Page 1 of 2 12 LastLast
Results 1 to 25 of 43

Thread: US Economy grew at estimated 3.2%

  1. #1
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default US Economy grew at estimated 3.2%

    http://www.bloomberg.com/apps/news?p...d=aDGvmWmB18w0

    GDP Probably Grew as Stimulus Took Hold: U.S. Economy Preview


    By Timothy R. Homan

    Oct. 25 (Bloomberg) -- The economy in the U.S. probably grew in the third quarter at the fastest pace in two years as government stimulus helped bring an end to the worst recession since the 1930s, economists said before reports this week.

    The world’s largest economy grew at a 3.2 percent pace from July through September after shrinking the previous four quarters, according to the median estimate of 65 economists surveyed by Bloomberg News. Other reports may show sales of new homes and orders for long-lasting goods increased.

    Americans flocked to auto showrooms and real-estate offices last quarter to take advantage of government programs such as “cash-for-clunkers” and tax credits for first-time homebuyers. Growing demand caused stockpiles to keep falling, which will prompt companies to rev up assembly lines and help sustain the recovery into 2010 even as unemployment climbs.

    “The recovery is off to a decent but unspectacular start,” said Joe Brusuelas, a director at Moody’s Economy.com in West Chester, Pennsylvania. “While another large drawdown in inventories will be a drag on third-quarter growth, it sets the stage for a longer and stronger upturn in manufacturing.”

    The Commerce Department’s report on gross domestic product is due Oct. 29. The four consecutive decreases through the second quarter marks the longest stretch of declines since quarterly records began in 1947. The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades.

    Stocks Climb

    Stocks have rallied as earnings at companies from Caterpillar Inc. to Morgan Stanley topped estimates. Profits exceeded expectations at about 80 percent of the companies in the Standard & Poor’s 500 Index that have released results, according to Bloomberg data. That marks the highest proportion in data going back to 1993. The S&P 500 closed at a one-year high on Oct. 19.

    Consumer spending last quarter probably jumped at a 3.1 percent annual rate from the previous three months, the biggest gain since the first quarter of 2007, the GDP report is also projected to show.

    September readings on household purchases, due from the Commerce Department on Oct. 30, may show the quarter ended on a soft note after the Obama administration’s car incentive expired the month before. Spending probably fell 0.5 percent last month as car sales slowed after jumping 1.3 percent in August, the biggest gain since 2001.

    The so-called cash-for-clunkers program offered buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. The plan boosted sales by about 700,000 vehicles, according to a Transportation Department estimate.

    Homebuyer Credit

    The administration’s $787 billion stimulus package, signed into law in February, included an $8,000 tax credit for first- time homebuyers that expires at the end of November.

    New-home sales last month increased 2.6 percent to an annual pace of 440,000, the highest level since August 2008 and reflecting the boost from the credit, according to economists surveyed. The Commerce Department’s report is due Oct. 28.

    Lawmakers in Washington are debating an extension of the credit through June, and are discussing expanding it to all buyers under an income cap.

    A report from S&P/Case-Shiller home-price index due Oct. 27 may show home values in 20 U.S. metropolitan areas declined in the year ended August at the slowest pace since January 2008, according to the survey median.

    More Orders

    Orders for durable goods rose 1 percent in September, economists project the Commerce Department will report Oct. 28. A gain would be the fourth in the last six months and indicates companies are starting to invest in new equipment.

    Business spending and housing “stand ready to provide the oomph necessary to generate continued optimism until consumer activity stabilizes,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.

    Optimism among U.S. consumers in October is forecast to rise even as unemployment probably also increased, economists said. The Conference Board’s confidence index, due Oct. 27, climbed to 53.5 from 53.1, according to the survey median.

    The economy will likely grow at a 2.4 percent annual rate from October through December, according to a Bloomberg survey earlier this month. GDP will also expand 2.4 percent next year and 2.8 percent in 2011, the survey showed, compared with an average of 3.4 percent growth over the past six decades.

    “This has been the mother of all recessions in our working lifetime,” Jim Owens, Caterpillar’s chief executive officer, said on a conference call last week. The Peoria, Illinois-based company, the world’s largest producer of backhoes and bulldozers, predicted on Oct. 20 that sales may rise as much as 25 percent next year.

