Chris Low: GDP and consumption
A shopper pays cash for sales merchandise December 26, 2000 at the Lakeline Mall in Austin, Texas. Stores were hoping that after Christmas shopping could salvage what seems to be a disappointing holiday season.
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JEREMY HOBSON: Now let's get to the latest figures on economic growth. The government said this morning that the U.S. economy grew 3.2 percent last quarter. That's up a bit from third quarter. Economists attribute the pickup to strong consumer spending and to overseas sales by U.S. companies.
Chris Low is chief economist at FTN Financial and he joins us now live. Good morning Chris.
CHRIS LOW: Good morning.
HOBSON: So what do you make of this GDP figure -- 3.2 percent growth?
LOW: Well, 3.2 percent is solid. It was anchored by a 4 percent rise in consumption which is really good. But I tell you what -- one of the most exciting things about the GDP report for May was a fairly substantial draw down in inventories. The reason economists like to see that is it implies stronger growth going forward. I think we're going to see some upwards revisions to expectations too.
HOBSON: Alright well, Chris, some economists have said that if the economy grows fast enough -- if this economy can grow fast enough -- we might be able to grow ourselves out of debt we have as a nation. Listen to what Treasury Secretary Tim Geithner said earlier today at the world economic forum in Davos, Switzerland.
GEITHNER: I would say that the political is not fully manifest at the moment. But it's coming. There's no alternative to it. We can't grow our way out of it. We can't grow our way out of it.
We can't grow our way out of it -- Chris -- what do you think of that?
LOW: Wow. We have to grow our way of our it. And I take it in a way we are. But I think what he meant to say was the government can't necessarily provide that growth so it's a good thing we're starting to see the private sector kick in because it is time to start taking the deficit seriously. Japans debt was just downgraded by S&P, and Moody's used that to warn about the U.S.
HOBSON: Chris Low, Chief Economist with FTN Financial, thanks so much for your time.
LOW: You're welcome thank you.