By Annalyn Censky, staff reporterNovember 23, 2010: 9:26 AM ET
NEW YORK (CNNMoney.com) -- The U.S. recovery tugged along at a faster pace in the third quarter than originally reported, driven by stronger exports and spending, the government said Tuesday.
Gross domestic product, the broadest measure of the economy, grew at an annual rate of 2.5% in the three months ending in September, the Commerce Department reported Tuesday. That's a significant improvement over the 2% growth rate first reported for the period.
"We're headed in the right direction, and a good deal of the concern that was evident with the initial release has undoubtedly diminished," said Michael Schenk, senior economist with the Credit Union National Association. "But it doesn't really get us to where we need to be."
The government calculates GDP as a measure of goods and services produced in the United States. The number is often revised multiple times. This is the second reading for the quarter.
While the number is much better than the 1.7% growth reported in the second quarter, the rate is still considered weak for a recovery.
"I think most economists would agree that 2.5% is probably too low for robust job growth. It's about neutral," said Zach Pandl, an economist with Nomura Securities.
Consumer spending increased at a 2.8% pace, the best reading for that measure since the end of 2006, up from 2.6% initially reported. Exports were also revised upward to 6.3%, from 5%.
Those two points mark a bright spot in the report, as consumer spending and U.S. exports are engines of growth needed to drive the recovery forward.
Pandl expects the Fed's latest monetary stimulus plan, referred to as quantitative easing, will help spur stronger growth in the fourth quarter, but still not robust enough to totally diminish the need for the full $600 billion plan.
"This level of growth would still be considered unacceptable from the Fed's perspective," he said. "It's not fast enough to bring inflation back up and lower the unemployment rate. On the other hand, it suggests no reason for alarm."
The reading was slightly better than expected, as economists surveyed by Briefing.com had forecast growth of 2.4% for the third quarter.
This is the fifth installment of The Influencers, a six-part interview series that Lynn Parramore, the editor of New Deal 2.0 and a media fellow at the Roosevelt Institute, is conducting for Salon. She recently sat down for a conversation with nuclear disarmament advocate Jonathan Schell, author of "The Fate of the Earth," Fellow at the Nation Institute and Distinguished Fellow at the Yale Center for the Study of Globalization. They talked about America’s conflicted nuclear stance, the obstacles to nonproliferation and the connection between global warming and the nuclear dilemma.
Where are we today in terms of nuclear nonproliferation?
I think you have two contending waves. On the one side you have President Obama’s new commitment to the abolition of nuclear weapons, although he says that’s not going to happen in his lifetime. He’s framed that very much as a kind of weapon to use against proliferation -- most specifically against proliferation by Iran and North Korea. But on the other side you have a kind of counter-movement against that commitment within the U.S. government. And there are people in the woodwork of the bureaucracies who have struck back. The vehicle for doing that was the Nuclear Posture Review (a process that determines U.S. nuclear weapons strategy), and, to a certain extent, the new agreement with Russia.
Each has good things in it. I’m glad the numbers are coming down. I’m glad they’ve promised not to make any new nuclear weapons or have any new nuclear missions. But on the other hand, there are some things which are very disappointing and which do not really reflect at all Obama’s commitment. In the Nuclear Posture Review there was a refusal to have a thorough-going renunciation of what’s called "first use" -- in other words, refusing to have a no-first-use policy. What that means is that the United States still reserves the right in certain circumstances to use nuclear weapons -- even when nuclear weapons are not used or threatened against it.
If this country, with all its conventional superiority and so on, thinks that it can’t be safe in the world without a threat to use nuclear weapons -- even against conventionally armed countries -- then what country in the world could say to itself, by that standard, "well, we’re safe without nuclear weapons?" And most particularly, if you’re a North Korean, or if you’re an Iranian, and you’re facing a very hostile and angry United States, you might well decide, "we need these things, too." So there’s a kind of contradiction that’s built in there. On the one hand, the United States is saying: "we’re ready to do without nuclear weapons over some long term." But on the other hand, "we need them now, and we even need them against countries that don’t have nuclear weapons." So in the contention between those two points of view, some direction will eventually emerge. But in my opinion, it hasn’t really emerged yet.
Of course, I should have said, there are really three waves, because you also have proliferation itself. You have countries who are looking a little bit more interested in nuclear weapons. It takes the form of an interest in nuclear power. There are almost a dozen countries in the Middle East who are suddenly saying, "we’re really interested in nuclear power." That’s a way of keeping your options open for nuclear weapons. And so whether Obama’s commitment to disarmament is going to be enough to bring to the table with the countries that are potential proliferators is very much open to doubt at this point.
What is your earliest recollection of nuclear danger?
