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(AP) - America's economy, bolstered by brisk business spending, grew at a healthy 4.1 percent annual rate in the final quarter of 2003. That was even faster than first thought and offered new evidence that the nation's economic recovery was firmly rooted going into the new year.
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Within the context of elections, i think it does not matter i think for Bush anyway. all i remember is hearing "jobs lost" - its been drummed into my head so many times by so many Democratic candidates that its become fact. They were also clever to get on the outsourcing bandwagon to Bush and his policy of "Shipping American Jobs Overseas" whatever that means (as if having the ability to hire 10 times more programmers for the same money can't possibly have an impact on a companies ability to grow).
I think most Americans are of the impression that things are getting worse, not better... or that a lot of damage was needlessly done through bad policy. I think most Europeans are as well. Particularly with the $/Euro rates.
When Clinton came to office he attacked the success of the economy by saying that Bush created a nation of hamburger flippers.
When Bush Sr came to office, he attacked Reagans policies though they were clearly sucessful.
When Reagan came to office he attacked Jimmy... well. ok, That one made a lot of sense and might not have been partisan politics as much as it was simple math.
...*sigh* if only facts were facts instead of perceptions being facts. the world would be a better place. oh... and it would be a better place if i was Supreme Ruler of All Living Creatures, but that is another story.
fuel prices have a major effect on the end cost of all sorts of things. Is the US headed for inflation issues? Will gas be $2 this summer?
The dropping value of the US dollar does tend to prop up the internal economy by making it cheaper to make certain marginal products in the US instead of outside. Short term more people work. The effects on the shipping and transport industries are slower to show up.
Alex
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fuel prices have a major effect on the end cost of all sorts of things. Is the US headed for inflation issues? Will gas be $2 this summer?
The dropping value of the US dollar does tend to prop up the internal economy by making it cheaper to make certain marginal products in the US instead of outside. Short term more people work. The effects on the shipping and transport industries are slower to show up.
Alex
Fuel prices have had little effect on price inflation the past decade. Why would they now? The FED became strongly anti-inflation since the early 1980's and has taken all measures to keep it in check.
High fuel prices hurt the economy though. I've read some excellent analysis of that. An x% drop in GDP per 5 cents increase in gasoline prices. Pretty strong correlation though I don't have the numbers handy. It goes both ways though. If gas prices drop, it helps the economy. It's the change in fuel prices which matter. 7 and 4% growth happened with historically high fuel prices. Who can predict future fuel prices?
I agree with JR's political analysis though I think the higher GDP figures are helping Bush a lot. Bush will never be able to convey this in the way that Ronald Reagan was though. A year or so before election Reagan had a 38% approval rating and then won in a landslide, largely because he was so good at conveying the strength of the economic recovery. Reagan was on TV convincing people of the recovery even before it started.
George Bush is no Ronald Reagan.
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Yeah unfortunately many Americans do not understand how the economy works. Ignorance helps politicians.
I think the economy is doing pretty well.... but I have not had to look for a job.
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Originally posted by Mike AI@Feb 27 2004, 09:31 AM Yeah unfortunately many Americans do not understand how the economy works. Ignorance helps politicians.
I think the economy is doing pretty well.... but I have not had to look for a job.
as i get older i realize that politics is about exploiting the ignorance of the people... and not so much about representing the will of the people. its not thier fault though... people can't usually handle the truth either. it's all about making the sale. nothing more.
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Originally posted by Mike AI@Feb 27 2004, 12:31 PM Yeah unfortunately many Americans do not understand how the economy works. Ignorance helps politicians.
I think the economy is doing pretty well.... but I have not had to look for a job.
GDP is growing strongly the past 6 months. Unemployment rate is just a tad below its historical average. This is an average to above average economy and growing.
Ignorance is quoting the number of people out of work as a record when not adjusting for population or the number of people who are working. 5.9% unemployment in 2004 is not worse than 25% in 1933. Anyone who falls for such things can't divide.
There's absolutely nothing wrong with a 5.9% unemployment rate. The entire period from 1974-1987 had unemployment higher than that. For that matter, most western nations are considerably higher than that.
