Economic report not all bad for Obama
Republican challenger
Mitt Romney used a government report showing tepid economic growth to hammer
President Barack Obama less than two weeks before Election Day, but the report
also had some good news for the president.With the Commerce Department
reporting a modest 2% growth rate unlikely to make a big dent in unemployment,
Romney said Obama inherited a bad situation when he took office and "made
the problem worse." He criticised Obama for failing to reduce borrowing
and spending, protect entitlement programs or reach deals with Republicans.The
report also provided ammunition for Obama: It showed the economy grew for the
13th straight quarter at a rate that - though modest - beat expectations. Obama
claims progress during his term on fixing the economy, though conceding it
hasn't been fast enough, and says Romney's policies would only make matters
worse.The economy remains the race's dominant issue. But voters who are still
undecided aren't likely to be swayed by Friday's mixed report from the Commerce
Department, experts said.Growth in the July-September quarter climbed slightly
but was still too weak to stir significantly more hiring. The pace of expansion
increased to a 2% annual rate from 1.3% in the April-June quarter, led by more
consumer and government spending. This year's third-quarter growth is slightly
below the 2.2% average pace since the recession ended in June 2009."For
the average American, I don't think changes in quarterly GDP" make a big
difference in their perception of the economy, said Andrew Kohut, president of
the Pew Research Centre. "It's certainly good for the president that the
number is not bad because that would resonate."With 11 days until the
election, the economy is being kept afloat by revitalised consumer spending and
the early stages of a housing recovery. But more than three years after the
Great Recession ended, the US continues to struggle
because businesses are reluctant to invest, and slower global growth has cut
demand for American exports. The recovery is still the slowest since World War
II.The latest report did exceed expectations in GDP growth and showed some
progress in consumer spending, which drives 70% of economic activity.Obama took
office during the worst downturn since the Great Depression and says his
policies stabilised the economy later that year. He argues that his massive
stimulus package and auto bailout helped it grow in 2010.
US economic growth accelerating
US economic growth accelerated in
the third quarter as a last minute spurt in consumer spending and a surprise
turnaround in government outlays offset the first cutback in business
investment in more than a year.Even so, the stronger pace of expansion fell
short of what is needed to make much of a dent in unemployment, and it offered
little cheer for the White House ahead of the closely contested Nov. 6
presidential election.Gross domestic product grew at a 2% annual rate, the
Commerce Department said on Friday in its first estimate of the third quarter,
a pick-up from the second quarter's 1.3% pace. But to make substantial headway
cutting the jobless rate, the economy needs to grow by more than a 2.5% pace
over several quarters.The growth was a bit better than economists had expected,
in part because of a surge in government defence spending, which was not expected
to last. defence spending rose at its fastest pace in three years, and combined
with the rise in household consumption and a jump in home building to
strengthen domestic demand."The economy still has only weak forward
momentum," said Nigel Gault, chief US economist at IHS
Global Insight in Lexington Massachusetts. "Some underlying fundamentals are improving, but uncertainty at
home and abroad is holding back the business sector."US stocks ended the day
little changed, with corporate earnings holding greater sway over market
sentiment, while Treasury debt prices rose. The dollar was flat against a
basket of currencies.Since climbing out of recession, the US economy has faced a
series of headwinds ranging from high gasoline prices to the debt turmoil in Europe and, lately, fears of US government austerity.