I began my life as a writer as a reporter in the Vietnam War. That was way back in 1966. And the experience of being in Vietnam certainly set me on the path that eventually led me to thinking about nuclear weapons. When I arrived in Vietnam I really didn’t know anything about the war. I didn’t know the history and so on. But just from what I saw with my own two eyes it became apparent in the first day that this was a massive governmental enterprise that was absolutely making no sense of its own terms. It was radically and 100% mistaken. Shockingly so. It was self-defeat, which you could see every day, every hour of that war.
So it was the fallibility of government that struck you?
Precisely. It opened my mind to the idea that there could be vast governmental enterprises that most people were saying were sensible but were actually chaotic and made no sense whatever. I still believe that about the presence of nuclear weapons in our world. That was one way that I arrived at it. The other way was that when you looked into the reasons that the United States had got into the war in Vietnam, and, more particularly, the reasons why it couldn’t get out -- the whole arena of nuclear strategy began to loom large. The way that worked, to say it very quickly, is that Vietnam was conceived as a so-called limited war. There was actually a "Bureau of Limited War" in the Kennedy White House before there was ever any major intervention in Vietnam. Well, what was limited war? What was the opposite of limited war? General war? That was nuclear war. So in a certain way, the fighting in Vietnam was an escape from the paralysis of the unfightability of the general war, which meant a nuclear war. Now these two things were joined at the hip in a paradoxical way, so it led me to think about it. That was a pathway into thinking about it.
How does attitude towards nuclear weapons reflect our evolution as human beings?
I now think that the nuclear dilemma is the first in an array of dilemmas that have arisen in which we discover the self-destructive potential of human life is unlimited. We’ve seen that most notably through global warming, but also through a whole other array of ecological threats including the incredible acceleration in the extinction of species in the rain forest and elsewhere around the world, and in the depletion of fish stocks and the whole multi-dimensional ecological crisis. So what we are finding is -- and again it goes back to my experience in Vietnam -- that many of the activities that seem to be our salvation or that seem to be positive turn out to have an unlimited dark side to them. They have their positive side, too, industrialization being an example, or the use of fossil fuels. It’s great: We can sit here and have this conversation because we have a tape recorder that’s fueled by fossil fuels, and so on -- your computer and all the rest. But to state what’s now becoming clearer in an array of fields -- these sources of hope and betterment have turned out to have a dark side that really is without limit.
A nuclear holocaust is often described as "unthinkable." How do the limits of our imagination impact our ability to prevent such a catastrophe?
Well, it’s a problem with many levels. I don’t think that we have succeeded yet, collectively, to apprehend what is at stake here. After all, in some ultimate sense, it is the survival of the species that is at stake. That was put on the table in 1945; it became very acute during the Cold War. Now it’s receded quite a bit, although the technical means are still in place. One problem -- and the whole arena is full of paradoxes -- is that with nuclear weapons present, you can’t really fight a major power war. Well, that’s a great thing -- not to fight a great power war. But one result of it is that you have no experience of nuclear destruction since Nagasaki. And so thought is given little to chew on. We’re left with a lot of theory, and all nuclear strategizing is pure theory. Military strategizing used to be based on actual experience -- millennia of experience of war. But nuclear strategy is quite otherwise because there’s never been a nuclear war. The Japanese didn’t have nuclear weapons, so that wasn’t a nuclear war.
So nuclear holocausts are relegated to science fiction movies?
Well, that’s right. And now, we don’t even have the Cold War. And yet the dilemma is there. These things are deeply embedded in our world. And we can see from the resistance that Obama gets -- or anyone gets -- who actually talks about eliminating nuclear weapons. They’ve become part of the furniture of the world. They’ve become domesticated and deeply lodged in our institutions and our thinking, and so on. And yet, they rarely are brought into consciousness.
On the flip side of that domestication is the romance of the idea of this world-destroying weapon. Do you think that’s part of our attachment?
When the H-bomb was invented, they called it "The Super," and I think it was this use of "super" that put the word "super" in "superpower." So, the weapon is associated very deeply and primally with holding immense power. And that’s of course a legacy of war itself traditionally throughout the millennia. The countries that had the best weapons and the best militaries and so forth were the most powerful. They could fight these wars and win them. It’s no longer true with nuclear weapons. They turn out in actual practice to be rather a paralyzing influence than an enabling one. But I think that that deep association that’s left over inappropriately from the whole tradition of warfare. Psychologically, it means that people still hold tight to these instruments of seeming supreme power even though they are nothing of the kind in reality or in experience.
What is the most dangerous illusion that we cling to with regard to nuclear weapons?
The idea that we can hold onto nuclear weapons while at the same time stopping their proliferation to other countries. That is an absolutely unworkable proposition. It just cannot happen in the real world. And that’s why I think that Obama’s pledge, or his commitment, that the United States is ready to surrender its nuclear weapons has to become something that’s active and real in our world now. It’s the only way we’re going to be able to stop proliferation, including proliferation conceivably to a terrorist group.