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"According to Greenspan, it seems that we must be grateful to the Fed for its loose interest rate policy. Without this policy we would probably be suffering a terrible economic slump by now. In short, according to Greenspan the low interest rate policy of the U.S. central bank has strengthened consumers' and businesses’ financial conditions. Our analysis, however, disagrees with this. Rather than showing strengthening in financial conditions the data demonstrates that the exact opposite took place.
Thus the household liabilities-to-assets ratio climbed to a new record high in Q3 of 0.185 from 0.183 in the previous quarter. Furthermore, the outstanding consumer credit-to-personal income ratio stood at a record of 0.214 in December. This record high ratio indicates that the pace of consumption by far exceeds the pace of wealth generation. This is likely to force consumers to curtail their borrowing and in turn curtail their expenditure in the months ahead."
Originally posted by MattK@Feb 27 2004, 12:52 PM US Consumers are Running on Empty
quote from article:
"According to Greenspan, it seems that we must be grateful to the Fed for its loose interest rate policy. Without this policy we would probably be suffering a terrible economic slump by now. In short, according to Greenspan the low interest rate policy of the U.S. central bank has strengthened consumers' and businesses’ financial conditions."
haha..
".... in an important interview today, Greenspan applauded himself and his policies for being the savior once again of the free world"
Originally posted by MattK@Feb 27 2004, 03:52 PM US Consumers are Running on Empty
quote from article:
"According to Greenspan, it seems that we must be grateful to the Fed for its loose interest rate policy. Without this policy we would probably be suffering a terrible economic slump by now. In short, according to Greenspan the low interest rate policy of the U.S. central bank has strengthened consumers' and businesses’ financial conditions. Our analysis, however, disagrees with this. Rather than showing strengthening in financial conditions the data demonstrates that the exact opposite took place.
Thus the household liabilities-to-assets ratio climbed to a new record high in Q3 of 0.185 from 0.183 in the previous quarter. Furthermore, the outstanding consumer credit-to-personal income ratio stood at a record of 0.214 in December. This record high ratio indicates that the pace of consumption by far exceeds the pace of wealth generation. This is likely to force consumers to curtail their borrowing and in turn curtail their expenditure in the months ahead."
I've read this guy. He has been bitching for the whole past year saying that the FED's policies wouldn't improve the economy. He must be baffled at the past 2 quarters. How many straws left to grasp?
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How many people have heard about the recent drop in the money supply (M3 and M2) despite the Fed's attempts to keep extending easy credit? Kind of like what happened in the 1930's...
"The Federal Reserve may believe that it's keeping monetary policy accommodative, but if you look at the drop in the nation's money supply lately, the central bank may not be as easy as it thinks."
...
"M3, which adds large time deposits, eurodollars and other items, and even MZM, which includes all kinds of accounts on which checks can be written, also are shrinking, having abruptly changed direction in the past two months.
If this decline in the money supply were to continue, it could restrain economic activity -- not to mention pull the stock market down. Indeed, the recent slowing in consumer spending and the pullback in stock prices may very well be the first signs that the economy is becoming parched for liquidity."
"Independent Economic Researcher A. Gary Shilling’s last two books have been all about the “D” word, and he is still a true believer. The Elliott Wave Theorist’s Bob Prechter’s latest book is “Conquer the Crash,” in which he talks about a coming deflation and how to cope with it. John Makin, an American Enterprise Institute Scholar who also works the hedge fund side of the Street, hasn’t published a book on deflation, but says he “probably should. I’m really looking at continuing disinflation and the Fed’s seeming indifference thereto.” And John has written copiously and cogently on same.
This trio, quite evidently, are marching to a different drummer than the herd of optimistic prognosticators whose economic predictions already have produced any number of cheery “outlook” pieces in this still-new year. So what do they think they see that most economists are missing, amid their celebrations of booming GDP and quiescent inflation? Deflation, of course. I gathered them into a conference call last week, and challenged them to worry me. "
Originally posted by MattK@Feb 27 2004, 05:38 PM Kind of like what happened in the 1930's...