  2. #2
    God/dess erotictonic's Avatar
    Joined
    Dec 2003
    Location
    Watching lalaland
    Posts
    2,307
    Thanks
    17
    Thanked 39 Times in 34 Posts

    Default Re: US Economy grew at estimated 3.2%

    I'm convinced! Tell me more, fool!

  3. #3
    Senior Member MOP's Avatar
    Joined
    Sep 2009
    Location
    ohio
    Posts
    177
    Thanks
    356
    Thanked 52 Times in 22 Posts

    Default Re: US Economy grew at estimated 3.2%

    Great!

  4. #4
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: US Economy grew at estimated 3.2%

    ^^^ yup great news if you ignore a whole bunch of 'minor details' ...

    A. the acceleration of new car sales in the third quarter is entirely due to the gov't handing out 'free money' ( which of course isn't actually free ) via 'cash for clunkers'. This drew 'forward' new auto sales from the 4th quarter and from 2010. So while mainstream financial media is reporting positive sales growth over the last couple of months, they are NOT reporting that with 'cash for clunkers' gone new auto sales in the next few months will crater. This is already the case in the preliminary October new car sales data.

    B. The acceleration of residential home sales in the third quarter is entirely due to the gov't handing out 'free money' ( which again isn't actually free ) via the first time homebuyer's tax credit. This also drew 'forward' home sales from the 4th quarter and from 2010. And if you look at the details of new home sales data you will see that sales at this very moment are already tanking now that the homebuyer's tax credit is expiring.

    C. US stocks are up ~%15% because the US dollar is down a similar ~15% as a result of gov't money printing. In terms of 'purchasing power', the US stock markets have gone nowhere. This is actually intensifying, with the Treasury about to try and sell a record $100 billion dollars worth of freshly printed T bonds to the Chinese / Japanese / Middle East this coming week.

    The bottom line is that the only 'positive' economic developments stem from the issuing of new consumer credit to people whose ability to repay is questionable to say the least ... new consumer credit only made possible because the US gov't ( = future US taxpayers ) 'gave' these people a down payment that they otherwise could not have come up with on their own. It also remains to be seen how many of these new car loans and new mortgage loans will still be 'current' a year from now ... or whether the US taxpayer will wind up taking a double loss ( paying for the original down payment plus eating part of the future loan losses).

  5. #5
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: US Economy grew at estimated 3.2%

    Woe be to us if international creditors decide our children are not a good credit risk. Given shoddy education (and attitude to education) along with selfishness (never loan to the selfish) and unlikely prospects for productivity (jobs over seas) we are looking just as good as Somalia. Well, maybe that is an exaggeration, but we all know who is paying these bills - the next generation and the generation after that.

    Also we need to look at WHO is receiving these benefits. When the reading goes on about "America" we think all Americans. The truth of it is, it is a small percentage of Americans.

  6. #6
    God/dess hockeybobby's Avatar
    Joined
    Nov 2007
    Location
    Canada
    Posts
    4,969
    Thanks
    1,811
    Thanked 597 Times in 382 Posts
    Blog Entries
    1

    Default Re: US Economy grew at estimated 3.2%

    Even when there is positive news, it's a negative for Mel. But why? Because that doesn't fit her fantasy that the U.S. is going down the drain. Obama stands for everything Mel and her right-wing fellow-travellers despise and rail against. If the U.S. doesn't go into the toilet, it puts the lie to all their negativity.

    Technically speaking, the recession is over with a rise in GDP. The government's "priming of the pump" did what it was supposed to do, it stopped the bleeding. The recovery has already started.

  7. The Following User Says Thank You to hockeybobby For This Useful Post:


  8. #7
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: US Economy grew at estimated 3.2%

    yeah well then how do you explain MoveOn.org 'father' and uber-liberal George Soros agreeing on this point ?



    (snip)"The big profits made by some of Wall Street’s leading banks are “hidden gifts” from the state, and taxpayer resentment of such companies is “justified”, George Soros, the fund manager, said in an interview with the Financial Times.