Can human beings create policies big enough to deal with a threat as huge as nuclear weapons?
I think that in a whole array of areas, there really are new stakes on the table in politics. And the essence of it is the threat to the natural world. Only a part of it is the threat of the extinction or mutilation of our own species. So, really there’s a new framework in which you have to consider political actions and political thinking -- and the nuclear weapon really was the first expression of that, the first manifestation of this new crisis, which is a crisis of the natural order, as I say. But now others have appeared. And so I don’t know whether we’ll find out whether we’re able to act on that scale -- whether we’re able to step up to the level of danger that we now live with.
WASHINGTON — Voters who demanded Washington rein in the nation's spiraling debt are getting a message from President Barack Obama and leaders of his deficit commission: It'll hurt.
A proposal released Wednesday by the bipartisan leaders of the commission suggested cuts to Social Security benefits, deep reductions in federal spending and higher taxes for millions of Americans to stem the flood of red ink that they say threatens the nation's very future. The popular child tax credit and mortgage interest deduction would be eliminated.
Interest groups on the right and the left squealed, predictably, about the plan, which would cut total deficits by as much as $4 trillion over the next decade — much of it from programs long considered all but sacred.
The full commission has yet to make recommendations, and the chairmen acknowledged their plan was dead on arrival — but said it would prompt a more realistic national debate about what it'll take to solve the nation's fiscal woes.
Obama, in Seoul, South Korea, declined to discuss the specifics of the chairmen's work but said Thursday, "We're going to have to take actions that are difficult and we're going to have to tell the truth the American people." He said there has been a lot of rhetoric about the nation's debt and annual budget deficits but "a lot of the talk didn't match up with reality."
"We need to be straight with the American people," the president said. "We can't just engage in political rhetoric."
Sen. Kent Conrad, D-N.D., chairman of the Budget Committee and a member of the White House commission, said the nation faces the real possibility of becoming a "second-tier economic power" if it fails to address the trillion-dollar-plus deficit. He said simply cutting waste and fraud will not solve the problem, and insisted changes to Medicare and Social Security were needed because both programs are headed toward insolvency.
"People can say we want to keep what is. What is is not affordable," Conrad said Thursday on ABC's "Good Morning America."
Under the chairmen's proposal, Medicare spending would be curtailed. Tax breaks for many health care plans, too. And the Pentagon's budget would suffer as well in a plan that attaches $3 in spending cuts to every $1 in tax increases.
For all the pain, the deficit still would approach $400 billion in 2015 under the proposal, released by deficit panel's co-chairmen, Democrat Erskine Bowles, a former Clinton White House chief of staff, and Republican Alan Simpson, a former senator from Wyoming.
The plan arrived a week after congressional elections in which voters demanded action on the $1 trillion-plus budget deficit.
"This debt is like a cancer that will truly destroy this country from within if we don't fix it," Bowles warned.
Current deficits require the government to borrow 37 cents out of every dollar it spends.
The entire 18-member commission is supposed to report a deficit-cutting plan on Dec. 1, but panel members are unsure whether they'll be able to agree on anything approaching deficit cuts of the size proposed. And even if they could, any vote in Congress this year would be nonbinding, Simpson said.
During the campaign, neither political party talked of spending cuts of the magnitude offered Wednesday, with Republicans proposing $100 billion in cuts to domestic programs passed each year by Congress — but with no specifics.
The plan would gradually increase the retirement age for full Social Security benefits — to 69 by 2075 — and current recipients would receive smaller-than-anticipated annual increases.
Sept. 21 (Bloomberg) -- New Jersey Governor Chris Christie talks about his efforts to lower taxes and overhaul the state's public-employee pension system, the future of the Republican party and the Tea Party movement, and Christie's political future. Christie speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (This is an excerpt of the full interview. Source: Bloomberg)
New Jersey Governor Chris Christie, while serving as U.S. attorney, billed taxpayers for hotel costs that exceeded the federal government’s lodging rates by as much as $242 a night, according to a report by the Justice Department’s inspector general.
The report highlights travel spending by five unidentified prosecutors among 208 who served as U.S. attorneys during 2007- 2009. One, identified as U.S. Attorney C, was Christie, his spokesman, Michael Drewniak, acknowledged. He said Christie explained the expenses when they were questioned during the 2009 campaign.
Attorney C exceeded the government room rate on 15 of 23 vouchers submitted during the years studied, spending a total of $2,176 more than the prescribed rate, the report said.
“The U.S. attorney provided insufficient, inaccurate, or no justification for 14 of 23 trips (61 percent) that exceeded the government rate,” the largest share of any attorney, the report said.
