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it's the economy, stupid...... - 7/31/2008 10:05:46 AM

philosophy

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http://news.yahoo.com/s/ap/20080731/ap_on_bi_go_ec_fi/economy

......doesn't look like the economists are getting it right. How come the US economy isn't responding as predicted to the usual measures?

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RE: it's the economy, stupid...... - 7/31/2008 10:43:53 AM

FirmhandKY

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quote:

ORIGINAL: philosophy

http://news.yahoo.com/s/ap/20080731/ap_on_bi_go_ec_fi/economy

......doesn't look like the economists are getting it right. How come the US economy isn't responding as predicted to the usual measures?

Funny thing is ... the US economy grew at 1.9% last quarter. Might not be in the report you cited. I glanced through it, looking for that and was unable to find it, and not interested enough to spend the additional time parsing it out since I had read the same numbers on another news site which did point out the growth.

I guess it's all in how the news organization wants to present the news ... positive, or negative.

Don't always believe what you read, especially about the US economy, the first ime.

Firm

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RE: it's the economy, stupid...... - 7/31/2008 11:06:03 AM

DomKen

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quote:

ORIGINAL: FirmhandKY
Funny thing is ... the US economy grew at 1.9% last quarter. Might not be in the report you cited. I glanced through it, looking for that and was unable to find it, and not interested enough to spend the additional time parsing it out since I had read the same numbers on another news site which did point out the growth.

The 1.9% figure is in the second paragraph. However it needs to be kept in mind that a rate below the rate at which the working population expands is really a net contraction. With the working age population expanding at about a 3% rate that means growth is matching what's needed simply to keep up with population growth.

As to why it didn't work, the real and paper losses continue. Every time a homeowner defaults on a mortgage he loses all his equity and has to go out on the market to rent and the bank loses the remaining unpaid amount of the motgage. The banks count on being able to sell homes below market and still recoup their loss. However with the real estate bubble prices being so much higher than present prices banks have to take a real loss when they sell the foreclosed properties. As long as this is going on, in a very real sense a decrease in the money supply, it will be very hard for banks to make loans to businesses needed to expand and grow the economy.

What's really disturbing is that fuel prices have managed to overcome that deflationary pressure and cause significant inflation. Significant inflation during a recession is a very bad sign as any one who remembers the late 70's and early 80's will recall.

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RE: it's the economy, stupid...... - 7/31/2008 11:10:46 AM

philosophy

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quote:

ORIGINAL: FirmhandKY

quote:

ORIGINAL: philosophy

http://news.yahoo.com/s/ap/20080731/ap_on_bi_go_ec_fi/economy

......doesn't look like the economists are getting it right. How come the US economy isn't responding as predicted to the usual measures?

Funny thing is ... the US economy grew at 1.9% last quarter. Might not be in the report you cited. I glanced through it, looking for that and was unable to find it, and not interested enough to spend the additional time parsing it out since I had read the same numbers on another news site which did point out the growth.

I guess it's all in how the news organization wants to present the news ... positive, or negative.

Don't always believe what you read, especially about the US economy, the first ime.

Firm

...actually the article i linked to does show there has been a modest growth. However, there are two caveats to that. Firstly it's significently less than was predicted. Secondly, the article had an interesting part regarding how these figures get revised with hindsight...

The article, while hosted on yahoo, was the work of an AP journalist.....so not massively partisan.

What i'm trying to ask is, spin aside, why is the current administrations economic model off? Is the mismatch between prediction and reality due to external forces or false paradigms?

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RE: it's the economy, stupid...... - 7/31/2008 11:18:28 AM

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Ronald Reagan used a recession to get his first pass into office. Carter wasn;t as agressive in suggesting reforms,and people were in a panic over it-Carter lost.

Right now,we are between the hammer and the anvil. The banks are tapped out and loans for new business starts are scarce. Everything get delivered with fuel vehicles. Costs are going up at every level due to this-materials making-delivery to manufacturing plants.....all points in between. Many products go through several delivery chains to arrive on salesfloors.

