There's Always a But

No matter how good the economic news is, the media just can't resist injecting what they think it downbeat news.

So the U.S. economy grew at it highest pace in four years, but Reuters still finds problems.

They so desperately want a recession so they can pound it over the head of the GOP presidential candidate next year.

The U.S. economy grew at its fastest rate in four years during the third quarter, the government confirmed on Thursday, but a surge in new claims for jobless benefits showed the labor market is softening.

The Commerce Department said gross domestic product, which measures total goods and services output within U.S. borders, expanded at a 4.9 percent annual rate in the third quarter, the same as it estimated a month ago and the strongest since the third quarter of 2003.

But growth already is slowing and a separate report from the Labor Department showing an unexpectedly steep jump in weekly jobless claims added a disquieting note of weakness.

Claims rose by 12,000 last week to 346,000 while the four-week moving average of claims -- seen as a more reliable barometer of labor market conditions -- hit its highest in more than two years.

Faster exports and increased inventory-building accounted for the pickup in third-quarter growth from the second quarter's 3.8 percent pace, but many economists say the ongoing drag from a weak housing sector and credit market turmoil will slow fourth-quarter expansion to 1 percent or less.

Of course, when the fourth quarter comes in higher than 1%, we'll be told how experts were shocked. And, of course, another but will be sure to follow.

Still, with the upbeat news, reuters goes out of their way to find someone forecasting catastrophe.

Economist Kurt Karl of Swiss Re in New York said that based upon the economy's current performance, the third-quarter GDP figure seemed "outrageously unrealistic" and said the economy's direction looked increasingly perilous.

"The probability continues to rise for a recession," Karl said, especially in light weakening in the labor market. "It's still hiring, not firing, but now we're getting to the firing point."

We'll check back with Mr. Karl in a few months.