Every year since the end of the depression some writer somewhere has used this phrase. I think you can find plenty enough examples from 2001 and what happened? One of the shortest and weakest recessions of all time. What we should have learned is that our recessions are shorter and less severe than they used to be. There has been no repeat of the 1930's despite how many factors have seemed similar at various times.
It seems to me that in pretty much all times people are in a state of panic regarding te economy. I can't remember when people weren't. All during the middle and late 1990s there were many articles that showed ominous comparisons with 1929 based on the overinflated stock market and predictions of a coming depression on par with the 1930's. Fear.
Yet 1929 always remains a distance memory.
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Originally posted by Buff@Feb 27 2004, 06:30 PM Ok, Colin, since you don't think we'll have another Great Depression, you must know what caused the Great Depression, and what is different such that it can't happen again.
So I ask you, what caused the Great Depression?
I didn't say it can't happen again and nor did you read that. (Why are you trying to redirect the conversation like that?) It's highly improbable. If you want a treatise or two on causes of the Great Depression, I'll be happy to recommend a few books for you.
Go to a used bookstore and you will find dozens of books from over the years with titles like "The Coming Depression", "The Coming Economic Earthquake", and "1929 Revisited". They come. They go. People buy them because they are afraid. The authors of books like this all thought they saw a pattern that reminded them of 1929. Jesus, go read the gold standard sites. Those people are ALWAYS predicting a horrible recession and without even looking I GUARANTEE they are right now.
And if you want to bet that a depression is coming soon, go right on ahead and join the long list of fools who published the above nonsense.
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Originally posted by Buff@Feb 27 2004, 03:52 PM
The Great Depression was predicted by the Austrian School Economists, specifically Ludwig von Mises. He explained quite clearly what would happen as a result of Federal Reserve Monetary policy (holding the interest rate below the natural rate of interest).
We saw an internet bubble result from the same policy.
If you think it's improbable that we will have another great depression, then what you're really saying is that Central Planning of an economy works. And if you believe that, then you're a socialist.
Kennedy's assassination was predicted by quite a few psychics. It's funny how we take 1 out of 1,000,000 guesses and call the person who guessed right a genius... and the rest idiots.
Originally posted by Buff@Feb 27 2004, 06:52 PM If you think it's improbable that we will have another great depression, then what you're really saying is that Central Planning of an economy works. And if you believe that, then you're a socialist.
If A then B. If B then C. Only socialists believe that another depression is improbable? That's crazy. There's absolutely no connection. There's a whole range of economic thought that falls under capitalism. Not everyone is a laissez faire capitalist. Mr. Capitalism wears many hats, my friend.
Just to be clear, I believe that a depression at any particular time is improbable. Not that one will never happen. Chance of one happening in the next 5 years? Very low. Chance in the next 100 years? Who knows?
Does central banking "Work"? If the function of central banking is to smooth out the highs and lows of the economy then it does appear to "work". Go dig up all alist of all the recessions since the late 1880s and you will find they become of shorter duration and intensity especially in the post-World War II period. There were many shocks in the late 19th and early 20th centuries that were much worse than anything we've seen since. Are there alternative explanations? Of course.
The economy of today differs from that of the late 1920's in many, many different ways. According to one school of thought, the attempt to balance the budget during the early Depression exacerbated the situation. There's also a well-known correlation between countries that stayed on the gold standard and countries that suffered the worst of the depression. There are whole books on this subject and they are easy to find.
Last edited by Colin at Feb 28 2004, 05:54 AM
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i can't believe some of the utter horse shit being flung around in this thread. i admit to being a contrarian and not sharing the viewpoint of the mainstream on economic matters, but this is ridiculous.
anyone who uses the current administration's economic numbers to argue any fact is beginning their argument on a false premise. anyone that quotes numbers such as the "gdp" is not only quoting fictitious numbers but ones that don't even mean what most people think they mean.
when some of the best and brightest among us fall for this line of horse shit then what chance do average people have?
don't just recite numbers, look at what the people with real money are doing right now. they aren't buying stocks and counting on growth in america. they are cashing out, taking profits, and taking defensive positions.
do i trust what the government tells me or do i trust what warren buffett, jim rogers, george soros, bill gates and others are showing me?
you are influenced by 6 weeks down in Nazdaq. it ALWAYS happens after INTC earnings release, works like a clock with last week of February being the worst.
