Where is the US economy headed?

@realjohnboy,

Quote:

But no. The U.S. just happens to be "testing" the release of oil from the Strategic Oil Reserve. It is purely coincidental that this is happening now. We should not interpret it as any kind of a signal to Russia.

these boys and girls cant resist using everything at their disposal for political gain, even "for emergency use only" items.

BTW: we already know how the Strategic Oil Reserve would work in an emergency....not very well. Too few refineries can handle the type of oil that they have, and there is not enough pipeline capacity to get the oil from the reserves to the refineries that can handle it.

Dont hold your breath waiting for a fix.

Or for anyone to even admit that the program is flawed.

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@realjohnboy,

Quote:

Hawkeye...I guess I disagree with your suggestion that an argument against raising the minimum wage is that it will increase "robotizaton." If that is the future, it is going to happen.

In the real world solutions are often chosen based upon the price. If you make the human work solution very much more expensive then the machine solution the human goes. We would prefer to some extent the human solution in this industry because we are a service industry and humans in some ways are better at service then machines, but you already see a lot of huge companies working to partially replace waitresses with tableside IPADS, and this trend will pick up steam.

BTW: Obama just massively increased food service labor costs by changing the overtime rules...Managers and chefs routinely work 60-70 hours a week on straight salary, it looks like a lot of that is going to get outlawed.

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@hawkeye10,

hawkeye10 wrote:

BTW: Obama just massively increased food service labor costs by changing the overtime rules...Managers and chefs routinely work 60-70 hours a week on straight salary, it looks like a lot of that is going to get outlawed.

I am still digesting this overtime proposal. At this point we will need clarification on what Obama has or has not done. Can you clarify?
Thanks.

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@realjohnboy,

Amazing how interpretations can change when we start taking in more variables.

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@roger,

Worth a look, I think.

https://www.youtube.com/watch?v=Jjv-MtGpj2U

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@realjohnboy,

How can hawk clarify anything? He shoots from the hips before he even understands what he's done.

All past minimum wage increases has not destroyed jobs; on the contrary, it increases jobs because more people are able to spend their money in the market place beyond the bare necessities of food and shelter.

There is no evidence that minimum wage increases destroys jobs. hawk will not be able to show us anything to validate his claim. NONE.

San Francisco has the highest minimum wage in the country at $10.65/hour. Their job increases is in the top rung of the country.

http://www.sfgate.com/business/article/San-Francisco-nears-top-for-job-growth-5351501.php

One final issue; the southern states have no minimum wage laws. Look at their economy.

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@cicerone imposter,

Tak, you are arguably the only one who will appreciate this but here goes...
Where Will The Next Bubble Come From?
Most investors might say real estate or the stock market and the tech sector in particular. I read an article* today suggesting that the culprit may be in the private bond market.
The stock market is worth some $28 Trillion while bonds come in at $40T. With interest on government debt yielding about 1%, banks and others have been buying corporate debt. The yield on corporate debt versus government has narrowed considerably. Private sector corporate debt has risen in recent years from 45% to 55% of GDP.
The share of that private sector bond debt that is rated as "junk" has also risen.
Therein lies the danger.

* I highly recommend Nate Silver's 538 site from which I cribbed this. I agree with his staff's take on things about 56% of the time. But it is always an interesting read if you enjoy statistics.

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@realjohnboy,

rjb, Here's my .02c worth in response.

You,

Quote:

Most investors might say real estate or the stock market and the tech sector in particular.

Me, I don't think it'll be in the real estate market, because getting loans are more difficult than they were before the crash in 2008.

You,

Quote:

I read an article* today suggesting that the culprit may be in the private bond market

.

Me, I doubt that because 'private bond markets' make up a very small percentage of the bond market. Investors in private bond markets can lose their investment, but that's always been true.

You,

Quote:

The stock market is worth some $28 Trillion while bonds come in at $40T.

Me, What is important is the strength of the US economy as we see it against all other economies. From that perspective, I see our economy growing at a very healthy pace. As jobs continue to grow, so does demand for all goods and services. Inflation is under control because 20% of the population owns 80% of the assets. In other words, the wealthy aren't going to be going out to spend their money at a higher rate than they have in the past to impact inflation.

As for bonds, China and Japan own $6 trillion of our bonds, and they're not in any position to sell them on the open market, because too much supply will depress their price. The majority of the bonds are owned by the feds, and they slowed down the printing of money.

That's not to say our government doesn't needs to slow down their spending to keep it within a reasonable level based on our GDP. The current balance is really a carry-over from GW Bush who doubled our debt, and Obama had to pay for two wars that were never paid for by GW Bush, and had to spend money to save our country from going belly up from the financial crisis and Great Recession. Many financial pundits say Obama didn't spend enough.