So everything is going up-even basic NEED commodities, like food. Sellers dealing with luxury items-Like starbucks, are taking it in the shorts. People are being forced to use cheaper alternatives to make ends meet. And you can't buy a thousand dollar big screen tv when you can barely afford to fill the gas tank to make it to work.

When gas drops back to three dollars a gallon or less-we will get some relief. But I don't see this getting any better until that happens-no matter how some news agency tries to spin it.

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RE: it's the economy, stupid...... - 7/31/2008 11:34:23 AM

pahunkboy

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It is the percieved cost of gas.

They took it up- ok- even commented on how the economy absorbed it. So took it up a tad more- dropped it- then ran it up to $4. so thats the breaking point where say the cement patio stones are a bargain, as is a pack of socks.

Now- consider if you, he, her, and them, everyone on CM- ran the household budget with esoteric accounting methods? Reverse the banks balance-available balance- debit-credit- fees-a-rama go round. Flip that around. Would it work to tell the electric company that you are experiencing a liquidity problem? Nope.

IMO a whole bunch of CPAs need to go to jail and loose their assets. The numbers are all smoke and mirrors.

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RE: it's the economy, stupid...... - 7/31/2008 5:06:06 PM

FirmhandKY

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quote:

ORIGINAL: DomKen

quote:

ORIGINAL: FirmhandKY
Funny thing is ... the US economy grew at 1.9% last quarter. Might not be in the report you cited. I glanced through it, looking for that and was unable to find it, and not interested enough to spend the additional time parsing it out since I had read the same numbers on another news site which did point out the growth.

The 1.9% figure is in the second paragraph. However it needs to be kept in mind that a rate below the rate at which the working population expands is really a net contraction. With the working age population expanding at about a 3% rate that means growth is matching what's needed simply to keep up with population growth.

1. Population Growth

In the U.S., the natural growth rate is 0.6% and overall growth is 0.9%.

2 Population Numbers, Projections, Graphs and Data

U.S. population has grown by 1.2% per year over the last 50 years.

3. United States Population growth rate

Population growth rate: 0.883% (2008 est.)

Definition: The average annual percent change in the population, resulting from a surplus (or deficit) of births over deaths and the balance of migrants entering and leaving a country. The rate may be positive or negative. The growth rate is a factor in determining how great a burden would be imposed on a country by the changing needs of its people for infrastructure (e.g., schools, hospitals, housing, roads), resources (e.g., food, water, electricity), and jobs.

Taking the highest of the population growth rates given above (1.2%), and taking the report's published economic growth rates of the first two quarters as 1.9% and 0.9%, - hell, let's even throw in the negative 0.2% of the fourth quarter of last year - we have an economc growth rate of 2.6% over the last three quarters, compared to a 0.9% population growth (1.2 / 4 * 3 = 0.9).

The economy is still growing faster than the population.

Firm

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RE: it's the economy, stupid...... - 8/1/2008 2:52:39 AM

Vendaval

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The really bad news is 7 months straight of job losses, with more lay-offs coming to the automotive industry and airlines.

"GLOBAL MARKETS-Stocks fall on U.S. worries, jobs data awaited"

Fri Aug 1, 2008 4:29am EDT

By Jeremy Gaunt, European Investment Correspondent

"Euro zone government bonds traded in a narrow range. The U.S. July employment report is due at 1230 GMT. Economists polled by Reuters expect it to show that companies shed 75,000 workers in July, marking the seventh straight month of job losses.

Hopes of a speedy economic recovery were dented on Thursday by a surprise jump in U.S. weekly jobless claims, a lower than expected second-quarter gross domestic product and a shock revision of data that showed the U.S. economy shrank in the final quarter of 2007, revealing a brush with recession."

http://www.reuters.com/article/economicNews/idUSL144952720080801

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RE: it's the economy, stupid...... - 8/1/2008 3:34:44 AM

Sanity

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Drill now, drill here.

quote:

ORIGINAL: Vendaval

The really bad news is 7 months straight of job losses, with more lay-offs coming to the automotive industry and airlines.

