At first glance, the economic growth report for fourth quarter 2009 improved - it was up 5.9% instead of the 5.7% growth rate reported last month. However, and just like last month, this growth was based on businesses stocking up low inventory, which added 4 points.
Econo-blogger Calculated Risk points out that:Changes in private inventories are transitory (only lasts a few quarters at the start of a recovery), and although the headline number was revised up, final demand was weaker than in the advance estimate.He goes on to note that spending on personal consumption and residential investment were both revised down in Q4.
What It Means to You
Even a 1.9% growth rate means the economy is technically out of recession. Recessions are usually defined by two consecutive quarters of negative GDP growth. Job losses will continue, however, since growth needs to be 3% or more for businesses to add jobs. For a history of all GDP reports since 2007, see GDP Current Statistics. (Source: GDP News Release)
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Comments
Dear Amedeo
It is a great pleasure for me to extend to you my bets greeting together with some question.
We often assert that US$ is not backed by nothing. Then, its status of reserve currency gives the USS a great deal of advantageous. As far as Petrodollars are concerned, do USA get special advantages from pricing petrol in USD? We assert that US needs only printing dollars to buy crude oil while others need dollars in order to buy oil making a huge demand on USD.
Another question is relating to the Dollar hegemony, is there really a hegemony of the US Dollars.
I would be happy to learn about your own opinion about this issue as well that of some leading economists is possible.
Having oil priced in dollars does help the dollar become the world’s reserve currency. This makes the dollar stronger, which lowers the cost of imports to the U.S.
In the past, it has also allowed the U.S. to borrow more by selling Treasuries at a lower cost. This has allowed Americans a better standard of living because the government can stimulate the economy with the cheap borrowed funds.
However, the U.S. has become addicted to this debt, and has over spent. Now the debt is over $12 trillion, and it is pushing the value of the dollar down.
This has become a disadvantage in terms of oil, because as the dollar weakens, oil producing countries must raise the price of oil to compensate. Oil and gas cost more in the U.S. as a result. It doesn’t cost more in other countries, because the declining value of the dollar compensates for the rising price of oil.
For more, see High Price of Oil.
Kimberly