Maybe Robert Reich will give him a boost!

And btw, "Holy Katrina"?! Could this guy be any bigger of a dork?

Good post, though. 3.8% is friggin' amazing given what all's gone on the past few months.

Dork?

That's an obvious Batman reference. So, that guy is super cool.

Heard from a typical liberal:

"That 3.8% increase benefits the top .001% of the wealthiest of Americans. Meanwhile, Bush's racism has caused there to be an increase in the poor at the rate of 33,000,000 per month. Cheney's evil schemes with the bad, evil Halliburton have ended up killing 37,000,000 poor people per month. And all because Bush lied. The 3.8% increase is a kickback to the wealthiest for the fraud that helped Bush steal the election in 2000."

Sound about right?

Actually, the economy benefited from the 8.8 billion dollars stolen by Dick Cheney through his proxy, the puppet government of Iraq. This money was poured into the economy via kickbacks to the corporate fat cats of the military-industrial complex who used the money to tip their caddies at the local country club. If you don't believe me I got this straight from TubinoTalkingPointsMemoDemocraticUnderGroundDailyKosDroolingMorons.com

GDP just reflects economic activity expressed through spending on new goods, which is not necessarily good in all cases. There will be plenty of economic activity and spending generated from cleaning up hurricane zones that will show up in GDP statistics, doesn't mean getting hit by hurricanes helped the economy.

Moonbat, what is your point other than that you have less reading comprehension skills and economic literacy than a second grader?

His point is that the hurricanes provide economic stimulus as affected areas are rebuilt. This is not self-sustaining because it is based on (borrowed) public money. This argument has the redeeming value of being true, unlike your post, which does nothing except call names.

Weasel:

Tubby showed up. We're waiting for your respectful reply.

Wow. First we had liberal trolls posing as lawyers, now as economists.

It's amazing... the rebuilding has only barely begun (insurers are still assessing damage) and this occurred only in the last month of the quarter, and yet George the Genius assures us that this growth is based only on "borrowed money" for the hurricane reconstruction.

What was the 3.3% growth rate in the 2nd quarter due to?

"His point is that the hurricanes provide economic stimulus as affected areas are rebuilt. This is not self-sustaining because it is based on (borrowed) public money. This argument has the redeeming value of being true, unlike your post, which does nothing except call names."

Wow! A new, "theory," produced because the doom and gloom didn't materialize! The argument is, "True?" That's a bit of a stretch, don't you think, George? Oh, that's right, the, "theory," of evolution is now deemed true, isn't it???

Unfortunately, your clarification doesn't exactly gel with what moonbat said. He said nothing about, 'borrowed public money,' he referred to the possibility that the some of the economic activity may have been, "artificial," and based on the money spent (on new goods) in the rebuilding efforts. Period.

The gist of the blog entry appears to be that the doom and gloom forecast, that the economy would take a negative hit, because of the hurricanes, didn't come true. Is this flawed? I think not.

Good points, ace! Additionally, from your linked article:
"Consumers' boosted spending at a brisk 3.9 percent rate, the strongest pace since the end of last year. That spending reflected a big appetite for big-ticket "durable" goods, such as cars, which had been discounted and promoted to lure buyers. Some analysts believe consumer spending probably will moderate, but still remain healthy, in the months ahead."

Doesn't sound to me like it was all, "rebuilding."

Excuse the hell out of me. All I was saying is that being impressed by a healthy GDP despite New Orleans getting wiped off the map can be misleading, given what GDP actually measures. It is not necessarily economic growth, and that is relevant now with the huge damage and clean up from the hurricanes and the very high energy costs we saw in Q3.

When the Exxon Valdez ran aground in 1989, the Alaskan economy which had been flagging for several years got a huge boost from all the money Exxon spent cleaning up its mess. True enough, but does that mean we want oil spills (or ruined cities)? An increased GDP does not always indicate desirable growth.

Higher oil prices, too, figure into the GDP. They can be discounted easily by the CPI in order to show that the source of higher prices doesn't stem from monetary inflation, not quite as easily in the GDP.