The economy has struggled to exceed a 2% growth pace and remains about 4.5
million jobs short of where it stood when the downturn started.White House
adviser Alan Krueger said the GDP report underscored the need to extend tax
cuts for the middle class and small businesses, as President Barack Obama has
proposed. Obama's Republican challenger, Mitt Romney, described it as evidence
of the president's failed policies.In the third quarter, consumers shrugged off
the impending sharp cuts in government spending and higher taxes that are due
early next year and went on a bit of a shopping spree, buying automobiles and
snapping up Apple Inc's iPhone 5.Consumer spending, which accounts for about
70% of US economic activity, grew at a 2% rate after increasing 1.5% in the
second quarter.A separate private-sector report showed consumer sentiment rose
this month to its highest point in five years, another sign households are
little worried by the looming fiscal cliff at year end that will raise income
taxes and is estimated to drain about $US600 billion from the economy next year
unless Congress acts.High stock prices and firming home values have made
households a bit more willing to take on new debt, supporting consumer spending
even in the face of higher gasoline prices.An inflation gauge in the
government's GDP report rose at a 1.8% rate, up from the second quarter's 0.7%
pace. But a core measure that strips out food and energy costs slowed to a 1.3%
rate, suggesting the rise in overall inflation will be temporary.Even so, with
about 23 million Americans either out of work or underemployed, consumers might
have to cut back, especially if they get slapped with a higher tax bill in
2013.Incomes were squeezed in the third quarter rising just 0.8% after accounting
for inflation and taxes and households slowed their saving to ramp up their
spending.Government spending, which snapped eight straight quarters of declines,
accounted for 0.7%age point of GDP growth. defence outlays jumped at a 13%
annual rate, the most since the second quarter of 2009, after dropping for
three consecutive quarters. The surge was mainly in defence services installation,
and support for both weapons and personnel.Fears of the fiscal cliff hammered
business spending, which dropped at a 1.3% pace, the first decrease since the
first quarter of 2011."We are being really cautious about (the) kinds of
investments we make and the kinds of risks we are taking in this
environment," the chief executive of consumer products maker Newell
Rubbermaid Inc, Mike Polk, told on Friday.Worries over slower global
growth have weighed on the corporate sector, which has issued a series of
disappointing third-quarter earnings reports. According to Thomson Reuters
data, 63% of companies have posted revenues below analysts' expectations;
several have also announced job cuts.Slowing global demand, particularly
weakness in Europe and China, caused US exports to contract for the first time since the first
quarter of 2009. Exports declined by 1.6%, outstripping a 0.2% decline in
imports, marking the first drop in imports for three years.Another spot of
weakness in the GDP report were inventories, which were squeezed by a drought
in the US Midwest. Farm inventories cut 0.42%age point from GDP growth and could remain a
drag in the fourth quarter.Home building, which has been a weak spot in the
economic recovery, surged at a 14.4% rate, thanks in large part to the Federal
Reserve's ultra-accommodative monetary policy stance, which has driven mortgage
rates to record lows.Economists say housing the epicentre of the last recession will contribute to growth this year for the
first time since 2005.
Rightwing 'Big Bang' hits Israeli politics
The rightwing alliance
between Israeli Prime Minister Benjamin Netanyahu and his foreign minister has
polarised political forces in Israel ahead of next January's parliamentary
election.Netanyahu and Avigdor Lieberman's surprise announcement late on
Thursday that their respective Likud and Yisrael Beitenu parties would run on a
joint ticket was dubbed "the rightwing Big Bang" by the Israeli
press.Alongside the ultra-nationalist Yisrael Beitenu, the premier's right-wing
Likud - already predicted to win the vote would be able to form a broad
nationalist bloc leaning strongly to the right.Such a move would also allow
Netanyahu to overcome, to some degree, the chronic instability of past coalition
governments in the country."Israel needs a strong coalition government
based on a political list based on genuine cooperation," Netanyahu said on
Thursday evening."We ask the people to support strengthening the state,
and I want a clear mandate so I can take care of the basic" issues.Israeli
media quoted a survey by an adviser to Lieberman, according to which the joint
list would receive 51 seats in the 120-seat Knesset, or parliament, when the
votes are cast on January 22.Other polls, however, predict an outcome of less
than 42 seats, the current combined number of Likud (27) and Yisrael Beitenu