    “Those earnings are not the achievement of risk-takers,” Mr Soros said. “These are gifts, hidden gifts, from the government"(snip)

    to put the point ever so bluntly, much of the recent US stock market run-up has also been attributable to the booking of record profits by big Wall St financial firms ... firms who have been provided 'free' capital by the US taxpayer ( via almost zero interest TARP loans ) which made such profits possible.


    Bobby, the larger point is that every bit of the supposed 'improvement' in the original news blurb post is A - extremely temporary, and B - the direct result of the US gov't 'giving away' money that it doesn't have ! As soon as the US gov't stops 'giving away' more money, all of these statistics will drop right back to ( or even lower than) the point where they started. But to add insult to injury, future US taxpayers will also be on the hook to eventually pay for the additional borrowed money that the US gov't has already 'given away' to achieve these extremely temporary upswings, which will subtract from real future US economic growth potential.

  9. #8
    Featured Member
    Joined
    Oct 2007
    Posts
    837
    Thanks
    104
    Thanked 791 Times in 316 Posts

    Default Re: US Economy grew at estimated 3.2%

    Here is a good article on how the GDP is calculated and how the government can manipulate it.

    http://www.financialsense.com/fsu/ed...2009/0911.html
    “Never argue with an idiot. They will only bring you down to their level and beat you with experience.”

  10. #9
    God/dess hockeybobby's Avatar
    Joined
    Nov 2007
    Location
    Canada
    Posts
    4,969
    Thanks
    1,811
    Thanked 597 Times in 382 Posts
    Blog Entries
    1

    Default Re: US Economy grew at estimated 3.2%

    Quote Originally Posted by Melonie View Post
    Bobby, the larger point is that every bit of the supposed 'improvement' in the original news blurb post is A - extremely temporary, and B - the direct result of the US gov't 'giving away' money that it doesn't have ! As soon as the US gov't stops 'giving away' more money, all of these statistics will drop right back to ( or even lower than) the point where they started. But to add insult to injury, future US taxpayers will also be on the hook to eventually pay for the additional borrowed money that the US gov't has already 'given away' to achieve these extremely temporary upswings, which will subtract from real future US economic growth potential.
    The stimulus was meant to be temporary. Now, if you are right, next quarter will have negative GDP like there was before the stimulus. I doubt you will admit you were wrong if this isn't the case though...you'll be on to your next negative topic.

    Future taxpayers being on the hook for current deficits is just the way it works Mel. It's like a social contract. Governments (all over the world btw) can smooth out these extraordinary events by spending now, in order to throw a lifeline to sputtering businesses and households, for the greater good of the nation. It's compassion and common sense Mel. It's like a family might act in response to a family member in current trouble.

    The nation is not a dispassionate corporation Mel. It exists for the benefit of the citizens.

  11. #10
    God/dess Paris's Avatar
    Joined
    Nov 2002
    Location
    Oregon
    Posts
    6,345
    Thanks
    168
    Thanked 801 Times in 419 Posts

    Default Re: US Economy grew at estimated 3.2%

    Quote Originally Posted by Melonie View Post
    ^^^ yup great news if you ignore a whole bunch of 'minor details' ...

    A. the acceleration of new car sales in the third quarter is entirely due to the gov't handing out 'free money' ( which of course isn't actually free ) via 'cash for clunkers'. This drew 'forward' new auto sales from the 4th quarter and from 2010. So while mainstream financial media is reporting positive sales growth over the last couple of months, they are NOT reporting that with 'cash for clunkers' gone new auto sales in the next few months will crater. This is already the case in the preliminary October new car sales data.

    B. The acceleration of residential home sales in the third quarter is entirely due to the gov't handing out 'free money' ( which again isn't actually free ) via the first time homebuyer's tax credit. This also drew 'forward' home sales from the 4th quarter and from 2010. And if you look at the details of new home sales data you will see that sales at this very moment are already tanking now that the homebuyer's tax credit is expiring.

    C. US stocks are up ~%15% because the US dollar is down a similar ~15% as a result of gov't money printing. In terms of 'purchasing power', the US stock markets have gone nowhere. This is actually intensifying, with the Treasury about to try and sell a record $100 billion dollars worth of freshly printed T bonds to the Chinese / Japanese / Middle East this coming week.