I don't dispute that the economy is doing reasonably well. This is due largely to the Fed setting historically low interest rates and the government borrowing several hundred billion dollars a year. When you have stimulative fiscal and monetary policy, you will have a growing economy. The problems arise when the Fed can no longer tolerate low interest rates due to rising inflation, and the government can no longer borrow money without increasing interest rates because it has to compete with private industry for capital. (Or because the dollar falls because foreign banks are no longer willing to buy government paper).

This has little to do with Moonbat One's point, which is a valid one insofar as there is a difference between economic growth which is the result of a robust economy and economic growth which is artificial and short-term because it results from a one-off government outlay like hurricane reconstruction. My disagreement with him is that GDP figures are best read as lagging indicators instead of leading indicators.

Moonbat,

Sorry, honestly, I thought I was responding to a troll, not you. Georgie Boy repeated the statement, I didn't know you'd made it first.

I wouldn't have blasted you. I'm sure you know something about economics.

I'm just weary of lefty "experts" coming in here and larnin' us all.

Anyone else see the hypocrisy of Tirebait's economic analysis (as an aggregate of the left's positions)?

The economy does well because of the FED. But when the economy tanks for a quarter, all of a sudden, it's BUSH LIED AND THE ECONOMY DIED!!1!1

The cliche is old and tired.

IIRC from my history classes back in the dark ages, public spending was absolutely necessary to lift the country out of the Great Depression, both make work projects and spending on war material.

So according to this the economic growth is solely due to rebuilding funds. Despite the hits the economy took with refineries being damaged, damage to offshore natural gas rigs and the natural gas infrastructure, having to purchase refined petroleum products on the world market (as opposed to crude oil), despite the destruction to Gulf Coast cities and the livelihoods that they provided.

I am not an economist, but it would seem to me that the destruction and its economic costs far outweighs any benefit that may come from purchasing reconstruction material. And still the economy lept forward at a healthy clip above inflation. Yep, I'm convinced, it is all an illusion, a Rovian trick made of smoke and mirrors.

Mikey,

Most history classes don't cover how seriously close we came to a collapse of government authority during the Depression. To many the capitalist approach appeared to have failed and the USSR was doing a very good job of convincing the West that everything was swell for Soviet citizens. Those actively preaching communism in the USA were being taken more seriously by ordinary people than anytime before or since.

I'd be willing to bet that the great majority of recent college graduates in this country could not identify the origin of the phrase 'Bonus Army.'
http://www.amazon.com/gp/product/0802714404/103-5387391-2265400?v=glance&n=283155&s=books&v=glance

Given time and sanity the Depression would go away by itself. The spending was to prevent mass starvation and insurrection by people whose entire world had collapsed for reasons beyond their comprehension.

If we had anything comparable to the Great Depression today I don't think we could pull through again without major carnage just due to the sheer volume of people now living here. The portion of the population that scraped by on subsistence farming could not remotely be matched today.

epobirs, I know what the bonus army was and who was the US Army chief of staf at that time (and who his chief of staff was). I know how bad off things were, my parents lived through it.

My comment wasn't to make the depression seem light, it was directed above at those who claimed that the growth in the economy was due only to purchase of recovery/reconstruction material when all the government spending in the 1930's just kept things afloat, whereas the economy took a major hit with all of the destruction in the Gulf and it still grew.

That and the bottle of wine I was drinking.

The arguments above would benefit from reading about the Broken Window Fallacy. Disaster recovery spending is often savings/wealth converted into spending, therefore it shows up in GDP - which measures income as opposed to stores of wealth) as a positive increase.

I agree wholeheartedly with the idea that the MSM generally spins economic news to benefit their chosen ideologies, but very recent economic indicators do give some substantial concern - inflation has picked up and consumer sentiment has dropped precipitously.

You can see both sides of the story here.

On the other hand, many urban job markets are very tight (my own firm is seeing this in a big way) so we should see increases in real wages over the coming months.

Just my two cents.

Given that Katrina hit at the end of August and immediate clean up, as we all know, took the better part of a month and a half I would think it highly specious to attribute much of the GDP growth to the hurricane. I would think it would be a lot more logical to expect a large economic slow down in the immediate aftermath of the hurricane, much as there was right after 9/11, given that the Mississippi river and the the gulf region as a whole are a large part of the economic engine of this country and they were effectively put out of action and a large amount remain out of action.

