What Slowdown?

Okay, it is still a slowdown, but things haven't slowed nearly as much as we thought.

The revised 3rd quarter GDP growth number put out by the Commerce Department today was expected to move the previous estimate of 1.6% up to 1.8%.  Instead, the report showed growth clocking in at 2.2%.  This, despite the big drag the housing market had on GDP.

The much better than expected growth rate might explain Uncle Ben's relatively sanguine remarks yesterday, suggesting the economy was coming in for a soft landing from the first quarter's blistering growth.

The Fed will release its always thrilling Beige Book later today, which may offer additional insights into the true economic picture for those willing to parse the big ugly thing.  Or you can just return here for the highlights.

How in the world have we managed to keep such a strong economic footing despite a volatile housing market, high energy prices, and global unrest anyway?  It's almost as though something had rendered our economy fundamentally more flexible, more resilient, and more growth-prone than it used to be...

Maybe Chuck Schumer knows what it is.  He seems to have a pretty good grip on how this all works.

Update:  It's Beige time.

By and large, the report indicated "continued moderate growth" from each of the regional Fed Districts, with four exceptions:  Dallas, where activity decelerated; Atlanta, where results were mixed; and New York and Richmond, where activity accelerated.

The job market continued to sizzle, with unemployment pushing still lower and wages growing faster than normal in the New York, Boston, Philadelphia, and San Francisco regions.  Kansas City, Atlanta, Philadelphia, and Dallas all reported shortages in skilled workers.  The only job market downside seems to be that Chairman Bernanke is starting to wonder if the strong upward wage trend may start to bleed into inflation.

Yes, one of the big takeaways from the November Beige Book is that the labor market is extremely strong and that real wages are rising, almost alarmingly fast in some regions.

Observe, as this news is spun negative by MSNBC.

The Beige Book highlighted continued pressure in the jobs market, with a number of districts continuing to report "that labour markets were tight, especially for high-skilled occupations." Wage growth, though, was characterised as still "generally moderate."

Hmm, "pressure" in the jobs market?  How ominous.  Growth was "still 'generally moderate'"?  Underwhelming at best.  The most descriptive adjective they lifted from the report was "tight", which MSNBC's thin context doesn't reveal as being a good thing for workers and job seekers.

Above-normal wage growth and worker shortages were reported in construction, manufacturing, trucking, welding, energy, legal services, health care, banking, engineering, accounting, sales, and finance.

Bush tax cuts: good news for working stiffs.

"Reaganomics is dead."
   - Chuck Schumer's Theory

"Chuck Schumer's theory is dead."
   - Reaganomics