Chris Low: GDP and consumption

Jeremy Hobson Jan 28, 2011
HTML EMBED:
COPY

Chris Low: GDP and consumption

Jeremy Hobson Jan 28, 2011
HTML EMBED:
COPY

TEXT OF STORY

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.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.