    The bottom line is that the only 'positive' economic developments stem from the issuing of new consumer credit to people whose ability to repay is questionable to say the least ... new consumer credit only made possible because the US gov't ( = future US taxpayers ) 'gave' these people a down payment that they otherwise could not have come up with on their own. It also remains to be seen how many of these new car loans and new mortgage loans will still be 'current' a year from now ... or whether the US taxpayer will wind up taking a double loss ( paying for the original down payment plus eating part of the future loan losses).

    Yes, yes and yes! Until we do something about the ever widening income inequality, we are going to be stuck in this jobless recovery cycle. Ultimately, the economy cannot grow long term until more people actually have some money to spend.


    Promote yourself and earn more money! This is a business that is owned by strippers for strippers. Let's make that money!


  12. The Following User Says Thank You to Paris For This Useful Post:


  13. #11
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: US Economy grew at estimated 3.2%

    Quote Originally Posted by erotictonic View Post
    I'm convinced! Tell me more, fool!
    Those are the facts, fool!

  14. #12
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: US Economy grew at estimated 3.2%

    Quote Originally Posted by Melonie View Post

    C. US stocks are up ~%15% because the US dollar is down a similar ~15% as a result of gov't money printing. In terms of 'purchasing power', the US stock markets have gone nowhere. This is actually intensifying, with the Treasury about to try and sell a record $100 billion dollars worth of freshly printed T bonds to the Chinese / Japanese / Middle East this coming week.
    As always, you're making stuff up to support your ideology. Stocks are up 20% because the economic indicators show things are improving. Inflation is at 0% so 'purchasing power' has increased 20% for stockholders.

  15. The Following 2 Users Say Thank You to eagle2 For This Useful Post:


  16. #13
    God/dess hockeybobby's Avatar
    Joined
    Nov 2007
    Location
    Canada
    Posts
    4,969
    Thanks
    1,811
    Thanked 597 Times in 382 Posts
    Blog Entries
    1

    Default Re: US Economy grew at estimated 3.2%

    The stock market is a leading indicator, typically suggesting what will happen six months forward in the economy in general. Consesus amongst market participants is better times ahead.

  17. #14
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: US Economy grew at estimated 3.2%

    here we go with 'concensus' claims again ... with 'concensus' opinions being similarly confined to those opinions that mainstream financial media are willing to report !!! In point of fact, there is a huge body of opinion on the other side of the fence ...

    (snip)"Real Lesson of Japan's Lost Decades

    Neither Koo nor Krugman have learned a thing about the Real Lesson of Japan's Lost Decades.

    The real lesson is no matter how much money you throw around, economies cannot recover until noncollectable debts are written off. That is why you have “zero interest rates and still nothing’s happening.”

    The moment fiscal stimulus stops economies are virtually guaranteed to relapse until the core problem is resolved. The problem is Asset Bubbles, Malinvestments, and debts that cannot possibly be collected.

    Bailing out the banks did nothing to fix these problems. Consumers are still saddled in debt, in underwater mortgages, with no job. Moreover, there is no driver for jobs given rampant overcapacity in nearly every sector.

    Banks do not want to lend in this kind of environment so they don't. Businesses do not want to expand in this kind of environment so they don't. Meanwhile the Obama administration is making matters worse by increasing taxes on small businesses and proposing everyone pay for health insurance, with businesses forced to offer a plan or pony up part of the cost.

    This too is giving small businesses an incentive not to hire. Housing prices are too high yet the Administration and Congress are hell bent on propping up prices. The solution is to let prices fall until they are affordable.

    The irony is after all the bitching we have heard and all the "Affordable Housing Plans" out of Congress, we have a golden opportunity for affordable housing and no one wants it.

    This proves beyond a shadow of a doubt that "affordable housing" was nothing but a scam for the Fannie Mae, Freddie Mac Congressional slush fund all along."(snip)

    from


    I doubt you will admit you were wrong if this isn't the case though...you'll be on to your next negative topic.
    Actually I hope that I AM wrong ... because being wrong would mean that I could afford to move back 'home' !

