| | Last updated January 25 at 6:59 PM ET | |
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It happened again — the US economy defied yet another forecast in a big way. Economists were convinced the last quarter of 2023 had to be the one where economic growth slowed significantly after the prior quarter's gang-buster 4.9% annualized growth rate. Gross domestic product, the broadest measure of economic output, did slow last quarter to a 3.3% annualized rate. But make no mistake, as Larry David would say, that's prettaaay, prettaaay good. It's remarkable given economists were expecting 1.5% annualized GDP growth last quarter. It's even more remarkable considering a year ago they were all but certain there'd be a recession by now and the economy would grow at a meager 0.2% rate. For all those big swings and misses, you probably have yourself to thank. That's because consumer spending, which accounts for the biggest part of US GDP, has been relentless, even in the face of the highest interest rates in 23 years. But what's perhaps most remarkable about the US economic growth rate is how much it towers over similarly sized advanced economies. For instance: - The combined GDP of the 20 countries that use the euro grew at an annualized rate of just 0.1% in the third quarter of last year
- The UK is growing at a 0.2% annualized rate according to the latest GDP estimate from November
- Japan's economy shrank by 2.1% in the third quarter of 2023 compared to a year prior
So yeah, prettaay good indeed. US exceptionalism? In addition to all the fast food we consume, the US is a special case in another way, as well. There's only one industrialized country, Singapore, that spent more money as a percentage of GDP on Covid stimulus than the US from 2020 to 2021, according to research that looked at 166 countries' economic policy responses to the pandemic. In the US, we had a whopping nearly $5 trillion that went out directly to households in the form of stimulus checks, enhanced unemployment benefits, tax credits and more. That, combined with the fact that there weren't too many excuses to spend money when everything was basically closed during the pandemic, meant that people had a lot more cash in the bank. When the economy reopened people were spending like there was no tomorrow. That's been leveling off but has hardly come to a halt due in large part to all the stimulus money still flowing through the economy, Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics who previously worked at the Federal Reserve, told me. On top of that, people aren't getting taxed as much as they had been in prior years, as evidenced by the nation's declining tax revenue collections, Gagnon said. That's caused the federal government to borrow a lot more money to pay its bills. "People are acting as if they have a lot of money to spend," he added. Energy prices are also playing a big role in the gap between the US and other countries' economies. One of the reasons inflation has been higher in Europe than in the US is because the region, including the UK, is a net importer of energy, my colleagues Alicia Wallace and Hanna Ziady previously reported. The UK and euro area economies were heavily exposed to the surge in natural gas prices that followed Russia's full-scale invasion of Ukraine in February 2022, driving energy bills for households and businesses to record highs. Will there ever be a breaking point? It's easy to say, "What comes up must come down." That's why Gagnon told me he's not expecting 3.3% GDP to continue. But here's the thing, when it comes to the US economy lately I've learned that the only prediction one can get right is that something unpredictable will happen. Thankfully, it's been to the upside for the most part. Let's hope it stays that way. |
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Wall Street was not happy with Tesla's earnings, and traders are not being shy about expressing their disappointment. Tesla stock fell 12% Thursday, wiping out more than $73 billion in market value. The selloff came in response to Tesla's earnings report Wednesday evening, when the world's most valuable automaker said its sales growth "may be notably lower" this year. CEO Elon Musk noted on the call that Chinese carmakers were "the most competitive car companies in the world" and "will have significant success outside of China." Tesla's adjusted earnings per share were down 40% from a year earlier, and revenue, which rose 3% to top $25 billion, came in below market forecasts. It was the second straight quarter the company fell short of analysts' expectations. |
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| Two reports published Thursday are deepening a PR crisis for Boeing that began earlier this month with the dramatic midair blowout of a 737 Max fuselage panel. The reports from the New York Times and the Seattle Times, both citing a person familiar with the matter, say that it was Boeing employees who had removed and reinstalled the panel that eventually detached from the Alaska Airlines flight on January 5. Federal investigators have not reached any conclusions about the cause of the incident, which remarkably didn't cause serious injuries for the people on board. But the new details offer insight into how such a terrifying event might have occurred. The reports say the door plug — a panel used to seal the aircraft when no exit door is installed — was removed because Spirit AeroSystems, which makes the fuselage for 737 Max 9 planes, needed to make other repairs to the door plug's rivets. Boeing staff then reinstalled the door after Spirit AeroSystems workers made their repair. Boeing said it couldn't comment on the reports, citing the ongoing investigation. "As the air safety agency responsible for investigating this accident, only the US National Transportation Safety Board can release information about the investigation," Boeing said in a statement. Spirit did not respond to a request for comment. Boeing and Spirit AeroSystems are under multiple investigations by the Federal Aviation Administration, the National Transportation Safety Board, and Congress is preparing to launch its own inquiry into Boeing's safety record. Details about what went wrong are sparse. What we do know: - Boeing CEO David Calhoun on January 9 acknowledged the company made a "mistake," but he didn't specify what it was.
- Alaska Airlines CEO Ben Minicucci on Tuesday revealed the carrier found loose bolts on "many" Boeing 737 Max 9s in its fleet.
BIG PICTURE As a reminder: Boeing is a duopoly with Europe's Airbus, and it's not like airlines can easily switch between the two manufacturers, so no matter what the investigation turns up, Boeing isn't at risk of going out of business. (Even if it did, Airbus wouldn't have the capacity on its own to meet the global demand.) As scary as the footage from the January 5 flight looks, it's relatively minor compared with the disasters Boeing planes have been found responsible for in the last five years. In 2018 and 2019, a critical design flaw in Boeing's bestselling 737 Max aircraft led to two crashes that killed 346 people. Later, an investigation revealed internal communications in which one employee describes the jet as being "designed by clowns, who in turn are supervised by monkeys." And it's not just the 737! Boeing also had to twice halt deliveries of its 787 Dreamliner because of quality concerns cited by the FAA. And the 777 jet also suffered a grounding after an engine failure on a United flight scattered debris onto homes and the ground below. CNN's David Goldman has more. RELATED |
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🗞 Turmoil in the media industry deepened this week, with steep layoffs hitting the Los Angeles Times, TIME, and Business Insider. Hundreds of staffers at Condé Nast, Forbes and The New York Daily News staged walkouts to protest planned cuts. 🤖 Pornographic, AI-generated images of Taylor Swift were shared widely across social media, underscoring the risks posed by mainstream artificial intelligence technology. 📺 Jon Stewart is returning to "The Daily Show" once a week, just in time for the 2024 election run-up. |
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Adding to my Pinterest board... |
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Last updated January 25 at 4:00 PM ET | |
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