"GLOBAL MARKETS-Stocks fall on U.S. worries, jobs data awaited"

Fri Aug 1, 2008 4:29am EDT

By Jeremy Gaunt, European Investment Correspondent

"Euro zone government bonds traded in a narrow range. The U.S. July employment report is due at 1230 GMT. Economists polled by Reuters expect it to show that companies shed 75,000 workers in July, marking the seventh straight month of job losses.

Hopes of a speedy economic recovery were dented on Thursday by a surprise jump in U.S. weekly jobless claims, a lower than expected second-quarter gross domestic product and a shock revision of data that showed the U.S. economy shrank in the final quarter of 2007, revealing a brush with recession."

http://www.reuters.com/article/economicNews/idUSL144952720080801

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RE: it's the economy, stupid...... - 8/1/2008 4:42:12 AM

DomKen

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quote:

ORIGINAL: FirmhandKY
Taking the highest of the population growth rates given above (1.2%), and taking the report's published economic growth rates of the first two quarters as 1.9% and 0.9%, - hell, let's even throw in the negative 0.2% of the fourth quarter of last year - we have an economc growth rate of 2.6% over the last three quarters, compared to a 0.9% population growth (1.2 / 4 * 3 = 0.9).

The economy is still growing faster than the population.

Firm

Do I really have to explain this? What matters to the economy, mostly, is the expansion in working age people but even so we can stick to yuor figure of 1.2% if it makes you happy. However you're ignoring a factor that makes a direct correlation inappropriate, inflation. A certain amount of the GDP growth is price inflation rather than real growth and price inflation doesn't create new jobs.

Ask an economist and they'll tell you the economy needs to expand at around a 3% rate to keep up with the expansion of the population.

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RE: it's the economy, stupid...... - 8/1/2008 5:46:14 AM

DarkSteven

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There are several things going on.

1. The housing crunch. This means two things: first, that there is a loss of real wealth as people default, and second, that there is a loss of false wealth, as the bubble popped.
2. The credit crunch. This one I frankly don't understand. A bunch of financial institutions are strapped for cash because they made stupid, risky loans. But the Fed is offering banks money so cheap that it should be child's play to profit, So if the existing institutions are cash strapped, why aren't newcomers entering the market?
3. Gas prices. To be more precise, energy prices. Since our economy is based heavily on energy, high energy costs add to the price of everything.
4. Auto sales. I suspect that poor sales are a combination of tight money and tightened credit. Whatever, the auto industry is doing badly.
5. A weak dollar. That makes all overseas purchases more expensive. This helps industries that export, but the truth is that the US is a net importer big time. So electronics, Chilean produce, Mexican silver, etc. all cost more.
6. The deficit. I suspect that low deficits are more important to the economy's health than politicians let on. The GOP's trickle-down dogma, birthed by Reagan, is that whenever taxes are cut, the resultant economic stimulation generates additional economic activity whose resultant taxes more than make up for the up front tax loss. Bush's tax cuts and subsequent economic train wreck should convince anyone, but this is a GOP sacred cow. The Dems don't want to acknowledge this because they have a raft of programs that they want to initiate.

C'mon, guys. Clinton was gung ho on a balanced budget. Compare his economy to Bush's.

To respond to your "why don't the politicians DO something?", it's because there's not much they CAN do. The Fed can control rates but will allow for growth only at the cost of inflation. Right now we are experiencing inflation coupled with a shrinking economy, so the Fed's only option is picking which evil to live with. Another stimulus will increase the deficit.

The correct course is to cut the government and its spending drastically and begin shittling away at the deficit. This will NOT be done in an election year. I'm hoping that the new President will do that up front and bank on the pain being over come reelection time.