Being pessimist by nature, I always take defensive positions, but....I started loading on Friday.
Originally posted by eatapeach@Feb 29 2004, 04:13 PM i can't believe some of the utter horse shit being flung around in this thread. i admit to being a contrarian and not sharing the viewpoint of the mainstream on economic matters, but this is ridiculous.
anyone who uses the current administration's economic numbers to argue any fact is beginning their argument on a false premise. anyone that quotes numbers such as the "gdp" is not only quoting fictitious numbers but ones that don't even mean what most people think they mean.
when some of the best and brightest among us fall for this line of horse shit then what chance do average people have?
don't just recite numbers, look at what the people with real money are doing right now. they aren't buying stocks and counting on growth in america. they are cashing out, taking profits, and taking defensive positions.
do i trust what the government tells me or do i trust what warren buffett, jim rogers, george soros, bill gates and others are showing me?
Do you have some insight into who manipulated the GDP numbers and when? For example, were they manipulated during the recession of 2001? Were they manipulated by the Clinton administration to show strong growth throughout the 1990s or only by the Bush administration to show current economic recovery just in time for the elections?
Do you know someome over at the Department of Commerce? Maybe in the
Bureau of Economic Analysis itself? Someone who told you that there is a discrepancy between the survey data and the reporting. Please share. This will be interesting.
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Well I rarely get into any discussion involving "statistics", because while stats may have been created as a science for the basis of analysis, they have long been turned into the art of manipulation and subject to thousands of points of view.
That said, I just want to point out the unemployment rate is and always has been a measure of "people seeking work" and any time large numbers just give up after looking a long time, those are not tossed into the equation. And I've read the largest number of people who gave up has been during this Administration. I know for certain around November they took 200,000 off the unemployment roll not because they found jobs, but gave up. Haven't heard any concrete numbers lately, just that it's historically high.
Conspiracy theories aside, all the data you want is readily available from the Department of Labor. This is the straight dope. On a straight numbers basis, there are more people working in the US today than at any other times in its history. In January, 2004 there were 138.6 million people in the US employed. There were 133.4 million people working in 1999. There are 5 million MORE people employed today than there were 4 years ago. Look up the numbers. There has been a net GAIN in jobs.
Now nothing happens in a vacuum and some of that is because the population increased so it always make sense to compare the number employed to the total adult population (16+) so you have a ratio instead of a straight number. If you do, you'll see that the ratio of employed people to adults in the US is 62.4%. In 1999 it was higher at 64.3%. So in that sense we have less employed as a percentage of adults - which we would already suspect since the late 1990s were record-setting in that regard.
In general though it has risen over time. Before the mid-1980s we never saw it over 60%. It rose as more women entered the workforce and there were more opportunities for minorites. It has not been under 60% since.
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Originally posted by Colin@Feb 29 2004, 02:06 PM Do you have some insight into who manipulated the GDP numbers and when?
i didn't say manipulated, i said fictitious. anyway, here's richard daughty from barron's explaining the gdp in his own special way. read this, then reread what i wrote.
"Suppose you, as a successful capitalist swine, hire a hundred guys to make a hundred widgets, and sell the widgets for a dollar apiece, and thus GDP is $100. So far, so good.
Then a few days pass, and we wake up with a blinding headache in a strange, seedy little hotel on the outskirts of town with a one-eyed woman who says her name is Darla, and when we frantically call in to the office, we find that you raised the price to two dollars, and you also figured out a way to make widgets with only fifty employees!
The hike in price, unfortunately, reduces widget sales by 25%. But GDP jumps to $150! And because you fired half the employees, labor costs plummeted, and the next thing you know Alan Greenspan jumps on an airplane and flies down to visit your factory and give you an award as Proud Poobah of Productivity, which you deserve because productivity has soared.
In the old days, it took a hundred guys to make a hundred widgets. Now it takes only fifty guys to make seventy-five widgets, and you doubled the price to more than make up for it. You're a genius!
But unemployment is up by 50%, total sales volume is down, and inflation has soared to 100%. Only a Fed chairman as clueless as Alan Greenspan could possibly see just an upside in this."
