Analysis: GDP report doesn’t mean recession

The news that the government thinks the economy shrank in the fourth quarter looks like a disaster — but it’s not.

The Commerce Department reported Wednesday that the economy shrank at an annual rate of 0.1% in the final three months of 2012 — but that number was dominated by two temporary factors, as the Pentagon slashed spending 22% and businesses sharply slowed the rate of inventory accumulation.

Each took 1.3 percentage points off the number, says IHS Global Insight economist Nigel Gault. A drop in exports, which reflect a short-term slowdown in Asia and Europe’s ongoing problems, also cut into U.S. growth, Moody’s Analytics chief economist Mark Zandi said.

Adjusting for those factors leaves growth around 2.5% — not far from where it was in the third quarter. The third quarter got a benefit as businesses built up inventories and defense spending rose 13%, pushing the GDP number to 3.1%.

The government’s estimate Wednesday is only its first for the fourth quarter last year. The Commerce Department will make two more estimates in February and March and they could be revised upward as more data come in.

When you get into the core of the economy — consumer spending and business investment — the recent pattern of slow improvement is still there. That;’s bolstered by Wednesday’s news from payroll processor ADP that private companies added a better-than-expected 192,000 new jobs in January.

Indeed, both Gault and Zandi said Wednesday that they will raise their estimates for first-quarter growth based on the latest GDP report. While defense spending is set to fall as part of federal budget-cutting, it won’t drop as sharply as it did in late 2012. Inventories should bounce back and contribute to growth again in early 2013, both said.

None of this means the economy is booming. The expiration of the payroll tax holiday on Jan. 1 may cool consumers. The rate of job growth means unemployment, now 7.8%, will only fall to a still-to-high 7.3% by year end, Zandi said.

But you can think of this as a Star Spangled Banner day for the economy. The fiscal cliff was the rocket’s red glare. The tax increases and spending cuts coming into the economy now are the bombs. But the recovery is still there.

Source: Usatoday.com

Money saving Tips

Money saving tips and approach

personal finance experts recommend that you have an emergency fund that’s equal to 4-6 months of your net income. If you’re concerned about your ability to save that much money, do you feel motivated to save anything at all? Questions similar to this one can cause so much internal turmoil that you might avoid saving all together. Same goes for your retirement fund. Does confusion around the “best investment” to make keep you from opening or regularly funding your retirement account?

 

Many of us are confused about the state of our finances at any given time. To begin taking control of your money, you need clarity around your overall financial picture so that you’re operating with awareness. We recommend using an online budgeting tool like Online Budget Advisor to get a good look at where you stand financially. This tool is completely free and super easy to use.

Then, it’s a good idea to take a look at where some cutbacks can take place. Making cutbacks is the easiest way to save money, whether it’s for retirement, emergency fund or a family vacation.

 

  Here are some great money saving tips for 2013:

• Pay yourself first.
• Set financial goals (short and long term) to help you stick to your budget.
• Save your spare change.
• Attach a goal to your spare change collection.
• Use payroll withholding or direct deposit for a savings account.
• Open a Christmas club account at a credit union and have money deducted from your paycheck each month.
• Save any additional income, such as raises, overtime, tax refunds, and extra paychecks.
• After you pay off a car loan, student loan, credit card, etc. continue to make the monthly payment into your savings account instead.
• Have a garage sale or sell items you no longer use on eBay, Amazon or Craig’s List.

What are your ways to save money? and how can you fit these tips into your lifestyle to better your overall being!

The Young Raging Bull

The SEC will delay, by another two months, a ruling on Nasdaq OMX Group’s $62-million (U.S.) plan to compensate firms that suffered losses during Facebook’s botched initial public offering in May.

The SEC said it needs more time to consider Nasdaq’s proposal, as well as the comments received from various parties in favor of or against the plan, according to a regulatory filing dated Jan. 23.

The SEC, which had been expected to decide on the matter by Jan. 28, said its decision would be made by March 29.

Market-makers like Knight Capital Group Inc, UBS AG , Citigroup Inc, and others, have said they collectively lost around $500 million (U.S.) on May 18, when shares of Facebook first traded on public markets.

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Great!

It's So Easy Living Green

Everyone likes saving money! A major bonus includes saving energy and greening the planet in the process. With these simple tips you will easily accomplish all 3!

1) Switch out your regular lighting for compact fluorescent light bulbs and you will use about 75% less energy! Your savings of around $30 per year per bulb for electricity is also a great benefit. Fluorescent light bulbs also last longer than regular light bulbs.

2) Power strips will save you around $200 a year if you plug your appliances like TVs, computers etc into them and then turn the strip off when not in use. Appliances like TVs and computers are considered energy vampires and they suck out electricity while plugged in even if they are turned off!

3) Dishwashers actually use less water to wash your dishes then washing dishes by hand! Save money and water by running your dishwasher when…

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