You,

Quote:

With interest on government debt yielding about 1%, banks and others have been buying corporate debt. The yield on corporate debt versus government has narrowed considerably. Private sector corporate debt has risen in recent years from 45% to 55% of GDP.

Me, As with corporate debt, it's about the strength of our economy. It's good business to invest in our commerce when our economy and the world economy justifies it by the signs of economic growth.

You,

Quote:

The share of that private sector bond debt that is rated as "junk" has also risen.
Therein lies the danger.

Me, Compared to the past, what percentage are rated "junk?" As I mentioned earlier, it depends on the potential growth in our economy. More money is being pumped into Silicon Valley by venture capital firms who believe the economy will grow. I tend to agree with their assessment.

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Thank you for your response, Tak. I am always amused that this thread has endured since 2005 and now has had some 560,000 views.
I am certainly not a doom-and-gloomer about the state of our economy. The Great Recession has been very painful. The Fed has, in my opinion, handled it reasonably well.
Had they asked me I would have started to gradually raise interest rates six months ago. But they never called me.
I am concerned about bubbles. They may arise in the corporate bond market (I am sticking with my argument about the rising percentage of junk bonds), the housing market (too many purchases by investors) and the stock market (PE ratios that are not justifiable).
I hope that regulators will ensure that the economy at large isn't hurt when some speculative balloon bursts.

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@realjohnboy,

There was an item on Newsnight just now feechewering two Yanks who have written a book about technology getting going on middle class jobs.

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@realjohnboy,

I think that the state of our economy is slowly growing at a reasonable pace when compared to the world's economies. This kind of situation brings in foreign investors to the US market, because it's the only economy that shows steady growth.

Companies are beginning to invest in facilities and machinery, a sign that most believe that the world economies will begin to pick up.

P/E ratios are important, but it must be observed in relationship to the potential growth of the business sector.

I've been pretty accurate in my prognostications about how the stock market will act. My investments grew by 22% while the average was 7.5% last year. That's because I've been diminishing my bond funds at a time when most investment pundits suggest I should be holding 65% in bonds. I saw the writing on the wall that bonds would only handicap my investments that didn't pay enough to keep up with inflation.

I safeguarded much of that gain thinking that the stock market over-performed, and thought 2014 would be a bear market. Our investments are ahead 1.8% this year-to-date. Not bad with the DOW showing a negative.

Happy to discuss the economy and stock market with you.

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@spendius,

The item on Newsnight I mentioned was about a new book called The Second Machine Age by Erik Brynjolfsson and Andrew McAfee out of M.I.T.

It's thesis is that just as the steam engine and the internal combustion engine rendered muscle power almost redundant the computer is now set to do the same to brain power. Only 21st century Luddites can stop the process.

"I'm busy doing nothing" Bing Crosby warbled.

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@cicerone imposter,

But the poor are being screwed ci. in order to maintain your well-heeled lifestyle.

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@spendius,

Tell me how I'm screwing the poor?

I worked in management for most of my working career, and gave everybody and equal chance to succeed. I was the first at Florsheim Shoe Company to hire a woman auditor.

I've been retired since 1998; my wife and I saved 15 to 20% of our income while we worked, and invested well.

Don't make accusations that you can't back up!

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@cicerone imposter,

Quote:

Tell me how I'm screwing the poor?

Oh--don't worry about that ci. It is being done for you in such a way that you needn't feel personally responsible or even aware of it. You can even complain about the growth of food banks, the cutting of welfare and the infant mortality differentials whilst drooling over your financial acumen in the markets and the conspicuous consumption it allows you.

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@spendius,

I do all of that - and more. I'm enjoying life - unlike you!

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@cicerone imposter,

Why do all these posters continually harp on about how much they are enjoying life and how happy they are and informing others that they are not so privileged?

You should all get together and beam sanctimoniously at each other.

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@spendius,

You do know don't you, ci., that once a airliner gets up to about 100 mph on the runway the passengers have lost all control of their life and handed it over to a range of mechanical contraptions and the expertise on the flight deck and only get it back at the other end when the absurdity ceases.

On a ship some personal control is a possibility for good swimmers.

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Thanks mate. I'll bear it in mind.

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@spendius,

That issue isn't even important. It's more likely that any individual who drives a car will be involved in an accident that takes their life. I also drive, but less than 3,000 miles a year.

It's under my control that I choose to fly with all the dangers inherent in it.
I've flown more than 30 times around this planet, and I'm still on top soil.

People like you who have failed to travel hasn't passed the first page of your life.

You suffer from myopia - in the extreme.

1 Reply

Where is the US economy headed?

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