(15), the third largest political force in the Knesset."We are not worried
about the polls, what interests us is the construction of a broad nationalist
camp," Lieberman said at a news conference on Friday."Israel must move away from a
reality of many parties to a system of larger parties. We will probably never
reach two, like in the United States, but must achieve a system of four or five
parties to ensure governmental stability," he added.Assuming his expected
victory takes place, Netanyahu is certain to remain premier.But the Likud has
vehemently denied a report of a premiership rotation deal with Lieberman, a
populist authoritarian certain to receive a key position in the future cabinet.The
leaders of the political centre and left denounced the "nationalist"
and even "racist" Likud.Lieberman, a settler who was chief of
Netanyahu's staff during his first term as prime minister in the late 1990s, is
famous for his anti-Arab and nationalistic statements."The demon is out of
its nationalistic closet. Netanyahu has removed his mask," the leader of
the centre-right Kadima party Shaul Mofaz told public radio, calling on the centre
to unify. "Bibi" Netanyahu and Lieberman's together might
"encourage the centre-right parties to announce close cooperation in a
national salvation front," wrote Yossi Sarid, former Knesset member for
the left-wing Meretz party in a column in left-leaning daily Haaretz.Such a
front would have "but a single mission: no to 'Biberman'."Speaking on
public radio, Labour chief Shelly Yachimovich called for the creation of a
"centre-left bloc, consisting of the centrist parties and moderate members
of the Likud."In recent weeks media have noted the ambitions of potential
candidates, such as former prime minister Ehud Olmert and former foreign
minister Tzipi Livni, to head a centrist bloc to compete with Netanyahu.The
Likud-Yisrael Beitenu alliance also threatens the orthodox parties, which could
lose the pivotal role they have wielded in past coalitions, and they could even
be excluded from the next one.According to commentators, Netanyahu's pact with
Lieberman implies the adoption of at least some of Yisrael Beitenu's platform.Its
policies include military conscription of rabbinic seminary (yeshivot) students
and reducing the power of the Chief Rabbinate on matters such as conversions.The
Israeli parliament decided earlier this month that the election would be held
on January 22, 2013, nine months before its scheduled date.
EU lawmakers cancel Iran visit
A planned visit to Iran by five Euro MPs was
called off on Saturday after Tehran refused to let them
meet with a jailed activist lawyer and a filmmaker, just a day after the two
were awarded a prestigious European human rights prize."The five MEPs were
about to leave for Tehran when delegation chair (Tarja) Cronberg received a
phone call from the Iranian ambassador to the EU, saying they would not be
allowed to meet with the two Sakharov Prize winners," jailed lawyer Nasrin
Sotoudeh and filmmaker Jafar Panahi, a European Parliament source said.Sotoudeh,
47, who is serving an 11-year jail sentence for conspiring against state
security, and Panahi, 52, who is under house arrest and has been banned from
making films for 20 years, were awarded the 2012 Sakharov Prize on Friday."The
Islamic Republic of Iran categorically rejected any pre-conditions. Therefore this visit has
been cancelled," the Young Journalists Club, an affiliate of the state
broadcaster, reported on its website.The Isna news agency quoted Hossein
Sheikholeslam, international affairs advisor to the speaker of parliament, as
saying that Iran had "rejected a pre-condition set by the European
parliamentary delegation to meet with two prisoners".EU sanctions"If the delegation
agrees to visit Iran under the initially agreed conditions and agenda, then
there is no objection to the visit... But we cannot accept the current
pre-condition."Iran has cracked down on both since its disputed June 2009
presidential election.Sotoudeh is a leading human rights campaigner known for
her work as a lawyer representing opposition activists, while Panahi has been
acclaimed at international festivals for his gritty, socially critical movies.The
human rights and democracy prize "is a message of solidarity and
recognition to a woman and a man who have not been bowed by fear and
intimidation and who have decided to put the fate of their country before their
own", Parliament President Martin Schulz said on Friday.Schulz had also
warned that the visit would be cancelled if the delegation was unable to meet
Sotoudeh and Panahi.The rights award comes on the heels of tough new EU
sanctions against Iran aimed at forcing a breakthrough in talks between global
powers and Tehran on its disputed nuclear programme.After a biting oil embargo
took effect in July, EU foreign ministers last week tightened the economic
noose by targeting dealings with Iran's banks, shipping and gas imports.The
last visit by a European parliamentary delegation to Iran was in 2007.
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