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RE: it's the economy, stupid...... - 8/1/2008 5:55:56 AM

FirmhandKY

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quote:

ORIGINAL: DomKen

quote:

ORIGINAL: FirmhandKY
Taking the highest of the population growth rates given above (1.2%), and taking the report's published economic growth rates of the first two quarters as 1.9% and 0.9%, - hell, let's even throw in the negative 0.2% of the fourth quarter of last year - we have an economc growth rate of 2.6% over the last three quarters, compared to a 0.9% population growth (1.2 / 4 * 3 = 0.9).

The economy is still growing faster than the population.

Firm

Do I really have to explain this? What matters to the economy, mostly, is the expansion in working age people but even so we can stick to yuor figure of 1.2% if it makes you happy. However you're ignoring a factor that makes a direct correlation inappropriate, inflation. A certain amount of the GDP growth is price inflation rather than real growth and price inflation doesn't create new jobs.

Ask an economist and they'll tell you the economy needs to expand at around a 3% rate to keep up with the expansion of the population.

Official overview of complete report here

GROSS DOMESTIC PRODUCT: Second Quarter 2008 (Advance)
REVISED ESTIMATES: 2005 THROUGH FIRST QUARTER 2008

Complete report here:

Full Report Release with Tables.

Key reference:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.9 percent in the second quarter of 2008 (that is, from the first quarter to the second quarter), according to advance estimates released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.9 percent. [emphasis added]

Definition of Real Economic Growth Rate:

A measure of economic growth from one period to another expressed as a percentage and adjusted for inflation (i.e. expressed in real as opposed to nominal terms). The real economic growth rate is a measure of the rate of change that a nation's gross domestic product (GDP) experiences from one year to another. Gross national product (GNP) can also be used if a nation's economy is heavily dependent on foreign earnings. [emphasis added]

Notes:
The real economic growth rate builds onto the economic growth rate by taking into account the effect that inflation has on the economy. The real economic growth rate is a "constant dollar" and therefore a more accurate look at the rate of economic growth because the real rate is not distorted by the effects of extreme inflation or deflation. [emphasis added]

Therefore inflation is taken into account in the report.

I say again ... the economy is growing.

I'm willing to entertain the idea that if you add in "working age" people in the mix, it might have an effect. However, you'd have to come up with some cites and credible math before I'd take any assertion about it at face value.

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RE: it's the economy, stupid...... - 8/1/2008 7:07:54 AM

bipolarber

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Oh, yeah, and there's that little thing called the national debt... (have they added numbers yet to the "national debt clock" in Times Square yet? Last I heard, they were about to run out of numbers...)

$9.9 trillion in debt. Almost a full quarter of our GNP. (How healthy would your household be, if 1/4 of your earnings were going to credit card payments?) And the vast majority of it accrued during GOP administrations.... yeah, we Dems are the "tax and spenders" alright... and the republicans are the "spend us into a hole like a drunken teenager in a whorehouse with his Dad's credit card."

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RE: it's the economy, stupid...... - 8/1/2008 9:05:54 AM

FirmhandKY

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quote:

ORIGINAL: bipolarber

Oh, yeah, and there's that little thing called the national debt... (have they added numbers yet to the "national debt clock" in Times Square yet? Last I heard, they were about to run out of numbers...)

$9.9 trillion in debt. Almost a full quarter of our GNP. (How healthy would your household be, if 1/4 of your earnings were going to credit card payments?) And the vast majority of it accrued during GOP administrations.... yeah, we Dems are the "tax and spenders" alright... and the republicans are the "spend us into a hole like a drunken teenager in a whorehouse with his Dad's credit card."

Anger usually gets in the way of understanding.

You can look up the pertinent figures yourself, but here is some from the dreaded Wikipedia:

National Debt as Percentage of GDP

End of
Fiscal
Year % of GDP
1950----- 80.2
1960----- 45.7
1970----- 28.0
1980----- 26.1
1990----- 42.0
2000----- 35.1
2005----- 37.4
2007----- 36.8
2008----- 37.9(est)

The debt verses the overall economy is probably one of the best indications of what debt load the economy can stand. These selected figures show that the current debt load has been higher several times in the last few years. It was higher still during and immediately after WWII.

