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Monday, October 30, 2006

Recession our way?

An article came out October 27 stating that the economy is slowing down and will continue to do so into the fourth quarter this year. The economy grew by a real annualized pace of only 1.6% from July through September, down from 2.6% in the second quarter, and even farther down from the first quarter, 5.6%. This was the slowest quarter in more than three years.

Even more shocking was that in the GDP report there was a 17.4% drop in residential fixed investment (which includes spending on housing). That is the biggest quarterly decline since 1991.

They continue to speak of recession but I think the economy has a little room for further "deceleration" without talking of that. I’m always a little skeptical of the numbers politicians chose to announce however. So I did some more research and found that for one, inflation rate has decreased, from 2.7% to 2.3%. Also, the personal consumption expenditure rose from 2.6% to 3.1%, so obviously people are still spending plenty of money which, you would think, should help boost the economy shortly.

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