Christie, 48, is the first Republican elected governor in New Jersey, a Democratic stronghold, since 1997. During the 2009 campaign, he said he always attempted to get lodging at the government rate.
“There are only a few rooms at each hotel that are reserved for government rate,” Christie said in an interview with the Asbury Park Press last year. “If you got them, you got them. If you didn’t, you didn’t. I wouldn’t have slept in the park.”
Four Seasons
In one case, Christie stayed at the Four Seasons Hotel in Washington, D.C., for $475 a night, “more than double the government rate of $233 per night,” the inspector general’s report said. The report also called Attorney C’s decision to spend $798 on car service to and from airports in Boston and London “excessive.”
The analysis was reported earlier by the Associated Press and the Star-Ledger of Newark, New Jersey.
Reaction was muted given that the estimate for the country’s gross domestic product matched expectations. The stock market has tapered off slightly from last month’s rally but continues to make gains amid generally upbeat corporate earnings for the quarter.
The G.D.P. growth rate was a slight increase from the previous quarter, which grew at a 1.7 percent rate. The economy expanded at a 3.7 percent pace in the first quarter.
“There really isn’t a very marked reaction,” said Keith B. Hembre, chief economist and chief investment strategist at First American Funds. “It was pretty much on consensus number, so there was nothing in the way of a surprise factor in terms of the overall total.”
For most traders, next week’s midterm elections and the anticipation that the Federal Reserve will announce new asset purchases overshadowed Friday’s data. In addition, a new survey released on Friday showed consumer sentiment, an essential driver of any recovery, was revised down slightly. The University of Michigan Consumer Sentiment Index was 67.7, down from 67.9, and below a median forecast of 68.
“This is hardly surprising in view of all the headwinds facing the consumer, most of which are likely to persist for some time,” Joshua Shapiro, the chief United States economist for MFR, said.
In late morning trading, the Dow Jones industrial average was up 2.46 points. The Standard & Poor’s 500-stock index was flat, while the Nasdaq composite gained 3.30 points.
European markets regained ground after the G.D.P. report. In London, the FTSE 100 was 11.40 points, or 0.2 percent, higher. The DAX in Frankfurt and the CAC 40 in Paris were both up about 0.2 percent.
The dollar was broadly lower against other currencies.
Analysts and traders are sifting through statistics and corporate results for signs that the economy can sustain any momentum.
Peter Cardillo, the chief market economist for Avalon Partners, said that third-quarter results and guidance have generally performed well or exceeded expectations, and the market is on track, at least in early trading on Friday, to show a gain for the month of about 3 percent.
“The combination of good earnings and low interest rates are quite favorable for the market,” he said.
Consumer spending rose 2.6 percent, according to Friday’s G.D.P. report, the highest quarterly growth since 2006. But spending is not entirely recovered, with many households still seeking discounts and under pressure from an uncertain job market.
On Friday, Chevron Corporation, the oil company, reported a decline in third-quarter income that it attributed partly to a moratorium on drilling in the Gulf of Mexico. Earnings were $3.77 billion, or $1.87 a share. The figure was also a decrease from $3.83 billion, or $1.92 a share, in the same period a year ago. The results were helped by higher oil and gas prices.
Shares fell 1.7 percent, to $83, in early trading.
The financial markets are also repositioning for the expected announcement next week of a new round of quantitative easing by the Federal Reserve to help stimulate the economy. Uncertainty over the amount and timing of asset purchases is still overshadowing the markets.
Mr. Cardillo said he expected the market to remain stuck in a tight range until after the mid-term Congressional elections on Tuesday and the Fed meeting on Wednesday.
Some analysts predict the amount of quantitative easing by the Fed could be about $500 billion, at least at the start.
“I kind of think the Fed might surprise in that they might do a little bit shy of that,” he said. “If that is the case, it could disappoint the market.”
The economic figures did little to change expectations for Fed action. Nominal G.D.P., which takes into account market prices, expanded at a rate of 4.2 percent in the third quarter, a rate that an economist noted was broadly in line with the 4 percent to 5 percent range desired by the central bank.
“At this stage next week is baked into the cake,” said Dan Greenhaus, the chief economic strategist for Miller Tabak & Company, speaking about the prospect for an announcement of further asset purchases after the Fed’s policy makers meet on Nov. 3
“If anything, the data in today’s G.D.P. report provides further support, as the Fed sees it, for trying to stimulate inflation and the economic recovery,” Mr. Greenhaus said.
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By Annalyn Censky, staff reporterNovember 23, 2010: 9:26 AM ET 
Sept. 21 (Bloomberg) -- New Jersey Governor Chris Christie talks about his efforts to lower taxes and overhaul the state's public-employee pension system, the future of the Republican party and the Tea Party movement, and Christie's political future. Christie speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (This is an excerpt of the full interview. Source: Bloomberg)