The Commerce Department said the nation’s gross domestic product expanded at a 4.1% annual rate in the July-to-September period, up from its previous estimate of 3.6%.
On December 20, 2013, Don Lee writes in the Los Angeles Times:
Adding to the rosier economic outlook for next year, revised government data show the economy grew in the third quarter at the fastest pace in nearly two years as American consumers spent billions of dollars more than originally thought.
Officials had previously estimated that GDP grew at a 3.6% rate in the quarter and figured most of that came from an unusually large increase in the restocking of goods, something that typically can’t be maintained throughout the year.
But the new report found that consumer spending was stronger and had contributed significantly more than believed to the quarter’s jump in GDP growth from a rate of 2.5% in the second quarter.
That suggested there was stronger underlying momentum than previously thought, raising hopes that the economy will kick into higher gear next year and escape the sputtering recovery from the Great Recession.
Personal spending accounts for more than two-thirds of GDP, but it has increased at a sluggish rate this year and generally throughout the 4 1/2-year recovery.
New third-quarter data found that people spent more on services such as healthcare, recreation and financial services than initially thought. Friday’s report said consumer spending rose 2% in the third quarter, not 1.4% as previously estimated.
Although the revised spending number is far from robust, more recent retail sales and other economic statistics suggest that personal consumption is picking up and will provide a bigger boost to economic growth next year.
The primary keys to consumer spending are job growth and income gains — and both have been looking better in recent months. The improved job market was a main factor in the Federal Reserve‘s decision this week to start pulling back on its huge bond-buying stimulus program.
Friday’s report also showed a little more business spending in the third quarter than previously estimated, notably for intellectual property products. Combined, home-building and nonresidential investments added to the third quarter’s economic growth, and net exports and increased spending by state and local governments also contributed to the overall expansion.
Stronger consumer activity will be needed especially if capital spending by companies grows moderately, as it has this year. Corporate profits rose 1.9% in the third quarter, down from 3.3% in the second quarter, according to Friday’s report.
For the last three months this year, GDP growth is looking weaker largely because of an expected drag in inventories as companies run down their stockpiles. But analysts have steadily raised their GDP growth estimates for the near term.
On Thursday, Macroeconomic Advisers estimated that GDP would advance at a 2.2% annual pace in the fourth quarter, up from its projection of 1.7% just a week earlier.
And most Federal Reserve policymakers, in a forecast this week, projected GDP growth of 2.8% to 3.2% next year, up from 2.2% to 2.3% expected for this year.
One of the biggest risks to the outlook, analysts said, is an expected rise in interest rates and what that might mean for the recovering housing market as the Fed gradually pulls back from its unprecedented stimulus.
Don Lee and the sources for this article are living in fantasyland! Anyone who thinks that 2.8% to 3.2% GDP growth is stellar does not understand what the real potential of a FUTURE economy could be if we eliminated the barriers to economic growth that result in concentrated ownership of corporations with corporations constantly seeking means to production that will cut costs, including an emphasis on replacing stagnant labor productivity with far more productive gains achieved through the employment of human-intelligent machines, super-automation, robotics, digital computerized operations and other non-human productive capital assets.
Economists who are one-factor labor ONLY thinkers fail to grasp the reality that full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing productivity and role as an efficient and profitable replacement for labor.
So while the masses of the American population now presently employed continue to have unsatisfied needs and wants for products and services, and are spending their limited incomes toward fulfilling their desires, they will continue to deny themselves consumption because of the underlying gut fear that they may not have a job in a year or five years, with no alternative except for a greater reliance on taxpayer extracted and incurred national debt financed government welfare, open and concealed. What purchasing they have done is arguably traceable to credit card debt and loans based on limited home equity values, as well as a practicing spending conservation. The reality is that increasingly more Americans are experiencing flatline or declining incomes and benefits from their jobs as well as increasing pressure to work longer hours for the same pay, with poor prospects for retirement security.
The vast majority of Americans are oblivious to the role of physical productive capital, which is to do ever more of the work, which produces income to those who own such capital assets. They sense and experience that they are less secure with prospects for good incomes that they can rely on to support themselves and their families, but they feel helpless to do anything about their plight and continue to struggle on day by day, month by month. They will eventually come to realize that they are a statistic in a nation of industrial sharecroppers who work for somebody else and have no other source of income.
The majority of Americans, dependent on labor worker wages, no longer think that jobs and labor wages will return suddenly—if at all—and at a livable earnings level, that the value of their homes will rebound, or that their limited retirement funds will soon be fully restored. Americans are scared but attribute their worsening finances to job losses, reduced hours, wage givebacks, and overall reduced earnings. They do not understand the role of productive capital driven by technological innovation and science and the requirement for them to become capital “workers” (owners), as well as labor workers, to earn a viable economic future.
