The Bureau of Economic Analysis, of the U.S. Department of Commerce, released the Final Gross Domestic Product Report for the 3rd Quarter.  Real GDP decreased at an annual rate of 0.5%, to $14,412.8 billion, following a 2.8% growth rate in the second quarter, and a 0.9% growth rate in the first quarter of 2008.  Negative contributions to GDP were personal consumption expenditures (-2.75% change) which has been roughly 70% of GDP while exports (+3% change), imports (-1.9% change subtracted from GDP), and government spending (+1.14% change) made positive contributions to GDP.  The GDP Deflator, the broadest measure of inflation, increased 3.9% in the 3rd quarter, compared with an increase of 1.1% in the 2nd.  The CPI has decreased over the past couple months, so the GDP Chain Deflator will deflate in the 4th Quarter.  The Advance 4th Quarter GDP Report will be available on

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The American dream is drowning in debt, says Andrew Gordon. The middle class are being squeezed as tumbling asset prices hack away at household wealth. And things won’t change unless the government steps up to the plate.

More from Andrew at Investor’s Daily Edge:

We’re in a “damned if we do, damned if we don’t” economy. And there’s not a damn thing we can do about it.

Our economy floats on the whims of the American consumer. When they feel confident about the future, they spend. The more they spend, the better the economy does. This is oddly true even if 80 percent of the spending is on goods from Asia.

Right now the American consumer isn’t feeling so confident and the economy is suffering as a result.

But if we spend more, we go more into debt. We’re already spending more than we make. And the

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by Edward Hugh: Barcelona"The Kazakh government is ready to step in,'' Kazakhstan's Prime Minister Karim Masimov said this morning in a telephone interview with Bloomberg "The Kazakh banking system with the support of the government and central bank will fulfill all obligations to international investors.....We have our own specific plan to survive without any external support....I don't think we need support from the International Monetary Fund or overseas.'' Well that is good news, so at least we know that one of the CIS and CEE economies won't be looking to the IMF for bail-out support in this crisis which is presently growing by the day. So Kazakstan, that country which is reputedly host to reserves of approximately 95% of the elements in the periodic table, with a population of around 15 million housed on a surface area greater than the whole of Western Europe, is going to be able to look after itself. But hang on a minute, just where is Kazakhstan, and just what have they been getting up to over there, and why the hell should I take Karim Masimov's word for it, when just about all the other Iceland Look-alike show contestants seem to be saying the same? After all, didn't those extermely bright and able young people over at RBC Capital Markets in Toronto say in a report only last week that, along with Latvia, the country's $100 billion oil-led economy is among the most vulnerable to the present global credit crisis and the skid-row economic trajectories that go with it simply because of its excessive reliance on short-term foreign borrowing. And isn't it the case that the cost of protecting Kazakhstan government debt against default has more than doubled this month - to over 1,000 basis points (or 10%), the level for borrowers that investors term ``distressed,'' according to CMA Datavision credit-default swap prices. Only Ukraine, which as we know is already seeking IMF support, is classified as being a bigger risk among European emerging-market governments. Surely all those highly dedicated, bright, and extremely able young people who are doing all that trading know what they are about, don't they?

During the years 2000-2007 the Kazakhstan economy enjoyed an extended period of very rapid growth, with real GDP growth averaging 10 percent annually. The expansion was underpinned by the development of the oil sector, prudent macroeconomic policies, structural reforms, and increased access to global financial markets. As a result, real per capita incomes have doubled since 2000 and social indicators have generally improved. • The global financial turmoil that began last summer had a significant impact on the Kazakhstan economy. Market perceptions of risk on Kazakhstan's assets rose sharply last September and remain relatively elevated. • Economic growth is expected to drop back significantly in the wake of the financial shock, but is still likely to sustain significant growth. The IMF are forecasting GDP growth of 5 percent in 2008 and a modest recovery to 6.25 percent in 2009. • Consumer ...

    

The U.S. Census Bureau released Housing Start data at an annual pace of 817,000 in September, 6.3% below the downwardly revised rate of 872,000 in August and 31.1% below the September 2007 rate of 1,185,000.  For the second consecutive month this pace continues to be the slowest since January 1991, during recessionary times.  Analysts estimated a rate of 873,100 for the month, which corresponds to a -6.4% surprise.

   

The descent in housing activity should be expected to continue in coming months given that Building Permits underperformed the decline in Housing Starts and only 2.5% of housing in the US is constructed in areas which do not require building permits.  In September, Building

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Most of the discussion surrounding the current crisis has focused on the implications for major businesses and their hiring and investment decisions, or households and their employment possibilities, or consumer behavior. One overlooked (or underemphasized) aspect of the issue is the impact on small firms. Fortunately, my former colleague (and coauthor), Rob Fairlie has just published a book that can inform one's thinking on this subject.

In Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States (MIT Press), Fairlie and coauthor Alicia Robb investigate examine racial disparities in business performance, drawing on a rarely used, restricted-access dataset compiled by the U.S. Census Bureau. They also explore the broader question of why some entrepreneurs are successful and others aren't.

From the introduction:

Estimates from the [Characteristics of Business Owners] CBO [dataset] indicate a strong positive relationship between startup capital and business outcomes. Firms with

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by Edward Hugh: BarcelonaWhat follows is the first of three posts which will appear this week on the "peak retail sales" phenomenon - one on them will look at Italy, another will look at Germany, and the third will examine the Hungarian case. The basic idea is that as populations age and decline, it is only natural that we should anticipate a longer term decline in the volume of retail sales in the most affected societies. Many theorists place the impact of population ageing out at some distant point in the future, often people seem to like to use 2050 as a reference point, or possibly 2020. But the fact of the matter is that we seem to be able to identify significant consequences flowing from population ageing already, in levels of housing activity to give one example, and in retail sales, to mention another. ...

Sharp Drop In June SalesRetail sales in Germany, Europe's largest economy, fell a second month in July as rising prices and a slowing economy acted as a brake on household spending.Price and seasonally adjusted retail sales were down by 1.5 percent in July over June, when they fell by 1.4 percent, according to the latest data from the Federal Statistics Office. On a year on year basis there was no change over July 2007.Now the ongoing lacklustre performance of German domestic consumption during what has been an unprecedented economic expansion in recent terms is causing a lot of heart-searching at the moment, but what many observers seem to fail to be taking note of is that German retail sales have been dropping steadily for time now, at least as measured by the seasonally adjusted constant price index....

Source: U.S. Census Bureau, Durable Goods Report

Source: U.S. Census Bureau, Durable Goods Report