Funny we never hear from the left about the mythical "new economy" driven by the unsustainable tech bubble which thrived during the Clinton years. You remember those times when companies such as Akamai had a market cap greater than GM while LOSING $500 million a year on sales well under a billion dollars? When everyone finally awoke from the collective drunk of that stupid period and the NYSE, the NASDAQ and huge parts of the telecom and tech industries collapsed almost overnight, where was Krugman and the great lefty economic wailing?

The boil of that period may have been lanced during the presidency of GWB, but the infection started and was allowed to fester during the Clinton years. Or did we all forget that Krugman was a paid Enron advisor?

"misleading, given what GDP actually measures. It is not necessarily economic growth"

Yes, it is. Economic growth is economic growth.

As you note, it's neutral w/r/t what we actually want to see happen - even if the cleanup after a hostile nuclear exchange increased GDP, we wouldn't want to have to do it - but that appeals to a fuzzier, utilitarian concept of "healthy" growth. Which is unquantifiable. The appeal of GDP is that it is an (approximation of) a quantum.

"GDP - which measures income as opposed to stores of wealth) "

It measures neither.

Oh, for the love of GOD!

If recovering from disasters spurred the economy, it would make sense to spend part of our time destroying cities so we could spend the other part rebuilding them. Keynesian bullshit. (He did argue this was exactly the case.) Any form of this rancid nonsense should insult the intelligence of a 6 year old.

"Stimulus" indeed. If the someone wants to say we do not measure the cost of reconstruction well, I'll be happy to go along for the ride. But, honestly!

It measures neither.

Considering what it does measure, his point, "Disaster recovery spending is often savings/wealth converted into spending," still seems worth consideration.

http://www.breitbart.com/news/2005/10/31/D8DJ1SDG0.html

I hate to say I told you so...who am I kidding I LOVE to say I told you so. So I'll say it again. I told you so.

his point, "Disaster recovery spending is often savings/wealth converted into spending," still seems worth consideration.

Or maybe not. I'll take a shot anyway.

Unless you are in the habit of keeping your savings in a mattress or buried mason jars, they are already at work in the economy as investment capital. So savings and investment amount to the same thing and they are already productive in the formation of our GNP. (This is what makes the lefty lines about things "only benefitting the rich" so patently bogus.) Moving these assets to cover reconstruction costs would slide them more to the GDP side of the ledger as long as we are assuming, reasonably I think, that construction is more oriented to domestic production than the economy as a whole. So reconstruction can make GDP rise at the expense of GNP.

This wouldn't necessarily be the case elsewhere, but I understand that NO is a port city rather than a production center. So it may not contribute a whole lot to GDP and instead makes its value mainly on the GNP side of things. If so, I'd expect the GNP to be dropping more in real numbers from its mormative Q3 rate (whatever that would be) than the Q3 GDP rose -- assuming NO normally generates enough value to be worth rebuilding.

Beats me if any of that is actually happening. All I really know is that (1) wealth at any moment is finite and (2) assets in a free economy naturally flow to their most productive use. Reconstructing a city draws assets from other uses that are more productive than building cities. So this drain of assets from more productive uses acts as an obstacle to economic growth.

Since there is deficit spending in the picture, though, I have a problem getting a clear picture of anything in the short haul. It isn't until the interest on that borrowed money gets factored in that the actual costs of the disaster are fully accounted for. Fortunately, the market is brilliant at figuring that sort of thing out and reflecting it in trading behavior.

The release of Q3 GNP numbers will help tell the story about whether we are looking at an economy that is incredibly robust despite disasters or whether we are just seeing the obvious shift of assets toward GDP-only production. But it will probably be another quarter or two before the numbers become meaningful to me on account of the deficit spending hangover the markets will be factoring in.

In any case, the business about converting savings to spending does not strike me as meaningful except as an obscure way of raising the GNP/GDP distinction.

OK. Now I'll let some actual economists take me to school.