    And yes I am certainly willing to face economic facts, but actual facts and manipulated statistics are far from the same thing. In fact if you recall, not only am I willing to face facts but I was also willing to 'put my money where my mouth is'. You may recall that I accepted a wager with another Dollar Den poster immediately after Obama won the election last november that the US economy would be far worse off economically 6 months into his presidency. That Dollar Den poster in fact still owes me a one ounce gold bar ( which has gone up $150 in price since the original bet was placed ) !
    Last edited by Melonie; 10-25-2009 at 02:09 PM.

  18. #15
    God/dess hockeybobby's Avatar
    Joined
    Nov 2007
    Location
    Canada
    Posts
    4,969
    Thanks
    1,811
    Thanked 597 Times in 382 Posts
    Blog Entries
    1

    Default Re: US Economy grew at estimated 3.2%

    The market participants vote with their money. That is the consensus I'm speaking of. When the stock market goes up, we can rightly say that the participants are gambling in favour of the economy rising. Wouldn't you agree?

  19. #16
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: US Economy grew at estimated 3.2%

    ^^^ not when the vast majority of marginal price activity of traded shares is taking place between the proprietary trading accounts of the major Wall St. financial houses using US taxpayer money !!!! This indeed involves 'gambling' ... but arguably gambling employing a weighted roulette wheel or a marked deck !!!





    ~

  20. #17
    God/dess Paris's Avatar
    Joined
    Nov 2002
    Location
    Oregon
    Posts
    6,345
    Thanks
    168
    Thanked 801 Times in 419 Posts

    Default Re: US Economy grew at estimated 3.2%

    Quote Originally Posted by hockeybobby View Post
    The market participants vote with their money. That is the consensus I'm speaking of. When the stock market goes up, we can rightly say that the participants are gambling in favour of the economy rising. Wouldn't you agree?
    I hate to be negative about this, but the stock market model of today is not the one of previous times. With the advent of high-frequency trading, the market becomes artificially inflated much the same way the mortgage market inflated artificially over the last 6 years.

    People are essentially using unethical, yet legal, methods of making a ton of money in the market. I imagine that this trading tactic will be made illegal at some point, but for now it is still legal and still happening.

    Sure, some of the high priced stocks are worth it, but I'm afraid that we are going to see prices higher than the actual value of the stock, causing a correction later on, just like what we are experiencing in the housing market today.


    Promote yourself and earn more money! This is a business that is owned by strippers for strippers. Let's make that money!


  21. The Following User Says Thank You to Paris For This Useful Post:


  22. #18
    God/dess Paris's Avatar
    Joined
    Nov 2002
    Location
    Oregon
    Posts
    6,345
    Thanks
    168
    Thanked 801 Times in 419 Posts

    Default Re: US Economy grew at estimated 3.2%

    Quote Originally Posted by Melonie View Post
    ^^^ not when the vast majority of marginal price activity of traded shares is taking place between the proprietary trading accounts of the major Wall St. financial houses using US taxpayer money !!!! This indeed involves 'gambling' ... but arguably gambling employing a weighted roulette wheel or a marked deck !!!

    http://zerohedge.blogspot.com/2009/0...ipulation.html

    http://agonist.org/sean_paul_kelley/...ith_advantages

    ~
    Good lord! We actually agree on something.


    Promote yourself and earn more money! This is a business that is owned by strippers for strippers. Let's make that money!


  23. #19
    God/dess hockeybobby's Avatar
    Joined
    Nov 2007
    Location
    Canada
    Posts
    4,969
    Thanks
    1,811
    Thanked 597 Times in 382 Posts
    Blog Entries
    1

    Default Re: US Economy grew at estimated 3.2%

    The market reflects even this information Mel. You know it, and can therefore profit from it. The market prices reflect all of the information currently knowable. There will be corrections and profit taking of course, but the market is currently forecasting a recovering economy, whether you like it or not.

  24. #20
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: US Economy grew at estimated 3.2%

    ^^^ damn Bobby, you really don't get out much do you ???



    (snip)"so that the Fed, in becoming the lender of last resort, would allow any collateral, up to and including stocks, to be funded by the Federal Reserve's credit facility, in order to prevent the $4.5 trillion repo financing system from imploding. By doing so, the Federal Reserve effectively gave a Carte Blanche to primary dealers to purchase any and all equities they so desired, with such purchases immediately being funded by the US taxpayer, via the PDCF. In essence, this was equivalent to the Fed purchasing equities by itself through a Primary Dealer agent.

