the difference. I say, "Why pull them out?! It's not like we're going to stop eating and driving, so keep them in there and forget about the 'core' nature of it!!" The answer is always the same: "They're too volatile to never take them out as an accurate measure." And I do agree, once those components are out, you have a different look at the cost of living. I mean, gas can go up 5% overnight. Does inflation go up by that much, too? Of course not. But still, I see your point and agree with it.

I've always scratched my head about this. Whiskey for our men (Food), beer for our horses (Fuel). Never going to go away.

 

[NightWarrior]

Yes, agreed. When you weigh in the figures of gas and food costs, inflation is higher than the reported 3 or 4% I've heard lately. When you lose money to drive to work with the same salary, thats inflation, at least partially to me.

 

[groundpounder]

well, "inflation" with gas and food in it is running about 2.1-2.9% roughly over the last few months. You take that out and the cost of living becomes "less" but like I said, who's going to quit eating and quit driving??

So inflation runs mid 2's and GDP runs upper 3's.

This is good.

 

[groundpounder]

Overall, the economy and the "stock markets" as a whole are on solid ground, and annual growth for the economy should proceed at a 2.5-3.5% clip for the next 2-4 years.

cut and paste economic commentary:

Productivity growth surges in Q3
US productivity growth surged an annualized 4.9% in Q3, trouncing market expectations for a 3.2% gain. The robust increase in productivity contributed a -0.2% decline in unit labor costs from an upwardly revised 2.2% gain in Q2 (prior: 1.4%). The markets had been expecting a dip in productivity to 1.0%.

Implications
In Q3, productivity growth was the fastest since a 10.4% gain in the third quarter of 2003. Hourly compensation in the non-farm sector advanced at an annualized 4.7% pace compared to an upwardly revised 4.4% gain in Q2 (prior: 4.1%). Real hourly compensation was up 2.7% in Q3 after falling 1.5% in the second quarter. Hours worked in the non-farm sector fell 0.5% in the quarter. In the manufacturing sector, productivity growth surged 4.6%, up from 2.4% in Q2 while unit labor costs declined 2.2% after advancing at a 1.3% pace in Q2.

From an inflation perspective, the surge in productivity and the associated drop in unit labor costs in Q3 are certainly welcome. However, the robust productivity gain masks the fact that it has been slumping since the beginning of 2006, averaging a 1.0% year-over-year gain as compared to a 2.4% pace in the prior two years. That unit labor costs declined a quarterly basis and decelerated on a year-over-year basis is heartening. However, relative to a year ago, they were still up 4.3%, only slightly slower than Q2’s 16+ year high and the second fastest pace of growth since the beginning of 2000. When viewed in this light, the report indicates that that upside inflation risks are still present.