You do remember the depression immediately after WWII don't you

Math is a real bitch.

The economy is still growing, even if it doesn't fit into your particular anti-Bush, anti-Republican political narrative.

Firm

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RE: it's the economy, stupid...... - 8/1/2008 9:12:07 AM

bipolarber

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Oh, yeah... the economy is growing. Keep telling yourself that frim. As houses go into forclosure, as the inflation starts getting a grip, as investment dollars dry up and go elsewhere...

And since when does anyone consider "facts" on Wiki to be the final word on anything? People with agendas, like yourself, got on that thing and edit "facts" as they see fit.

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RE: it's the economy, stupid...... - 8/1/2008 9:29:24 AM

FirmhandKY

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quote:

ORIGINAL: bipolarber

Oh, yeah... the economy is growing. Keep telling yourself that frim. As houses go into forclosure, as the inflation starts getting a grip, as investment dollars dry up and go elsewhere...

And since when does anyone consider "facts" on Wiki to be the final word on anything? People with agendas, like yourself, got on that thing and edit "facts" as they see fit.

Please ... pretty please .... look up your own sources of the debt versus GDP and tell me what you find.

Kinda breezy out there on that limb, isn't it?

I don't think I'm the one with an political "agenda" here, btw. Read my sig line, and see if you can base your political arguments on facts, rather than how you "feel" and what others have told you to think.

Firm

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RE: it's the economy, stupid...... - 8/1/2008 9:33:10 AM

Lordandmaster

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No it didn't. It grew at a 1.9% ANNUAL RATE last quarter.

And that sucks.

quote:

ORIGINAL: FirmhandKY

Funny thing is ... the US economy grew at 1.9% last quarter.

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RE: it's the economy, stupid...... - 8/1/2008 9:49:20 AM

FirmhandKY

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quote:

ORIGINAL: Lordandmaster

No it didn't. It grew at a 1.9% ANNUAL RATE last quarter.

And that sucks.

quote:

ORIGINAL: FirmhandKY

Funny thing is ... the US economy grew at 1.9% last quarter.

Good point. I'll take your word for it without going back to look.

It doesn't change a single thing about my comments. The economy is still growing.

You want it to grow faster than 1.9%, I'm all for it.

My point has been that too many people are shouting "recession!" when they don't have a clue that it is usually defined as two straight quarters (6 months) of negative growth (shrinking economy).

And they are doing it for political reasons, or out of ignorance. And sometimes both.

We ain't in a recession. The economy is growing. We can argue how much, and what is the appropriate rate if you want .... but that's a different issue.

Firm

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RE: it's the economy, stupid...... - 8/1/2008 11:21:45 AM

popeye1250

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Boy! Isn't this "Global Economy" just the greatest thing!
Why pay blue collar people in this country $25-$30 per hour and benefits to make things when we can pay slave wages to people in foreign countries to make shoddy junk and then expect our blue collar people to buy that junk on $12 per hour but at the same rate like they're still making $25-$30 per hour!
Man! we just don't have enough GREEDY BILLIONAIRES in this country!
It wasn't about "helping developing countries" like Clinton told us,("NAFTA") it was all about making *working slaves* out of everyone under the guise of "efficiency" and now they're comming after *white collar* people too!
You know, I'm real glad that we have the Second Amendment in this country but,......."they" aren't!

< Message edited by popeye1250 -- 8/1/2008 11:24:02 AM >

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RE: it's the economy, stupid...... - 8/1/2008 11:27:33 AM

DomKen

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Firm you're, as is depressingly usual for you recently, making political statements and then trying to back them up by BS.

I'll also note that the revised stats in the report you cite indicates a real GDP shrink in last quarter 2007 of 0.2% annual rate. Further research finds that the adjusted numbers for first quarter 2008 is 0.9% which is well below the rate of population expansion even with your numbers. IOW that's a recession.

The Q1 2008 number is here:
http://www.bea.gov/newsreleases/national/gdp/2008/txt/gdp208a.txt

Now about who is making political or ignorant claims...

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