And until we, as a society, understand how wealth is produced, how consumers earn the money to buy products and services and the nature of capital ownership, we will not be able to set a course to obtain an affluent quality of life for middle and working class citizens, where everyone, according to President Obama “can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.” We need to build an economy of universally productive individuals and households, through broadened private sector productive, wealth-creating, income-producing capital ownership and real job opportunities resulting from significant economic growth with GDP in the double digits.
Market-sourced income (through concentrated capital ownership) has concentrated in individuals and families who will not recycle it back through the market as payment for consumer products and services. They already have most of what they want and need so they invest their excess in new productive power, making them richer and richer through greater capital ownership. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. The symptoms of dysfunction are capital ownership concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the 99 percent majority of people who depend entirely on wages from their labor or welfare and cannot survive more than a week or two without a paycheck. The production side of the economy is under-nourished and hobbled as a result.
We cannot balance the budget without cutting out coerced taxpayer-dependent redistribution of the earnings of capital “workers” (owners), which if we did at this juncture would collapse the economy and ruin lives, resulting in social strife, personal suffering and degradation, the erosion of freedom, and ultimately anarchy, which will bring on totalitarian government. While welfare, private charity, boondoggle employment and other redistribution measures are now seen as necessary, they do not have to be sustained indefinitely. There are policies that can be adopted and executed to reverse the ultimate direction of collapse of the American market economy system. These policies are based on the recognition that as the production of products and services changes from labor intensive to capital intensive, the way in which every human being––not just a few, but every person––earns his or her income must change in the same way. At the core of this quiet revolution is the understanding and commitment to broadening the ownership of productive capital.
Conventionally, most people do not have the right to acquire productive capital with the self-financing earnings of capital; they are left to acquire, as best as they can, with their earnings as labor workers and the pledge of past savings. This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital. Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively minuscule, as are their dividend payments compared to the top 10 percent of capital owners.
What historically empowered America’s original capitalists was conventional savings-based finance and the pledging or mortgaging of assets, with access to further ownership of new productive capital available only to those who were already well capitalized. As has been the case, credit to purchase capital is made available by financial institutions ONLY to people who already own capital and other forms of equity, such as the equity in their home that can be pledged as loan security––those who meet the universal requirement for collateral. Lenders will only extend credit to people who already have assets. Thus, the rich are made ever richer through their continuous accumulation of capital asset ownership, while the poor (people without a viable capital estate) remain poor and dependent on their labor to produce income. Thus, the system is restrictive and capital ownership is clinically denied to those who need it.
As binary economist Louis Kelso asserted: “The problem with conventional financing techniques is that they address only the productive power of enterprise and the enhancement of the earning power of the rich minority. Sustaining or increasing the earning power of the majority of consumers who are dependent entirely upon the earnings of their labor, or upon welfare, is left to government or governmentally assisted redistribution of income and to chance.”
Unfortunately, pursuing economic democracy has been frustrated by the systemic concentration of economic power and exclusionary access to future capital credit to the advantage of the wealthiest Americans. The so-called 1 percent rulers of corporations have rigged the financial system to enable this already rich ownership class to systematically further enrich themselves as capital formation occurs and technological industrialization spreads throughout the world, leaving behind the 99 percent to depend on income redistribution through make work “full employment” policies, government boondoggles, excessive military build-up and dependence on arms production and sales, and social welfare programs due to the lack of an alternative to full employment and the growing economic helplessness and dependency. The unsatisfied needs and wants of society are not in that 1 percent or for that matter the 5 percent; those people are not the ones who are hurting.
Today’s techniques of finance are designed to make the rich richer. None are designed to make the poor richer. That’s why the poor are poor. The reason they are poor is because they do not have viable capital ownership. Thus, we need to focus on revising today’s techniques of finance to broaden capital ownership.
The purpose of production in a market economy is the consumption of products and services by the consumers who make up the economy. But without income, the non-capital ownership class, the 99 percenters, cannot afford to purchase the products and services they desire. But when incomes rise among consumers who have the need and desire to improve their material standard of living, the market demand for products and services strengthens, which in turn increases production and results in a growth economy.
Our national economic policy needs to eliminate all barriers to enabling productive capital acquisition to take place through commercially insured capital credit. By doing so the result would be a quiet revolution in which economic plutocracy will transform to economic democracy.
It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.
For specific policy solutions see the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797 and support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.
http://www.latimes.com/business/la-fi-gdp-economy-growth-20131221,0,1887992.story#axzz2oEcLWioA
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