    Readers who have been concerned with the moral hazard provided by the Fed's monetization of Treasury and Mortgage debt, should be doubly concerned by this Fed action which sent three key messages to Wall Street: i) it made sure that Primary Dealers would generate massive profits on risky assets as the Fed would provide the funding to acquire any and all stocks (keep in mind the cost of funding of the PDCF to primary dealers was negligible); ii) it tipped its hand as to the existence and modus operandi of the rumored "plunge protection team," iii) and it made clear that the much maligned, by none other than Chairman Bernanke, concept of "moral hazard" is the one and only systemically relevant doctrine as long as the Fed's Chairman is in control, and not subject to any auditing auspices. The fact that PDs used over $140 billion of taxpayer money within a few weeks of the program's expansion in September to fund what one can assume were exclusively equity purchases, demonstrates that the American financial system got the message."(snip)


    Good lord! We actually agree on something.
    that's probably because we're both the type that are able to 'smell a rat', and go digging for TRUE facts, rather than accepting mainstream financial media's pre-packaged pablum at face value ! While our personal economic 'theories' may differ, typically our acknowledgement / interpretations of the true economic facts does not.

    ~
    Last edited by Melonie; 10-25-2009 at 03:20 PM.

  25. #21
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: US Economy grew at estimated 3.2%

    try some 'foreign' perspective ...

    (snip)"The US stock market is overvalued by 40%
    Posted by Neil Hume on Oct 23 10:32.

    Andrew Smithers, of London-based research house Smithers & Co, is not a man who has any truck with nonsense. Particularly when it comes from the mouths of stockbrokers.

    In his latest report, The US Stock Market: Value and Nonsense About It, he takes to task those who claim US equities are still cheap:

    As we have remarked before, valid approaches to value are disliked by many practitioners as they get in the way of business. As is inherently likely, and as a glance at Chart 1 will confirm, the stock market has been underpriced around 50% of the time. Those who sell shares would rather it were cheap 100% of the time and therefore prefer invalid metrics. The ones used vary from time to time, as those employed are restricted to those which currently give the desired answer that “stocks are cheap”.

    Smithers says there are only two ‘valid’ ways to value the market. One is by using a cyclically adjusted PE ratio and the other by using the Q ratio, which compares the market capitalisation of companies with their net worth, adjusted to current prices.
    Whichever technique is used, the answer is the same: the US stock market is overvalued by around 40%.

    Smithers explains:

    As the valid measures of the US market show that it is currently around 40% overvalued, some ingenuity is needed to claim otherwise. The EPS for the past 12 months on the S&P 500 is $7.51 so, with the index at 1071, it is selling at a trailing PE of 142. This is far higher than it has ever been before, as the previous end month record is a PE of 47. But current multiples are no guide to value; when depressed, or elevated, they need to be adjusted to their cyclical norm.

    This is how the cyclically adjusted PE (”CAPE”) is calculated and when its current value is compared with long-term average, using the geometric means of EPS and cyclically adjusted PEs,6 it shows that the market is 37.7% overpriced using 10 years of earnings’ data and 45% if 20 years are used. This method is therefore of no use to those who sell shares, or have made faulty claims about value in the past. The following are among the most common approaches to circumventing the problem this presents. Some produce relatively small distortions, but these can amount to a substantial degree of misinformation when combined.

    Of course , that doesn’t mean equity markets won’t keep rising given the tsunami of liquidity that has been unleashed by the world’s central banks. But it should give investors some pause for thought, even if they keep backing the momentum trade."(snip)

    from

  26. #22
    God/dess hockeybobby's Avatar
    Joined
    Nov 2007
    Location
    Canada
    Posts
    4,969
    Thanks
    1,811
    Thanked 597 Times in 382 Posts
    Blog Entries
    1

    Default Re: US Economy grew at estimated 3.2%

    Buy Goldman Sachs if you like their unfair advantage. If the "loophole" gets closed, short it. It doesn't change the fact that the stock market is rising, and that it is a leading indicator for the economy. I prefer to believe the total market's opinion on the value of something rather than one of your gurus. Like I said, there will be corrections, there always are, when enough people vote with their money.