Colin, two numbers you have to be careful on in those DOL numbers... first, they don't directly break out the number of people working full time versus part time, and they don't tell you if those jobs are good (higher dollar) or bad (lower dollar burger flipping type) jobs. Also, 5 million jobs sounds good... until you see that the population has gone up 20 million in the same time. (http://www.census.gov/cgi-bin/popclock)
Also, does the "adults working" number reflect retired and not working? Or does it slice off under 16 and over 65? The baby boom is crashing into retirement, which is going to make a major adjustment in those numbers. Based on the population increases and the fact that jobs only went up by 25% of the population increase, either we are having a MAJOR baby boom or retirees are being removed from the count.
Any ideas?
Alex
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Originally posted by RawAlex@Mar 1 2004, 12:18 AM Colin, two numbers you have to be careful on in those DOL numbers... first, they don't directly break out the number of people working full time versus part time, and they don't tell you if those jobs are good (higher dollar) or bad (lower dollar burger flipping type) jobs. Also, 5 million jobs sounds good... until you see that the population has gone up 20 million in the same time. (http://www.census.gov/cgi-bin/popclock)
Also, does the "adults working" number reflect retired and not working? Or does it slice off under 16 and over 65? The baby boom is crashing into retirement, which is going to make a major adjustment in those numbers. Based on the population increases and the fact that jobs only went up by 25% of the population increase, either we are having a MAJOR baby boom or retirees are being removed from the count.
Any ideas?
Alex
I didn't say anything got better in the last 4 years, Alex. In fact, I provided the breakdown by percentage and said that the late 1990s were a record for employment in the US. It should be pretty difficult to beat a record. I did also mention that the population increased. Overall, on a percentage basis, the employment rate in the US was only better in the late 1990s than it is today. What we've really had is more of a return to normalcy. Normal growth, normal unemployment. Actually, the US is slightly above average the past 6 months in both these regards.
As long as they are not in a nursing home, 65 and older are counted in the employment ratio figures.
Last edited by Colin at Mar 1 2004, 05:11 AM
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Originally posted by eatapeach@Feb 29 2004, 11:37 PM i didn't say manipulated, i said fictitious. anyway, here's richard daughty from barron's explaining the gdp in his own special way. read this, then reread what i wrote.
"Suppose you, as a successful capitalist swine, hire a hundred guys to make a hundred widgets, and sell the widgets for a dollar apiece, and thus GDP is $100. So far, so good.
Then a few days pass, and we wake up with a blinding headache in a strange, seedy little hotel on the outskirts of town with a one-eyed woman who says her name is Darla, and when we frantically call in to the office, we find that you raised the price to two dollars, and you also figured out a way to make widgets with only fifty employees!
The hike in price, unfortunately, reduces widget sales by 25%. But GDP jumps to $150! And because you fired half the employees, labor costs plummeted, and the next thing you know Alan Greenspan jumps on an airplane and flies down to visit your factory and give you an award as Proud Poobah of Productivity, which you deserve because productivity has soared.
In the old days, it took a hundred guys to make a hundred widgets. Now it takes only fifty guys to make seventy-five widgets, and you doubled the price to more than make up for it. You're a genius!
But unemployment is up by 50%, total sales volume is down, and inflation has soared to 100%. Only a Fed chairman as clueless as Alan Greenspan could possibly see just an upside in this."
you seem to see an upside in this too, colin
eatapeach,
There you go again. That's a political article, not an economic one. ;-)
For all that have complained about the FED flooding the system with money, take a good look. It appears that they have been reducing the money supply for 6 months now. The US economy grew more the past six months than in any other six month period in the past 20 years and it happened it with less money in circulation. As the Austrians on this board will probably point out, you can't be sure the money supply drop is intentional as the FED's actions are non-transparent but there it is.
I'll tell you why GDP matters. Defense. Most developed countries spend about the same 3% of GDP on defense as each other. The US is nothing special in this regard. What it does is buy the US more aircraft carriers than all the rest of the world combined. What it does is permit the US to spend more on advanced military technology than all the rest of the world combined.
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02-27-2004
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