US economy firing on all cylinders

[Army_of_One]

Activity in both the vast US services sector and at factories accelerated more than expected, according to data that pointed to fresh economic vigour and the risk of more interest rate hikes.

Most economists are expecting economic growth to slow from a torrid first-quarter pace of 4.8 per cent, yet the latest figures showed no hints of slowing and appeared likely to keep the Federal Reserve leaning toward further rate rises. Fed Chairman Ben Bernanke said last week a pause in the rate-hike cycle was possible.

The Institute for Supply Management's services index rose to 63.0 in April from 60.5 in March, with new orders hitting a two-year high, confounding Wall Street estimates for a slowdown to 59.2.

In addition, the government reported new factory orders rose a stronger-than-expected 4.2 per cent in March, beating estimates for a 3.5 per cent gain, as demand for transportation equipment, computers and electronics proved robust.

Treasury debt prices fell and the dollar firmed against the euro after the data.

"It does suggest that the overall economy is improving and for the market it is part of the recent theme - all the numbers are coming in on the stronger side of expectations," said Scott Brown, chief economist at Raymond James & Associates in St Petersburg, Florida.

Financial markets have fully priced in another rate rise at the Fed's policy meeting next week, and on Wednesday raised the chances of a follow-up move in June.

"They want to keep their options open for late June but most likely they may end up leaning towards another rate hike as the data continues to come in strong," said Brown.

The services sector accounts for about 80 per cent of US economic activity, including businesses like restaurants, hotels, hair salons, banks and airlines.

"This suggests GDP growth momentum of 4.5 per cent to 5.0 per cent, rather than the slowdown to 3.25 per cent trend growth the Fed is banking on," said Ian Morris, chief US economist at HSBC.

"As a result we think this piece of news is significantly hawkish."

Businesses cited rising energy costs, with the prices-paid index hitting a six-month high, but overall activity was not dampened as new orders surged to 64.6 from 59.5.

"Most of the comments our members made this month were very positive, very bullish," said Ralph Kauffman, chair of the non-manufacturing ISM business survey committee.

"Retailers indicated that the prices they are paying are going up. I don't think that their sales are having a problem. Their profit margins are probably being squeezed somewhat."

Kaufmann also noted inventories rose in April and businesses were deliberating stockpiling goods in expectations of increased business ahead.

Separate government data showed March's gain in factory orders was caused in part to a 14.7 per cent jump in new orders for transportation equipment, while civilian aircraft and parts orders soared 71.3 per cent.

Orders for non defence capital goods climbed 12.9 per cent, the strongest increase since November. Stripped of aircraft, orders for non defence capital goods - a proxy for business spending - advanced a still-strong 3.9 per cent.

Orders for durable goods, expensive items meant to last three years or longer, advanced an even stronger 6.5 per cent in March, revised up from a 6.1 per cent gain reported last week.

The report also contained information on factory inventories that implied a small upward revision to first quarter GDP of around 0.2 percentage point, economists said, which combined with other revisions point to a pace above five per cent.

A new indicator released for the first time suggested a solid gain in April jobs, ahead of the official payrolls report due on Friday.

ADP Employer Services, a private firm, estimated the 178,000 private jobs were added in April, based on a survey sample of 14 million workers. It also estimated 22,000 government jobs were added, which would bring the month's total payrolls increase to 200,000, in line with current Wall Street consensus.

Financial markets are hoping the April jobs report will help clarify the outlook for official interest rates. Fed Chairman Bernanke last week said a pause in tightening was possible, but rates rises could resume even after a break in tightening.

Why can't King George and the Repubs step up and take some credit for this. Despite the Liberal Talibans efforts to destroy our country the Repubs and their tax cuts are keeping the economy strong. Think about this...DESPITE a costly war on terror, $3.00 a gallon gas prices...two devastating hurricanes that displaced 1000's of people our economy is booming and the stock market is rocking....why would you want this to end. As soon as a liberal gets into office there goes our tax cuts and there goes the economy....

[Outofdodge]

Originally Posted by Army_of_One

Why can't King George and the Repubs step up and take some credit for this. Despite the Liberal Talibans efforts to destroy our country the Repubs and their tax cuts are keeping the economy strong. Think about this...DESPITE a costly war on terror, $3.00 a gallon gas prices...two devastating hurricanes that displaced 1000's of people our economy is booming and the stock market is rocking....why would you want this to end. As soon as a liberal gets into office there goes our tax cuts and there goes the economy....

King George and the Repubs are going on six years to get it right, not that everything is a rosy as you would like to paint the picture. Presidents get more credit and blame for economic factors than they sometime deserve. However this administration and it's lack of a traditional conservative economic philosophy will be forcing the government to compete with private industry for capital in the long run. What's going to finance an expansion then?

If inventories go up temporarily and spending increases at the consumer level fine. But if they don't start ducking or re-enlist. The effect of the 2005 Hurricane season will be a short term increase in building materials and large item consumer goods as houses and infrastructure are re-built. (I believe your term for those folks who will be artificially increasing large consumer durable goods sales was roaches). With the interest rate increases the housing market will probably continue to slow down except for the largest most expensive houses.

Then there is the question of how long the increased price of fuel can be absorbed before it drastically affects individuals and businesses. As annual earnings reports come out beginning in the fall and into the first quarter of 2007, there will be pressure on business to up prices and like it or not, the private sector and many public sector cannot afford to up the rate of wages that may be needed to keep up. Add to it the fed efforts to control inflation by use of interest rates.

Where I am at now, Delphi, GM, Ford, and Diamler Benz have shuttered or are considering closing more plants. Jobs are being created and have been being created in the service sector but those wages are significantly less than the wages they are replacing. If one is kicked back in Texas still paying Dodge taxes, I sure as heck would hope someone besides a packing plant and Walmart was going to expand into the area. As much as it pains me to admit, Ross Perot was right when it came to those jobs moving offshore.

King George's father knew enough that he had to go back on his no new taxes pledge even if it cost him an election. It's too bad the son is not near the man his father is, or he is too tied to an ideology to recognize the potential long term fallout. I'm not sure what your fear of raising taxes, I would think an active duty NCO would have that the farthest thing from one's mind (based on the 15 tax returns I filed for employees with active duty spouses overseas this year). Quit thinking an ideology and look at the foundation, the rich are not creating new jobs with those targeted tax cuts they got.

Or has the Dodge City economy suddenly started to blossom in the last three years?

And on a personal note, that liberal taliban thing is insulting as hell. You may not like the philosophy and may not even like the politicians; that's ok. Had an honest man been in office the past six years the tower and pentagon attacks might still have happened but there would be over 2000 of this country's finest citizens still alive, and a whole lot more with all their eyes, arms, and legs intact and not bogged down in nation building and a mission they aren't meant to do while those responsible for 9/11 still taunt us from their mountain hideouts. (oh, spare me the Clinton lying about a bj comment in the responses)

[Army_of_One]

Originally Posted by Outofdodge

King George's father knew enough that he had to go back on his no new taxes pledge even if it cost him an election. It's too bad the son is not near the man his father is, or he is too tied to an ideology to recognize the potential long term fallout.Clinton raised taxes...the largest tax raise in history and when he was leaving office our economy was going into a recession.... I'm not sure what your fear of raising taxes, Raising taxes is counter productive and slows the economy. I pay taxes every year. I didn't deploy this time around to the desert so my income all counts...I would think an active duty NCO would have that the farthest thing from one's mind (based on the 15 tax returns I filed for employees with active duty spouses overseas this year). Quit thinking an ideology and look at the foundation, the rich are not creating new jobs with those targeted tax cuts they got.

Or has the Dodge City economy suddenly started to blossom in the last three years?

And on a personal note, that liberal taliban thing is insulting as hell. Insulting? Yes it is. It is insulting that the Democrats are destroying this country from the inside out with their politics of hatred and division....You may not like the philosophy and may not even like the politicians; that's ok. Had an honest man been in office the past six years the tower and pentagon attacks might still have happened but there would be over 2000 of this country's finest citizens still alive,and even more terrorists, al qada and taliban running around the world and maybe even another more devastating attack on the U.S. If it costs the lives of 3000 soldiers to ensure that your family and my family doesn't get blown up by a bomber walking into a Walmart...then so be it. Take the fight to them. Unfortunately people perish in the fights...but it's so you can sleep at night. while those responsible for 9/11 still taunt us from their mountain hideouts.

Good reply! You must be related to the Wordster......

[Army_of_One]

Originally Posted by Outofdodge

Had an honest man been in office the past six years the tower and pentagon attacks might still have happened but there would be over 2000 of this country's finest citizens still alive.

Out of curiosity what would YOU have done when the 9/11 attacks happened? Turned your back like Clinton did for 8 years? Pretend it didn't happen? Reason with the Taliban? Sign a truce? Pay them to leave us alone? ?????

[Highwayman]

In fine liberal form the solution is always raising taxes. As a tax preparer you of all folks should know that the reduction in tax rates was across the board. Everyone that earns enough to pay income taxes got a break, not just the rich. In fact the so called rich pay a higher percentage of total taxes after the tax cuts than before. If you want to talk taxes explain to the folks how the AMT is not indexed to inflation and is affecting increasing numbers of middle case folks that are far from rich.

Originally Posted by Outofdodge

Had an honest man been in office the past six years.... (oh, spare me the Clinton lying about a bj comment in the responses)

I hope this ain’t bringing up the old Bush stole the election lie.

I don’t want to hear about Klinton lying about sex either. That’s just the liberal spin for committing perjury.

[Outofdodge]

Originally Posted by Army_of_One

Out of curiosity what would YOU have done when the 9/11 attacks happened? Turned your back like Clinton did for 8 years? Pretend it didn't happen? Reason with the Taliban? Sign a truce? Pay them to leave us alone? ?????

Clinton did not turn his back for 8 years. There is the alledged handover from Sudan story but under US law there was nothing he could do at the time. Compare it Reagan and the air intercept of the cruise ship hijackers, even though they killed an American, he turned them over to ship's country of registry. He signed an assasination order that was still in effect in the first 9 months of GW's term. I will agree there should have been a bigger response to USS Cole thing. But if you want to point the finger at Slick, then carry to Bush sr who enraged Bin Laden by putting US soldiers on the ground in Saudi and Reagan who trained and armed the Afghan "freedom" fighters.

Note I said nothing about Afghanistan. They hosted those responsible and did not do as requested. Iraq however is a far different story, you know it and your superiors know it. And the American people by and large are starting to see it too.

[Outofdodge]

Originally Posted by Highwayman

In fine liberal form the solution is always raising taxes. As a tax preparer you of all folks should know that the reduction in tax rates was across the board. Everyone that earns enough to pay income taxes got a break, not just the rich. In fact the so called rich pay a higher percentage of total taxes after the tax cuts than before. If you want to talk taxes explain to the folks how the AMT is not indexed to inflation and is affecting increasing numbers of middle case folks that are far from rich.



I hope this ain’t bringing up the old Bush stole the election lie.

I don’t want to hear about Klinton lying about sex either. That’s just the liberal spin for committing perjury.

No the alledged conservative line is that liberals tax. The tax cuts were dispproprionate towards the high end. Which by itself if you've worked hard, been born into it, or won the lottery would be good for you. There was some lowering at the bottom end but in the middle where most of the population lies. As to the rich paying a higher percentages of taxes, look at the demographics and the widening spread (polarization) of the population. The wealthy maybe paying a higher percentage than ever becuse the basis has changed, they are still paying a smaller percentage than ever. Which frankly would be OK but where is the spending responsibility? I challange the average American to cut their income AND increase their spending. I can not wait to see how soon the clammering will be for changing the bankruptcy laws back. I make more money than some people and less than others but I am not poor, those tax cuts did very little for me personally. I'm not going to lie and say they did nothing but some places do charge higer taxes than ford county and of course, I moved to one.

You are absolutely 100% correct on the AMT. It has not been changed since I studied taxation in the 80's. It was put in place to ensure everyone paid a fair share but too many middle class folks get hit by it. I do not do tax returns for a living but volunteer my time because what HR Block charges people for a short form irks me to no end, but I did a return for an Army Capton's family with an Adjusted Gross of 110K (solid middle class, wife has the better non military income). Their AMT was 15K. I would not advocate abolishing it as I'm sure you would be glad to hear that Mrs Heinz-Kerry had over 2M in tax exempt interest income in 2003. Because of the AMT she had to pay an addtional 400K in taxes.

You will never see me post a Bush stole the election thought, Gore's loss was due more to his arrogance and even more so to Nader. In much the same way Clinton's first election was less to do with George I ignoring the economy as it was related to the 3rd party candidacy of Perot.

And lastly, he lied under oath in a civil suit about sex, perjury if you will. For that he lost his bar and had to suffer further Hillary. $60+million of investigations to uncover semen on a dress. I'll accept that of my president more than I will accept a trumped up excuse to invade another country solely on questionable intelligence and some phony link to the 9/11 murders.
Especially one that members of his administration in a former life visited and sold arms to.

[Outofdodge]

Originally Posted by Outofdodge

challange ...Capton's

For the spelling and proofreading challenged, does this thing have spell check?

[Outofdodge]

Originally Posted by Army_of_One

Good reply! You must be related to the Wordster......

Don't know the wordster. I lean liberal and generally vote Democrat but don't walk hand in hand with them One of my dearest hunting and fishing buddies is listed on the following website and I've spent time with another officer. We've had some good discussion over the years, even when we've each been armed: http://www.conservative.org/about/directors.html .

You only think you know about economics, these guys have the fed chair on speed dial. Oh yea, the federal government doesn't even say the economy was going into recession at the end of Clinton's term. It was returning to *normal* as everything in nature and economics eventually does. It could not maintain the pace it did during the Clinton years without an inflationary hangover. I don't expect to change your mind in the short or long run and generally have avoided your posts for specific reasons but if you're going to post economic theory please have an idea what you're talking about. You want to debate micro/micro/fiscal policy/multiplier effects ad nauseum I'm game. As far as I'm concerned Clinton's two major areas I disagreed with him was his continued support of the Bush negotiated NAFTA agreement (ever really stop and think about why immigartion has gotten worse in the last 8 years? and for those keep score that covers two administrations) and Aspin as secretary of defense.

As to the rest of your speil, How can you even say that Democrats are destroying the country with a straight face? And not working together? please . The Republicans never could accept Clinton and his successes and dodged him at every corner. Now when the shoe is one the other foot the democrats are obstructionist? Hypocrisy at the highest levels. Hell the Democrats even support this president early in the post 9/11 saga until he got what he wanted and gave them the virtual finger and used that support against him.

And terrorism and Iraq? It should be painfully obvious by now that Hussein couldn't be bothered supporting terrorists attacks on US soil, he had his hands full with the Shites, Sunnis, and Lord only knows what else. Junior's puppetmasters had the hots for Hussein and the American people let themselves get fooled lock, stock and barrell. And your fellow servicemen are being used put at risk to keep this charade going. If this guy could at least admit a mistake once in a while. The similarities to Nixon elsewhere just keep coming.

No one with a straight face can criticize the invasion in Afghanistan while reasonable people can disagree on the tactics. There's your *war* on terror. Georgie conviently forgot about that.

[Highwayman]

Well OOD, you can be a very pleasant fellow.

Tax cuts for the high end are disproportional because taxes at the high end are disproportional. The biggest direct benefit of the tax cuts probably went to folks with dependants and small business owners. I personally favor the Forbes flat tax proposal and my friends at H&R Block hate me for that. I also like Bubba’s idea of transferring all the surplus IRS folks to border patrol duty.

Government revenues are currently at an all time high. If you want to complain about spending, I’ll be with you. Most likely we’ll disagree on were the overspending is going. That seems to be the problem with Congress and they end up not cutting anything. Both sides are guilty. Whenever Congress finds a few extra bucks they create something else to spend it on and then need to increase the spending every year even if revenues are down.