    It's funny to me how even when the signals are good, it's bad to you.

  27. #23
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: US Economy grew at estimated 3.2%

    and if you'd like to take the opportunity to learn from the past ...



    (snip)"I can calculate the movement of the stars, but not the madness of men. -Sir Isaac Newton

    There are five zombie banks that control between 20%-40% of NYSE daily volume. It started earlier this year with Citigroup and Bank of America. They equaled 10% of NYSE total daily volume. Now the trend in High Frequency Trading (HFT) is on the rise. This begs several questions. If this is a healthy bull market, why are just five stocks running the exchange? Is it possible the bailout money is being funneled into just a few stocks? To get a really good answer we’re going to visit London England in the year 1720. Let’s explore how history is repeating itself with the new South Sea Bubble. The goal by the end of this article is to draw connections between the greatest financial bubble of all time and what’s happening today. Hopefully it will be so obvious you’ll feel sick. (snip)

  28. #24
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: US Economy grew at estimated 3.2%

    Quote Originally Posted by hockeybobby View Post
    Buy Goldman Sachs if you like their unfair advantage. If the "loophole" gets closed, short it. It doesn't change the fact that the stock market is rising, and that it is a leading indicator for the economy. I prefer to believe the total market's opinion on the value of something rather than one of your gurus. Like I said, there will be corrections, there always are, when enough people vote with their money.

    It's funny to me how even when the signals are good, it's bad to you.
    Um? Where do you get the total market's opinion? Cuz I am thinking there are few "well monied^H^H^Hbailed out" shenanigans running this bull market. I'm thinking there are a lot of people sitting this one out except those willing to play musical chairs hoping to be OK when the music stops.

  29. #25
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: US Economy grew at estimated 3.2%

    ^^^ well the 'music stopped' in the Detroit real estate market ... however I somehow highly doubt that these property values got 'marked to market' in the latest economic statistics ...



    (snip)"On the auction block in Detroit: almost 9,000 homes and lots in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters.

    Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York's Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.

    The tax foreclosure auction by Wayne County authorities also stood as one of the most ambitious one-stop attempts to sell off urban property since the real-estate market collapse.

    Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.

    The county had no estimate of how much was raised by the auction, a second attempt to sell property that had failed to find buyers for the full amount of back taxes in September.

    The unsold parcels add to an expanding ghost town within the once-vibrant town known worldwide as the Motor City.

    Critics say the poor showing at the auction underscores the limits of using a market-based system to clean up property tax problems. They say the system has enriched a few but failed to deliver a way for Detroit to staunch its dwindling population and could worsen the vacancy crisis.

    One proposed alternative would have officials take control of the tax foreclosure process through a land bank program of the kind being used to revitalize the nearby city of Flint.

    The stakes in the debate are rising.

    The number of Detroit properties in tax foreclosure has more than tripled since 2007 and seems certain to rise further. The lots for sale last week represented arrears from only 2006, well before the worst of the downturn for U.S. automakers."(snip)


    The underlying question of course is 'how much is a property really worth if the future property tax liability, the 'neighborhood' risk factors, the terminal local economic climate etc. are such that the property can't even attract a $500 bid ? This of course extends to a question of who must book the virtual 100% loss in property value ? This again extends to who must make up for the virtual 100% loss in local property tax revenues ? While Detroit is definitely in the lead in this area, it is undoubtedly developing in other cities with terminal local economies as well.

Page 1 of 2 12 LastLast

Similar Threads

  1. Replies: 4
    Last Post: 09-29-2011, 06:31 PM
  2. My feet grew!
    By Jenny in forum Body Business
    Replies: 1
    Last Post: 08-19-2008, 11:09 AM
  3. Service Economy vs Manufacture Economy
    By xanfiles1 in forum Dollar Den
    Replies: 20
    Last Post: 05-04-2008, 03:36 AM
  4. Toys We Grew Up With
    By tiamaria in forum The Lounge
    Replies: 11
    Last Post: 02-06-2005, 11:18 PM
  5. You know you grew up in the 1980s when....
    By RedZ28 in forum The Lounge
    Replies: 6
    Last Post: 02-05-2005, 12:39 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •