Full Version: It's the Economy, Stupid!
US economic growth beats forecasts
The US economy grew at a rate of 2.2 per cent in the third quarter, faster than previously thought, while wage growth earlier this year was revised down on Wednesday, adding to evidence that the economy is on track for a soft landing.
<snip>
The government statistics showed considerable strength in the business sector as commercial investment rose at a 10 per cent annual rate – higher than the previous estimate of 8.6 per cent – while corporate profits grew much faster than earlier estimates suggested with a rise in pre-tax earnings of 4.6 per cent to $46.3bn.
The housing sector remained one of the weakest, with investment in homes falling by 18 per cent during the quarter, the biggest decline in 15 years - in line with earlier estimates.
Dollar Falls Versus Euro, Yen
September Trade Deficit Down
Falling oil prices helped lower the U.S. trade deficit in September after it hit an all-time high in August, the Commerce Department reported yesterday. The trade imbalance with China, however, rose to a record high.
The overall deficit fell 6.8 percent, to $64.3 billion, in September from $69 billion in August. The drop of $4.7 billion was the biggest one-month decrease in more than five years.
<snip>
The deficit with China set a record of $23 billion in September. It is running at an annual rate of $228 billion this year, on pace to surpass last year's $202 billion, which was an all-time high for any U.S. trading partner.
The big increase in September came from imports of Chinese cellphones, television sets and toys as U.S. retailers stocked up for Christmas.
Jobless Rate Is Lowest Since '01
Well these are just a few tidbits about various parts of our economy...on to the great questions.
Questions for Debate:
1) What is the current state of our economy?
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
3) How should we fix our trade deficit?
4) Is the weakening of the dollar going to lead to economic troubles?
5) What should the government do (or not do)?
QUOTE
The US economy grew at a rate of 2.2 per cent in the third quarter, faster than previously thought, while wage growth earlier this year was revised down on Wednesday, adding to evidence that the economy is on track for a soft landing.
<snip>
The government statistics showed considerable strength in the business sector as commercial investment rose at a 10 per cent annual rate – higher than the previous estimate of 8.6 per cent – while corporate profits grew much faster than earlier estimates suggested with a rise in pre-tax earnings of 4.6 per cent to $46.3bn.
The housing sector remained one of the weakest, with investment in homes falling by 18 per cent during the quarter, the biggest decline in 15 years - in line with earlier estimates.
Dollar Falls Versus Euro, Yen
QUOTE
The dollar weakened to a new 20-month low against the euro Monday, as traders bet the gap between European and U.S. interest rates will keep narrowing.
European economic data has recently been surprisingly robust while U.S. data has been tame, leading market participants to believe the European Central Bank will continue hiking rates and the U.S. Federal Reserve may eventually start cutting back. If this happens, dollar-denominated investments will become less attractive.
<snip>
Also putting downward pressure on the dollar Monday was speculation that China may shift part of it's $1 trillion foreign-currency reserves - the biggest in the world - away from the dollar and into the euro and other major currencies, said Satoshi Okagawa, head of foreign exchange spot trading group at Sumitomo Mitsui Banking Corp.
"The trend is: Sell dollars," Okagawa said.
According to market watchers, China isn't the only country looking to reduce dollar holdings.
"We've heard out of China, Russia, Sweden, and other central banks the desire to hold smaller proportion of reserves in U.S. dollars," Woolfolk said.
European economic data has recently been surprisingly robust while U.S. data has been tame, leading market participants to believe the European Central Bank will continue hiking rates and the U.S. Federal Reserve may eventually start cutting back. If this happens, dollar-denominated investments will become less attractive.
<snip>
Also putting downward pressure on the dollar Monday was speculation that China may shift part of it's $1 trillion foreign-currency reserves - the biggest in the world - away from the dollar and into the euro and other major currencies, said Satoshi Okagawa, head of foreign exchange spot trading group at Sumitomo Mitsui Banking Corp.
"The trend is: Sell dollars," Okagawa said.
According to market watchers, China isn't the only country looking to reduce dollar holdings.
"We've heard out of China, Russia, Sweden, and other central banks the desire to hold smaller proportion of reserves in U.S. dollars," Woolfolk said.
September Trade Deficit Down
QUOTE
Falling oil prices helped lower the U.S. trade deficit in September after it hit an all-time high in August, the Commerce Department reported yesterday. The trade imbalance with China, however, rose to a record high.
The overall deficit fell 6.8 percent, to $64.3 billion, in September from $69 billion in August. The drop of $4.7 billion was the biggest one-month decrease in more than five years.
<snip>
The deficit with China set a record of $23 billion in September. It is running at an annual rate of $228 billion this year, on pace to surpass last year's $202 billion, which was an all-time high for any U.S. trading partner.
The big increase in September came from imports of Chinese cellphones, television sets and toys as U.S. retailers stocked up for Christmas.
Jobless Rate Is Lowest Since '01
QUOTE
Unemployment fell last month to the lowest level in more than five years, to 4.4 percent -- a drum-tight labor market that shows the economy remains fundamentally strong despite weak spots such as housing and manufacturing.
The Labor Department said employers added 92,000 jobs in October, a modest number. But the department revised earlier estimates to show more payroll growth in August and September, for an average of 156,000 new jobs in each of the past three months. That was enough to drive unemployment down from 4.6 percent in September.
Higher interest rates have slowed economic growth. However, much of the bad news has come from just two sectors: housing and automobile manufacturing. The unemployment report and other data suggest that the problems there haven't spilled over to the broader economy.
The Labor Department said employers added 92,000 jobs in October, a modest number. But the department revised earlier estimates to show more payroll growth in August and September, for an average of 156,000 new jobs in each of the past three months. That was enough to drive unemployment down from 4.6 percent in September.
Higher interest rates have slowed economic growth. However, much of the bad news has come from just two sectors: housing and automobile manufacturing. The unemployment report and other data suggest that the problems there haven't spilled over to the broader economy.
Well these are just a few tidbits about various parts of our economy...on to the great questions.
Questions for Debate:
1) What is the current state of our economy?
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
3) How should we fix our trade deficit?
4) Is the weakening of the dollar going to lead to economic troubles?
5) What should the government do (or not do)?
I think this is possibly one of the hardest, most difficult questions posed on AD, and the most complex, and possibly the hardest answers to come up with. You ask ten different poeple in your own peer group, and you may get 10 different answers. By lot's of lead indicators, like the links you provided- makes our economy LOOK very strong, but there seems to be a real malaise in the economy, whether it is perception or reality is very difficult to tell. The Alaskan economy is doing quite well, if you want a job, you can get it, and if you work hard, you probably will be paid well, depending on what you choose to work at. That being said, lots of folks are struggling to make ends meet, and just the essentials, no "bling" in thier driveways! 
- and two person income and 60 hour weeks seem to be the norm just to survive. Housing costs up here have alot to do with that- but still, it DEFINATELY contridicts the "usual indicators"
1) What is the current state of our economy?
Overall- I think it the calm before the storm- the massive deficit spending, IMHO- the indicators are all too counter to reality of alot of folks' situations- I am sure some on the board will feel this way- but I believe that it is good for poeple that are CEOs, or big stock holders right now, but the "working joe" sure seems to be struggling. My personal situation is both unique and self inflicted- my business is doing quite well. But it is also based on being inexpensive and recycled- I build old motorbikes into new ones- and these bikes are being used for transportation FIRST, instead of a TOY - and the main reason given is
1) Cheap insurance (costs about 200 for 2 years on an old bike)
2) Fuel consumption ( about 50-70mpg on most of the bikes I have built)
3) Price- cheap
So, in my biz classes, they called this a "recession biz"- doing well because poeple want to DECREASE spending overall. That would indicate a difficult, at the very least, economy, and would be a direct contridiction to what the "lead indicators" say.
I would say stagnant really, with the other shoe about to drop within four years or so from GWs disastrous borrow and spend policies.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
I think it was Mrs P that said "non-affilicated corporate to corpoate intellectual property sales" was the under-reported (as far as public knowledge goes) bright spot? I would agree- I just sold an american made CNC mill to my cousin in Russia- that would fit the mold right there.
I am thinking that the deficit is going to really chew us up soon, along with massively raising oil prices in the next 6 years. I have paid down the leverage, way down, on m y own property investments. I am betting on recession in four years or less.
3) How should we fix our trade deficit?
It may very well fix itself, depending on oil prices. I am seeing shipping rates go through the cieling, and I am thinking, sometime in the soon future- that shipping costs will wipe out the low-labor rates of other countries.
4) Is the weakening of the dollar going to lead to economic troubles?
Yes, as above. I think globally this wil hurt- too many goverments are wrapped up in our dollar as well.
5) What should the government do (or not do)?
stop spending money on other countries- it is an enormous drain, super huge. Stop rebuilding Iraq for one, and that is just bleeding resources that will NEVER pay off for us.
Some creative trade tarrifs against countries that are using, basically slave labor, to make products. It is unfair competition to pay, or not pay at all, the labor markets of other countries. China would be a classic example with inmate labor http://www.iabolish.com/slavery_today/coun...reports/cn.html
Penalize importers of items, such as wal-mart, consistantly and repeatedly for buying products that use child labor, forced labor, or sweatshops for thier labor.
You have to be very, very careful with this though- it has enormous room for abuse as well. Former eastern bloc nations have low labour rates- but it is not forced labor or unwilling labor- it is what the local pay dicatates, and the cost of living in those areas reflect the reality as well.
Also- we need to be much more punitive to countries that don't allow us equal access to thier markets as we do for thiers- Japan would be another classic example, with thier beaurocratic methods to hold up American products etc. Free trade is a good thing- as long as it goes both ways!
- and two person income and 60 hour weeks seem to be the norm just to survive. Housing costs up here have alot to do with that- but still, it DEFINATELY contridicts the "usual indicators" 1) What is the current state of our economy?
Overall- I think it the calm before the storm- the massive deficit spending, IMHO- the indicators are all too counter to reality of alot of folks' situations- I am sure some on the board will feel this way- but I believe that it is good for poeple that are CEOs, or big stock holders right now, but the "working joe" sure seems to be struggling. My personal situation is both unique and self inflicted- my business is doing quite well. But it is also based on being inexpensive and recycled- I build old motorbikes into new ones- and these bikes are being used for transportation FIRST, instead of a TOY - and the main reason given is
1) Cheap insurance (costs about 200 for 2 years on an old bike)
2) Fuel consumption ( about 50-70mpg on most of the bikes I have built)
3) Price- cheap
So, in my biz classes, they called this a "recession biz"- doing well because poeple want to DECREASE spending overall. That would indicate a difficult, at the very least, economy, and would be a direct contridiction to what the "lead indicators" say.
I would say stagnant really, with the other shoe about to drop within four years or so from GWs disastrous borrow and spend policies.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
I think it was Mrs P that said "non-affilicated corporate to corpoate intellectual property sales" was the under-reported (as far as public knowledge goes) bright spot? I would agree- I just sold an american made CNC mill to my cousin in Russia- that would fit the mold right there.
I am thinking that the deficit is going to really chew us up soon, along with massively raising oil prices in the next 6 years. I have paid down the leverage, way down, on m y own property investments. I am betting on recession in four years or less.
3) How should we fix our trade deficit?
It may very well fix itself, depending on oil prices. I am seeing shipping rates go through the cieling, and I am thinking, sometime in the soon future- that shipping costs will wipe out the low-labor rates of other countries.
4) Is the weakening of the dollar going to lead to economic troubles?
Yes, as above. I think globally this wil hurt- too many goverments are wrapped up in our dollar as well.
5) What should the government do (or not do)?
stop spending money on other countries- it is an enormous drain, super huge. Stop rebuilding Iraq for one, and that is just bleeding resources that will NEVER pay off for us.
Some creative trade tarrifs against countries that are using, basically slave labor, to make products. It is unfair competition to pay, or not pay at all, the labor markets of other countries. China would be a classic example with inmate labor http://www.iabolish.com/slavery_today/coun...reports/cn.html
Penalize importers of items, such as wal-mart, consistantly and repeatedly for buying products that use child labor, forced labor, or sweatshops for thier labor.
You have to be very, very careful with this though- it has enormous room for abuse as well. Former eastern bloc nations have low labour rates- but it is not forced labor or unwilling labor- it is what the local pay dicatates, and the cost of living in those areas reflect the reality as well.
Also- we need to be much more punitive to countries that don't allow us equal access to thier markets as we do for thiers- Japan would be another classic example, with thier beaurocratic methods to hold up American products etc. Free trade is a good thing- as long as it goes both ways!
1) What is the current state of our economy?
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
4) Is the weakening of the dollar going to lead to economic troubles?
For me, the central question is number 4.
A weak dollar is going to provide welcome relief to the hard-pressed US manufacturing sector, as it's going to make life hard for China to continue to shadow the dollar if it's on a downward spiral, making their raw materials prices ever more expensive.
On the downside, necessary production efficiencies that are making some US goods more expensive will be masked by the weak buck, so there will be less incentive to apply the cost efficiencies that are so badly needed in them (I'm thinking particularly of automotive manufacturing).
And, the weak dollar makes it somewhat more likely that major oil producers will do what they've been mubling about for some time and switch oil trading currencies for the Euro (or even the reminbi?)
3) How should we fix our trade deficit?
A good hard consumer recession ought to fix it, which given levels of private debt looks like it's on the cards fairly soon. Unfortunately, since the US is still the largest consumer market, the rest of the world economy will get pretty chewed up by this too, though possibly not as much as was true historically with a consumer recovery beginning to show its face in continental Europe & Japan, and of course with increasing demand coming from China and India.
I'm surprised you haven't mentioned your budget defecit too here, which can only be fixed by a increase in the tax take AND across-the-board spending cuts (including defence); it's simply too big for only spending cuts to have much effect.
5) What should the government do (or not do)?
Short term, not much they can do. Medium term, pay down the defecit and bring back some form of creidt controls so that consumers can't find themselves getting so far in debt so easily. Long term, work with other countries a lot more in all areas (e.g. open up internal US markets to foreign investors) because sooner or later you won't be the world's biggest or most important economy, so the more links you have externally the less dependent you will be on internal domestic markets for growth.
Oh, and start paying attention to environmental concerns before the rest of the world gets so used to working under harsh emissions and pollution controls that the shock that hits you when you have to play catch up doesn't prevent you from doing so.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
4) Is the weakening of the dollar going to lead to economic troubles?
For me, the central question is number 4.
A weak dollar is going to provide welcome relief to the hard-pressed US manufacturing sector, as it's going to make life hard for China to continue to shadow the dollar if it's on a downward spiral, making their raw materials prices ever more expensive.
On the downside, necessary production efficiencies that are making some US goods more expensive will be masked by the weak buck, so there will be less incentive to apply the cost efficiencies that are so badly needed in them (I'm thinking particularly of automotive manufacturing).
And, the weak dollar makes it somewhat more likely that major oil producers will do what they've been mubling about for some time and switch oil trading currencies for the Euro (or even the reminbi?)
3) How should we fix our trade deficit?
A good hard consumer recession ought to fix it, which given levels of private debt looks like it's on the cards fairly soon. Unfortunately, since the US is still the largest consumer market, the rest of the world economy will get pretty chewed up by this too, though possibly not as much as was true historically with a consumer recovery beginning to show its face in continental Europe & Japan, and of course with increasing demand coming from China and India.
I'm surprised you haven't mentioned your budget defecit too here, which can only be fixed by a increase in the tax take AND across-the-board spending cuts (including defence); it's simply too big for only spending cuts to have much effect.
5) What should the government do (or not do)?
Short term, not much they can do. Medium term, pay down the defecit and bring back some form of creidt controls so that consumers can't find themselves getting so far in debt so easily. Long term, work with other countries a lot more in all areas (e.g. open up internal US markets to foreign investors) because sooner or later you won't be the world's biggest or most important economy, so the more links you have externally the less dependent you will be on internal domestic markets for growth.
Oh, and start paying attention to environmental concerns before the rest of the world gets so used to working under harsh emissions and pollution controls that the shock that hits you when you have to play catch up doesn't prevent you from doing so.
1) What is the current state of our economy?
The economy is a complex animal, but overall, the economy is doing well. Unemployment is very low, so it's an employees market. Unfortunately, most people are afraid of change and thus averse to changing jobs.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
3) How should we fix our trade deficit?
I will lump these two together as many people point to the trade deficit as a huge problem with our economy.
Modern economies are always going to have trade imbalances. It is the nature of the efficiency that comes from the modern specialization. Do we really want to be making cheap clothing, or trinkets or appliances when there are jobs that pay so much more to be had? If we moved clothing manufacturing here, how much would a worker make? Not enough is the correct answer.
One problem with our trade balance is the fact that China has pegged its currency to the dollar, making normal corrections impossible. Ordinarily, a falling dollar would mean domestic products would have an advantage. Not with China mirroring our currency value, however.
Also, trade deficits are usually present during periods of prosperity. In this case, it means that Americans have the means to buy foreign goods and that foreigners are happy to accept American dollars.
As this article explains, the trade deficit is not related to unfair trade policies or lack of competitiveness. They are directly correlated to unemployment rates.
As Adam Smith said : "Nothing can be more absurd than this whole doctrine of the balance of trade".
4) Is the weakening of the dollar going to lead to economic troubles?
It depends. As long as the dollar is valued as a currency, than nothing need be done. China has been threatening to switch to Euros for a few years now. However, the US dollar represents over 65% of the reserve currencies of the world. Countries benefit by holding US dollars as it makes their own currency value lower (and thus their goods more competitive). The banking community decides on which currency is the most stable based mainly on which country's economy is stable. Currently, that is the US.
As this article explains, the Euro could surpass the US dollar if two things happen: the EU economy exceeds that of the US and confidence in the US dollar is undermined (as determined by inflation and depreciation).
In absolute terms, the EU GDP exceeds that of the US ($12.8 trillion vs. $11.7 trillion). On a purchase power parity level, the US has the edge ($12. 4 trillion (US) vs. $12.2 trillion (EU). Recall, however, that the EU has 1.5 times as many people as the US.
Many people find this hard to believe, but the EU15 would rank 46th out of 51 if it were a state of the US in terms of per capita GDP. Only Arkansas, Montana, West Virginia and Mississippi would rank below it. Data
The eurozone (the region of the EU using the Euro), however, is much smaller. It matches the US in population (approximately 300 million people) but lags in GDP (at approx. $9 trillion). Significantly, the UK has not joined the Eurozone (with its $2 trillion economy). If it does, it might tip the balance in favor of the EU being
5) What should the government do (or not do)?
The $64,000 question!!
We need to continue to have low tax rates (which attracts capital to the US).
The economy is a complex animal, but overall, the economy is doing well. Unemployment is very low, so it's an employees market. Unfortunately, most people are afraid of change and thus averse to changing jobs.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
3) How should we fix our trade deficit?
I will lump these two together as many people point to the trade deficit as a huge problem with our economy.
Modern economies are always going to have trade imbalances. It is the nature of the efficiency that comes from the modern specialization. Do we really want to be making cheap clothing, or trinkets or appliances when there are jobs that pay so much more to be had? If we moved clothing manufacturing here, how much would a worker make? Not enough is the correct answer.
One problem with our trade balance is the fact that China has pegged its currency to the dollar, making normal corrections impossible. Ordinarily, a falling dollar would mean domestic products would have an advantage. Not with China mirroring our currency value, however.
Also, trade deficits are usually present during periods of prosperity. In this case, it means that Americans have the means to buy foreign goods and that foreigners are happy to accept American dollars.
As this article explains, the trade deficit is not related to unfair trade policies or lack of competitiveness. They are directly correlated to unemployment rates.
As Adam Smith said : "Nothing can be more absurd than this whole doctrine of the balance of trade".
4) Is the weakening of the dollar going to lead to economic troubles?
It depends. As long as the dollar is valued as a currency, than nothing need be done. China has been threatening to switch to Euros for a few years now. However, the US dollar represents over 65% of the reserve currencies of the world. Countries benefit by holding US dollars as it makes their own currency value lower (and thus their goods more competitive). The banking community decides on which currency is the most stable based mainly on which country's economy is stable. Currently, that is the US.
As this article explains, the Euro could surpass the US dollar if two things happen: the EU economy exceeds that of the US and confidence in the US dollar is undermined (as determined by inflation and depreciation).
In absolute terms, the EU GDP exceeds that of the US ($12.8 trillion vs. $11.7 trillion). On a purchase power parity level, the US has the edge ($12. 4 trillion (US) vs. $12.2 trillion (EU). Recall, however, that the EU has 1.5 times as many people as the US.
Many people find this hard to believe, but the EU15 would rank 46th out of 51 if it were a state of the US in terms of per capita GDP. Only Arkansas, Montana, West Virginia and Mississippi would rank below it. Data
The eurozone (the region of the EU using the Euro), however, is much smaller. It matches the US in population (approximately 300 million people) but lags in GDP (at approx. $9 trillion). Significantly, the UK has not joined the Eurozone (with its $2 trillion economy). If it does, it might tip the balance in favor of the EU being
5) What should the government do (or not do)?
The $64,000 question!!
We need to continue to have low tax rates (which attracts capital to the US).
ON a personal note- my own foray into the manufacturing sector- it turns out that it is actually very competitive to do lower volume manufacturing with metal manufacturing companies with less than 100 employees than going abroad for me.
That is because, from what I have been learning the hard way- shipping is cheaper, and the ease of getting it to my door- regulations and taxes nad import laws and everything making things much more complex and expensive drive up the price of a cheaper made product elsewhere- as long as I do al the design work myself.
I don't know if this figures into a possible rebound of small scale manufacturing or not- but I do see companies like Gemini design that is possibly going into production as the "other" American motorcycle company- with units going for under 9k out the door! They do this buy sources parts where neccesary, building the truly proprietary stuff right here in the US, sourcing a very, very well made motor from Hyonsung (though, I think this may be a mistake in the marketing and sales direction) and keeping the price more than competitive with the Japanese made bikes, and assembling them completely here in the US.
So, American manufacturing may very well be starting to make it out of the doldrums through good old fashioned smaller business ingenuity, which makes me more hopeful about the economy.
I think American big business has manipulated the political parties to the extent they can't compete with foriegn corporations, due to the fact they don't need to innovate to keep CEO salaries high. CEO's are not seeming to care about long range growth of the companies, rather, shorter term stock growths and major compensatiobn packages, and I am hoping they pay the price, heavily, while small biz reaps the bennies from thier short sighted behavior.
But though the "usual suspects" of indicators don't really show the malaise that is felt by US citizens in general, the idea that you work your butt off for nothing in dead end jobs in the US- I think that has more to do with the feelings of "whatever" that comes out of the general public when you say the "economy is great".
A good economy, circa 1960s, meant that a man had the luxury of working while the woman stayed home and took care of home and hearth- many ladies left that lifestyle not because they wanted too- but because one earner salaries just couldn't make ends meet.
It seems the middle class lifestyle, even when not materialistic or "keep up with the joneses" oriented, seems to be struggling just to make the neccesities of ends meet. Two jobs, long hours, not enough time with the family seems to be the general feeling- and, until that family ends, no "the economy is great" talks are going to have any real impact on the average middle class US citizen.
That is because, from what I have been learning the hard way- shipping is cheaper, and the ease of getting it to my door- regulations and taxes nad import laws and everything making things much more complex and expensive drive up the price of a cheaper made product elsewhere- as long as I do al the design work myself.
I don't know if this figures into a possible rebound of small scale manufacturing or not- but I do see companies like Gemini design that is possibly going into production as the "other" American motorcycle company- with units going for under 9k out the door! They do this buy sources parts where neccesary, building the truly proprietary stuff right here in the US, sourcing a very, very well made motor from Hyonsung (though, I think this may be a mistake in the marketing and sales direction) and keeping the price more than competitive with the Japanese made bikes, and assembling them completely here in the US.
So, American manufacturing may very well be starting to make it out of the doldrums through good old fashioned smaller business ingenuity, which makes me more hopeful about the economy.
I think American big business has manipulated the political parties to the extent they can't compete with foriegn corporations, due to the fact they don't need to innovate to keep CEO salaries high. CEO's are not seeming to care about long range growth of the companies, rather, shorter term stock growths and major compensatiobn packages, and I am hoping they pay the price, heavily, while small biz reaps the bennies from thier short sighted behavior.
But though the "usual suspects" of indicators don't really show the malaise that is felt by US citizens in general, the idea that you work your butt off for nothing in dead end jobs in the US- I think that has more to do with the feelings of "whatever" that comes out of the general public when you say the "economy is great".
A good economy, circa 1960s, meant that a man had the luxury of working while the woman stayed home and took care of home and hearth- many ladies left that lifestyle not because they wanted too- but because one earner salaries just couldn't make ends meet.
It seems the middle class lifestyle, even when not materialistic or "keep up with the joneses" oriented, seems to be struggling just to make the neccesities of ends meet. Two jobs, long hours, not enough time with the family seems to be the general feeling- and, until that family ends, no "the economy is great" talks are going to have any real impact on the average middle class US citizen.
I would just like to throw in some information to help explain more in depth of what Amlord touched on in regards to the trade deficit. The US owns a large majority of intellectual property and generate's profits largley through retail sales not manufacturing.
A trade deficit is not a bad thing and let me explain why with a brief basic example.
When you break down the parts of a computer, keyboard, mouse, motherboard, CPU, hard drive, etc... you have the manufacturing end, which is the low profit end that inflates the trade deficit.
All the parts cost $300 to manufacture and the foriegn companies sell it to Dell for $310. That's a $310 trade deficit, and dell turns around and sells the computer for $500 (windows costing them $20), so Dell made out with $170, Windows with $19 (only costs around $1 for the CD and print) and the foriegn companies only $11 ($1 for the CD).
So that's a $310 trade deficit but US companies gained gained a profit of $189 as opposed to $11.
A trade deficit is not a bad thing and let me explain why with a brief basic example.
When you break down the parts of a computer, keyboard, mouse, motherboard, CPU, hard drive, etc... you have the manufacturing end, which is the low profit end that inflates the trade deficit.
All the parts cost $300 to manufacture and the foriegn companies sell it to Dell for $310. That's a $310 trade deficit, and dell turns around and sells the computer for $500 (windows costing them $20), so Dell made out with $170, Windows with $19 (only costs around $1 for the CD and print) and the foriegn companies only $11 ($1 for the CD).
So that's a $310 trade deficit but US companies gained gained a profit of $189 as opposed to $11.
QUOTE(CruisingRam @ Dec 4 2006, 03:37 PM) 
A good economy, circa 1960s, meant that a man had the luxury of working while the woman stayed home and took care of home and hearth- many ladies left that lifestyle not because they wanted too- but because one earner salaries just couldn't make ends meet.
Ah, nostalgia for the misunderstood past.
Wa Post article
QUOTE
To understand the problems with the official poverty rate, compare the America of 1973 to the America of 2001. In 2001, the country's per capita income was far higher than in 1973 -- according to the Census Bureau, roughly 60 percent higher -- and unemployment rates were lower. In 2001, only one in six adults lacked a high-school diploma; in 1973, two-fifths had not finished high school. And government anti-poverty spending was more than twice as high in 2001 as in 1973.
So, in a richer, more fully employed and better educated nation with a bigger safety net, shouldn't the poverty rate be lower? Wrong. The way the official rate is calculated, the fraction of Americans living below the poverty line was higher in 2001 (11.7 percent) than in 1973 (11.1 percent). For some reason, our official statisticians insist that America's best year for combating poverty -- ever -- was 1973. Go figure.
<snip>
In the early 1960s, the poorest fifth of American families were forced to devote nearly 30 percent of their expenditures to buying food; by 2004, the proportion was down to one-sixth of spending. Undernourishment and hunger were common among the most vulnerable elements of society 40 years ago; today, by contrast, obesity is the main nutritional problem facing adult Americans, rich and poor alike.
<snip>
In 2001, only about 6 percent of the country's poor households lived in "crowded" dwellings (homes with more than one inhabitant per room), compared with more than 25 percent in 1970, according to the Census Bureau. Today's poor households are more likely to have telephone service and television sets than even non-poor households in 1970; they are much more likely to have central air conditioning than the typical American home of 1980, and almost as likely to have a dishwasher. Moreover, according to a Department of Energy survey in 2001, most poverty households have microwaves, VCRs or DVDs, and cable television -- conveniences unavailable in even the most affluent homes at the time the poverty rate measure was first released.
So, in a richer, more fully employed and better educated nation with a bigger safety net, shouldn't the poverty rate be lower? Wrong. The way the official rate is calculated, the fraction of Americans living below the poverty line was higher in 2001 (11.7 percent) than in 1973 (11.1 percent). For some reason, our official statisticians insist that America's best year for combating poverty -- ever -- was 1973. Go figure.
<snip>
In the early 1960s, the poorest fifth of American families were forced to devote nearly 30 percent of their expenditures to buying food; by 2004, the proportion was down to one-sixth of spending. Undernourishment and hunger were common among the most vulnerable elements of society 40 years ago; today, by contrast, obesity is the main nutritional problem facing adult Americans, rich and poor alike.
<snip>
In 2001, only about 6 percent of the country's poor households lived in "crowded" dwellings (homes with more than one inhabitant per room), compared with more than 25 percent in 1970, according to the Census Bureau. Today's poor households are more likely to have telephone service and television sets than even non-poor households in 1970; they are much more likely to have central air conditioning than the typical American home of 1980, and almost as likely to have a dishwasher. Moreover, according to a Department of Energy survey in 2001, most poverty households have microwaves, VCRs or DVDs, and cable television -- conveniences unavailable in even the most affluent homes at the time the poverty rate measure was first released.
Being poor isn't what it used to be.
OH, absolutely I agree with you on poverty- I lived it, I know it myself well- but, thanks to LBJs programs, poverty just isn't what it used to be LOL 
But- all that being said- economic indicators, what reliable ones are, who the economy is exactly "good" to, it is a matter of great debate amongst economist themselves- wouldn't you agree?
So- how exactly does this "worst recovery ever" (using that comic books fat dude's voice from the Simpson's )
Well, I live in what could be called a "great" economy- by just about any indicator, as far as Anchorage goes anyway (you can say Alaskan outying villages have terrible economies- but we are talking the "railbelt" here)
yet, no ones seems to be saying how great it is for THEM.
I feel a great economy can be bad for everyone BUT the already rich- you can see it in emerging third world powers- there is a section of the population that definately improves- while the vast majority does not.
So- who benefits from this "recovery" and "booming" economy?
Perhaps it will be the entrepeneur again? I am hoping so- I am hoping that the doldrums of corporate employment and the boom and bust cycle they seem to be having translates into more poeple opening businesses for themselves.
High shipping rates certainly help the domestic manufacturing equation, especially when unit orders under 100k come into play.
I don't even pretend to know as much about macro-economics like many on this board- but I do know customers, marketing and my market as it effects me.
I am not sure if even economicists have a real handle on the economy- otherwise- they would probably be the most powerful poeple in our society LOL
So- if the last election is any indicator, in past elections, if the voters feel the economy is going gangbusters- they will ignore just about anything a politician in power does- I am thinking that the majority of folks in the US don't feel very good about the economy today.
And I don't feel it is joblessness that makes voters so un-enthusiastic about the economy- it is how hard a middle class voter, that is financially prudent, has to work to "get ahead" or even stay even.
I am not sure you can measure that- if there is even a good, scientific way to do it- because it has to do so much with "feeling".
It is very hard for me, with 60K a year in my "normal" salary- with - credit card debt, and only a house and car payment, neither of which is very punishing, to have to work overtime to, say, go on vacation this year. And I am not talking extravagence here- I am talking about a trip to Hawaii- the cheapest vacation outside of alaska an Alaskan can have.
Perhaps it is also the fact that things that used to be cheap and taken for granted are so very expensive, yet neccesary even more today- health insurance for instance. Back in the 60 and early 70s, it wasn't even much of a concern, companies provided it, and coverage was good. Today- it is darned expensive, and you have to have it in order to not lose your house- same for car insurance. Same for quality post-secondary education for your children. and, OMG- what about "user fees" for childrens activities these days that school districts have to impose in order to have extra-curricular activities these days?
I am not on the brink, but I am not that far away from it- 2 months off work would force me into bankruptcy.
Add a little debt to that equation, a mild amount of financial lack of discipline- and you have lots and lots of very dis-satisfied voters, no matter what the "indicators" say.
But- all that being said- economic indicators, what reliable ones are, who the economy is exactly "good" to, it is a matter of great debate amongst economist themselves- wouldn't you agree?
So- how exactly does this "worst recovery ever" (using that comic books fat dude's voice from the Simpson's
) Well, I live in what could be called a "great" economy- by just about any indicator, as far as Anchorage goes anyway (you can say Alaskan outying villages have terrible economies- but we are talking the "railbelt" here)
yet, no ones seems to be saying how great it is for THEM.
I feel a great economy can be bad for everyone BUT the already rich- you can see it in emerging third world powers- there is a section of the population that definately improves- while the vast majority does not.
So- who benefits from this "recovery" and "booming" economy?
Perhaps it will be the entrepeneur again? I am hoping so- I am hoping that the doldrums of corporate employment and the boom and bust cycle they seem to be having translates into more poeple opening businesses for themselves.
High shipping rates certainly help the domestic manufacturing equation, especially when unit orders under 100k come into play.
I don't even pretend to know as much about macro-economics like many on this board- but I do know customers, marketing and my market as it effects me.
I am not sure if even economicists have a real handle on the economy- otherwise- they would probably be the most powerful poeple in our society LOL
So- if the last election is any indicator, in past elections, if the voters feel the economy is going gangbusters- they will ignore just about anything a politician in power does- I am thinking that the majority of folks in the US don't feel very good about the economy today.
And I don't feel it is joblessness that makes voters so un-enthusiastic about the economy- it is how hard a middle class voter, that is financially prudent, has to work to "get ahead" or even stay even.
I am not sure you can measure that- if there is even a good, scientific way to do it- because it has to do so much with "feeling".
It is very hard for me, with 60K a year in my "normal" salary- with - credit card debt, and only a house and car payment, neither of which is very punishing, to have to work overtime to, say, go on vacation this year. And I am not talking extravagence here- I am talking about a trip to Hawaii- the cheapest vacation outside of alaska an Alaskan can have.
Perhaps it is also the fact that things that used to be cheap and taken for granted are so very expensive, yet neccesary even more today- health insurance for instance. Back in the 60 and early 70s, it wasn't even much of a concern, companies provided it, and coverage was good. Today- it is darned expensive, and you have to have it in order to not lose your house- same for car insurance. Same for quality post-secondary education for your children. and, OMG- what about "user fees" for childrens activities these days that school districts have to impose in order to have extra-curricular activities these days?
I am not on the brink, but I am not that far away from it- 2 months off work would force me into bankruptcy.
Add a little debt to that equation, a mild amount of financial lack of discipline- and you have lots and lots of very dis-satisfied voters, no matter what the "indicators" say.
1) What is the current state of our economy?
I never like economics but I will give this a try. I think that our economic system, domestically and internationally is to large and contains to many variables to easily be quantified, moreover I think the interconnections of this system if you will in the idea of action/reaction in itself would be in large difficult to define, so for the point being unemployment rates to asset bubbles or whatever in my opinion is hard to define. Watching the stock market day to day goes into a brief look at chaos in my opinion because the human element in regards to it all make everything so much more fuzzy in regards to logic. A simple technological advantage that makes cooking various products easier would be hard to follow through the system let along anything else, I think maybe the economy has become its own thing we share a relationship with.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
Again its hard to tell, it would be easier if the economy was somewhat Like a food chain but in many respects its not, housing boom to housing bust its hard to really follow all the trends or even get specific with one of them. I would say overall that the overall mass of the economy makes it pretty stable as long as we stay away from aspects that could cause it to collapse.
3) How should we fix our trade deficit?
I don’t know how Americans are going to keep up with inflation in terms of end game speaking alone. With the creation of the EU and of course China I am sure many variables that may have not existed previously to such or in such states have come to bear consequence in a great many regards, but just like trying to understand in purely domestic terms to economy I am such gets just that much more difficult. On one point, I am sure most every nation and person would like to advance, going from that alone I think stability could be reached or a sort of equilibrium the problem then is where does any particular economy rest and do the people involved become content with such.
4) Is the weakening of the dollar going to lead to economic troubles?
I would think so. I mean the peso is not worth that much as from what I can see of such that makes life harder on those people, but on that note as much as I would not want America to have the bottom dollar in my terms I would not want it to have the top dollar either. I think a stable point in witch healthy reaction can be made is the best, it allows others to be RnD for you if you will go along with me on it.
On a side note, how is being environmentally friendly going to factor into all of this, do you think that in many respects many people in our economic system view it almost as a threat, a change to a greener world that is? Even in the idea that environmentally collapse would surely bring on the same economically.
I never like economics but I will give this a try. I think that our economic system, domestically and internationally is to large and contains to many variables to easily be quantified, moreover I think the interconnections of this system if you will in the idea of action/reaction in itself would be in large difficult to define, so for the point being unemployment rates to asset bubbles or whatever in my opinion is hard to define. Watching the stock market day to day goes into a brief look at chaos in my opinion because the human element in regards to it all make everything so much more fuzzy in regards to logic. A simple technological advantage that makes cooking various products easier would be hard to follow through the system let along anything else, I think maybe the economy has become its own thing we share a relationship with.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
Again its hard to tell, it would be easier if the economy was somewhat Like a food chain but in many respects its not, housing boom to housing bust its hard to really follow all the trends or even get specific with one of them. I would say overall that the overall mass of the economy makes it pretty stable as long as we stay away from aspects that could cause it to collapse.
3) How should we fix our trade deficit?
I don’t know how Americans are going to keep up with inflation in terms of end game speaking alone. With the creation of the EU and of course China I am sure many variables that may have not existed previously to such or in such states have come to bear consequence in a great many regards, but just like trying to understand in purely domestic terms to economy I am such gets just that much more difficult. On one point, I am sure most every nation and person would like to advance, going from that alone I think stability could be reached or a sort of equilibrium the problem then is where does any particular economy rest and do the people involved become content with such.
4) Is the weakening of the dollar going to lead to economic troubles?
I would think so. I mean the peso is not worth that much as from what I can see of such that makes life harder on those people, but on that note as much as I would not want America to have the bottom dollar in my terms I would not want it to have the top dollar either. I think a stable point in witch healthy reaction can be made is the best, it allows others to be RnD for you if you will go along with me on it.
On a side note, how is being environmentally friendly going to factor into all of this, do you think that in many respects many people in our economic system view it almost as a threat, a change to a greener world that is? Even in the idea that environmentally collapse would surely bring on the same economically.
1) What is the current state of our economy?
It is in good shape – the fact studiously ignored by liberl media such as the NYT. The weakest part of the economy is the ‘telecom” sector which still has not recovered from the crash in 2000.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
Telecom will recover and so will housing. The low rates brought a lot of speculators into that market who are now nearly gone. The auto industry may be the weak spot going forward. Bad management has left us with weak companies like Ford.
3) How should we fix our trade deficit?
The falling dollar will help and we need to get back to a balanced budget!
4) Is the weakening of the dollar going to lead to economic troubles?
No it makes our goods cheaper overseas and foreign goods more expensive. It cuts the deficit and increases foreign spending on American goods.
5) What should the government do (or not do)?
Keep taxes low and cut deficit spending. Our economy is, by in large, driven by consumers. Anything that allows consumers to have more money to spend is good for the economy. The current idea of raising the Social Security tax is asinine and a decade or more ahead of when it would be needed.
It is in good shape – the fact studiously ignored by liberl media such as the NYT. The weakest part of the economy is the ‘telecom” sector which still has not recovered from the crash in 2000.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
Telecom will recover and so will housing. The low rates brought a lot of speculators into that market who are now nearly gone. The auto industry may be the weak spot going forward. Bad management has left us with weak companies like Ford.
3) How should we fix our trade deficit?
The falling dollar will help and we need to get back to a balanced budget!
4) Is the weakening of the dollar going to lead to economic troubles?
No it makes our goods cheaper overseas and foreign goods more expensive. It cuts the deficit and increases foreign spending on American goods.
5) What should the government do (or not do)?
Keep taxes low and cut deficit spending. Our economy is, by in large, driven by consumers. Anything that allows consumers to have more money to spend is good for the economy. The current idea of raising the Social Security tax is asinine and a decade or more ahead of when it would be needed.
1) What is the current state of our economy?
Inflation is outrunning wage increases for 99.5% of Americans. Growth is slowing down, being reigned in by the Federal Reserve after a substantial spike.
Purchasing power for almost everyone may be decreasing, but on the bright side unemployment is very low right now.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
Outsourcing, debt, and energy dependence make the future look grim. They are substantial problems, and I don't see any good things counterbalance them. A very daring congress might be able to earnestly tackle the later two of them, though i'm not yet sure that the Dems will make such a congress...though the Reps certainly haven't.
3) How should we fix our trade deficit?
I don't think there is any good way we could. As long the dollar remains the international reserve currency, we can get away with it some undefined degree...
4) Is the weakening of the dollar going to lead to economic troubles?
It means less purchasing power, so yeah, perhaps dramatically so if it ever crashed. If its integrity lies in the oil standard, it can't remain strong after oil runs out, though perhaps we will have bigger things to worry about then. A euro switch could embody a earlier collapse, though people have been crying wolf about that for years.
5) What should the government do (or not do)?
It should stop trying to help people who don't want our help, like the Iraqis, and thus ease our military budget. It should also weed out corruption, and be more efficient. It should stop growing (like it has been for decades). It should also stop doing stupid things like effectually taxing the rich less (% wise) then the middle class by placing a 15% cap on capital gains taxation. Cafe standards should be raised so that they aren't the lowest in the first world, as if that doesn't help save the world, at least it will save consumers money, and you could argue its in the automakers long term interests. Malpractice lawsuits should be greatly reduced by changes in the legal process, as, as things are, there are three secretaries for every doctor, as a result of fear in the latter of being sued. Or maybe universal public health care should be pursued, that won't be as expensive as many property, and can't be much more expensive then the current private system is.
There are all sorts of no brainer things the government should do and stop doing for the economy, though its rarely had the guts to heed them.
I have a suspicion our economy is securely in its twilight right now, if nothing is done to save it.
Ted:
1) What is the current state of our economy?
[i]It is in good shape – the fact studiously ignored by liberl media such as the NYT.
Specifically, what facts showing the economies good shape is the the "liberal media" not showing to its viewers?
The weakest part of the economy is the ‘telecom” sector which still has not recovered from the crash in 2000.
Are you sure?
The Telecom industry is gradually rising, whilst the auto industry appears potentially headed towards bankrupcy.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
Telecom will recover
So it seems, though I would say its rising to new heights. Certainly the nation is more digitized now then it was in 2000. Tech stocks were overvalued in 2000 due to speculation. Though lax investment did for a time decrease their real value, I think we have long since surmounted the previous pinnacle since then.
and so will housing.
Its got a long way down to go before that. There's no reason to suspect the fall will flatten out now, or will for some time.
The low rates brought a lot of speculators into that market who are now nearly gone.
True.
The auto industry may be the weak spot going forward. Bad management has left us with weak companies like Ford.
When fuel was cheap, making SUVs made business sense-people wanted'em. Now things have of course changed, and the atuo three have been working for years to convert their factories to small car production, but it takes a long time. I don't know, but I think they are phasing, doing just some factories at a time so they can keep producing cars with the rest.
3) How should we fix our trade deficit?
The falling dollar will help and we need to get back to a balanced budget!
I don't think the falling dollar will solve the problem, but it will decrease it. Couldn't agree more with getting back on a balanced budget.
4) Is the weakening of the dollar going to lead to economic troubles?
No it makes our goods cheaper overseas and foreign goods more expensive. It cuts the deficit and increases foreign spending on American goods.
A weakening dollar represents inflation, and certainly represents a complete vice for us in things like oil purchase. Its a multisided sword, that most would term overall bad.
5) What should the government do (or not do)?
Keep taxes low and cut deficit spending. Our economy is, by in large, driven by consumers. Anything that allows consumers to have more money to spend is good for the economy. The current idea of raising the Social Security tax is asinine and a decade or more ahead of when it would be needed.
That will help, but in my opinion we need a strategy much more comprehensive then that.
Inflation is outrunning wage increases for 99.5% of Americans. Growth is slowing down, being reigned in by the Federal Reserve after a substantial spike.
Purchasing power for almost everyone may be decreasing, but on the bright side unemployment is very low right now.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
Outsourcing, debt, and energy dependence make the future look grim. They are substantial problems, and I don't see any good things counterbalance them. A very daring congress might be able to earnestly tackle the later two of them, though i'm not yet sure that the Dems will make such a congress...though the Reps certainly haven't.
3) How should we fix our trade deficit?
I don't think there is any good way we could. As long the dollar remains the international reserve currency, we can get away with it some undefined degree...
4) Is the weakening of the dollar going to lead to economic troubles?
It means less purchasing power, so yeah, perhaps dramatically so if it ever crashed. If its integrity lies in the oil standard, it can't remain strong after oil runs out, though perhaps we will have bigger things to worry about then. A euro switch could embody a earlier collapse, though people have been crying wolf about that for years.
5) What should the government do (or not do)?
It should stop trying to help people who don't want our help, like the Iraqis, and thus ease our military budget. It should also weed out corruption, and be more efficient. It should stop growing (like it has been for decades). It should also stop doing stupid things like effectually taxing the rich less (% wise) then the middle class by placing a 15% cap on capital gains taxation. Cafe standards should be raised so that they aren't the lowest in the first world, as if that doesn't help save the world, at least it will save consumers money, and you could argue its in the automakers long term interests. Malpractice lawsuits should be greatly reduced by changes in the legal process, as, as things are, there are three secretaries for every doctor, as a result of fear in the latter of being sued. Or maybe universal public health care should be pursued, that won't be as expensive as many property, and can't be much more expensive then the current private system is.
There are all sorts of no brainer things the government should do and stop doing for the economy, though its rarely had the guts to heed them.
I have a suspicion our economy is securely in its twilight right now, if nothing is done to save it.
Ted:
1) What is the current state of our economy?
[i]It is in good shape – the fact studiously ignored by liberl media such as the NYT.
Specifically, what facts showing the economies good shape is the the "liberal media" not showing to its viewers?
The weakest part of the economy is the ‘telecom” sector which still has not recovered from the crash in 2000.
Are you sure?
The Telecom industry is gradually rising, whilst the auto industry appears potentially headed towards bankrupcy.
2) Do future outlooks look promising? (In what areas do we look strong/weak?)
Telecom will recover
So it seems, though I would say its rising to new heights. Certainly the nation is more digitized now then it was in 2000. Tech stocks were overvalued in 2000 due to speculation. Though lax investment did for a time decrease their real value, I think we have long since surmounted the previous pinnacle since then.
and so will housing.
Its got a long way down to go before that. There's no reason to suspect the fall will flatten out now, or will for some time.
The low rates brought a lot of speculators into that market who are now nearly gone.
True.
The auto industry may be the weak spot going forward. Bad management has left us with weak companies like Ford.
When fuel was cheap, making SUVs made business sense-people wanted'em. Now things have of course changed, and the atuo three have been working for years to convert their factories to small car production, but it takes a long time. I don't know, but I think they are phasing, doing just some factories at a time so they can keep producing cars with the rest.
3) How should we fix our trade deficit?
The falling dollar will help and we need to get back to a balanced budget!
I don't think the falling dollar will solve the problem, but it will decrease it. Couldn't agree more with getting back on a balanced budget.
4) Is the weakening of the dollar going to lead to economic troubles?
No it makes our goods cheaper overseas and foreign goods more expensive. It cuts the deficit and increases foreign spending on American goods.
A weakening dollar represents inflation, and certainly represents a complete vice for us in things like oil purchase. Its a multisided sword, that most would term overall bad.
5) What should the government do (or not do)?
Keep taxes low and cut deficit spending. Our economy is, by in large, driven by consumers. Anything that allows consumers to have more money to spend is good for the economy. The current idea of raising the Social Security tax is asinine and a decade or more ahead of when it would be needed.
That will help, but in my opinion we need a strategy much more comprehensive then that.
QUOTE
Inflation is outrunning wage increases for 99.5% of Americans
Workers hoping that their wage increases will beat inflation should find some cheer this year.
Employees are expected to see their paychecks grow by an average of 3.5 percent in 2007, according to projections by several compensation surveys.
That should beat expected inflation of 2 percent to 3 percent, continuing a shift that began in recent months as the labor market has tightened and energy costs have fallen
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