U.S. Economic Growth Slowed in 3rd Quarter

The deflation of the housing market is holding the economy back. The growth is slower than it was since 2003. Economists were not even expecting for the growth to be this slow. The commerce department’s report shows that the small growth is indeed a substantial one, mostly due to the slump in housing. Residential construction had it’s biggest decline in fifteen years. With the economy’s shift into low gear, it is unlikely that the federal reserve will resume raising interest rates any time soon. A positive aspect of the slowed growth is that it will hinder inflation. Falling fuel prices are continuing to aid the economy’s growth. The Bush administration is claiming that the economy is resilient to slowdown because of the lower inflation as well as consumer spending. Democrats are saying that the low percentage growth is fact and that the president cannot just assume the economy is in good standing when in fact it is not.

The weakness in housing seems to be an effect of the baby boomers. Many of those in the baby boomer cohort are now beginning to retire. Within the next few years, many will be selling their houses to live in retirement homes. It seems that there is not a high enough replacement level to compensate for this. Therefore, I would not doubt if the housing market continued to hold the economy back for years to come.

The New York Times, Jeremy W. Peters Friday, October 27, 2006

Oil Falls to New '06 Lows on Doubts About OPEC Cut

Today oil prices dropped to one of the lowest in 2006 at only fifty-seven dollars a barrel compared to July records of seventy-eight dollars and forty cents a barrel. OPEC (Organization of Petroleum Exporting Countries) ministers have agreed to reduce output by 1.2 million barrels per day. The change is expected to result in about a half million barrels per day of production taken out of the market. What concerns the OPEC ministers is high fuel stocks in consumer countries, particularly the United States. Also the demand for OPEC oil could drop in 2007 as their competition is brought online. The drop in prices in recent months has positively impacted consumer attitudes as well as spending in the United States. Businesses will benefit over the holidays with consumers focus not being on the money they are spending on gas.

Regardless of the current status, it seems to me that within the next few years, prices will inevitably increase again. It’s great that things are all “hunky dory” right now, but I think it would be prudent to put some money aside incase there was a sudden spike again.

The New York Times, Reuters Friday, October 20, 2006

Fed Reports Resilience in Economy

The article begins by stating the improvement in the economy in the past month or so. People are being affected by this improvement in different ways. A few being at the gas pump, which is leaving everyone with some more money in their pockets, and in the stock market. It was also reported that even though it appears there is moderating growth in the economy, things are relatively stable at this point. Also a positive note, price inflation and decrease in consumer spending does not seem to be an issue in most parts of the country. In the next trade deficit report the falling fuel prices should greatly impact it, considering that this was one of the major reasons for the widening trade gap in August. Trade imbalance with China specifically was another aspect in the trade deficit.

What seems to be the case to me is that in order to prevent inflation from occurring again in the future, America needs to find a way to stop being so dependent on imports. Being so dependent on others provides an opportunity for them to be put in control. Clearly I am not an expert and have no idea what it would take to reach a point where our dependence could be lowered. However, in the article it stated how our exports have grown, but not enough to compensate for the import growth. So it seems that we need to increase our exporting in order to counterbalance the import inflation.

The New York Times, Jeremy W. Peters Thursday, October 13, 2006

Here's how socialism helps the rich

Sowell claims that socialism actually does more damage to the poor than to the rich. The idea is that the rich can find a way to get what they what, when they want it, and how they want it. The rich can hire upscale lawyers to fight city hall. Also city hall may feel the need to keep them happy because upscale taxpayers benefit them. Furthermore, the rich often donate sums of money to political campaigns. Another form of socialism for the rich protects their communities from even the dangers of a free market. They are protected from outsiders purchasing property near them, even when they are willing to pay prices determined by supply and demand.

I can understand Sowell's point that socialism could contribute positive outcomes for the upper class. One of the things that most people hold dear is their home. The community in which that home is in is also something that people hold dear. It would be highly unlikely to ever see a mansion adjacent to a trailer. Being able to maintain a haven and everything that encompasses it is something that would keep many people happy. Especially when that is not the case for everyone in the world, even the working middle class.

News & Record, Greensboro, NC Thomas Sowell Thursday, October 5, 2006