The US Economy

Thanks for asking. I'm inclined to think the economy in improving in spite of the lousy unemployment numbers, but just about all indicators have a month or two of lag in them, so the small improvement may not exist.

Still, much of the economy has been propelled by low interest rates, especially housing and durables. The tax reductions have been spent, and the low interest rates have been used up on overpriced housing. If anything goes wrong, there just isn't much room for further stimulus.

That's why it could go either way, in my opinion. A long, slow recovery, or a very fast reversal. In other words, I don't really have an opinion. I do like to see those of others.

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cicerone imposter wrote:

Yes, "depression" is not the correct word, but "recession" isn't even used by many government economists. It would depend greatly on your personal economic status. Many without jobs for the past two-three years will call it a "depression." On the other hand, we are "comfortable," and have no immediate worries about money. c.i.

I see your point, but regardless of how individuals might choose to misuse these terms, they have specific definitions and should be used based on those. There's no such thing as a personal economic depression; either the economy is measurably in a depression or recession, or it is not.

It is not.

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Scrat, I've learned all the correct economic terms in college, but most of us also understand that economics is an art and not science. Government declarations of recessions, depressions, and growth are not scientific; they are based on incomplete information. It's easy to define those terms when used in historical terms, but it becomes a challenge when using those terms in present and future terms. Even Lord Greenspan has difficulty measuring the correct stimulus for our economy through interest rates. My opinion: At this time in our economy, a .5 point change in the interest rate will do nothing for our economy one way or the other. There are pros and cons for playing with interest rates; lowering them hurts retired seniors who depend on interest earnings to live; while it may help consumer purchases of high priced items. It's never a win-win solution. c.i.

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roger, The scenario you describe is exactly what happened in Japan; overpriced real estate, low interest rates, and the inflated balloon. Unless our economy begins to see a postive uptick, all the king's men will be unable to put humpty dumpty together again. We'll need to keep a close watch on personal bankruptcies, and hope it doesn't domino. When the banks get into trouble, we're all in trouble (like in Japan). c.i.

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Just checking in. Here's what I found (the first six headlines) with a Google news search of "US economy" today:

US economy looks up
Melbourne Herald Sun, Australia - 17 hours ago
MORE signs emerged today of a strengthening US economy, including improving business and consumer confidence, although analysts said rising energy prices could ...

Further rise in the yen unwarranted as US economy recovers ...
Channel News Asia, Singapore - Aug 25, 2003
... finance minister for international affairs, Zembei Mizoguchi, says a further rise in the yen will be unwarranted considering that the recovering US economy is ...

US Economy: July Existing Home Sales Rise to Record (Update3)
Bloomberg - Aug 25, 2003
... to long-term securities such as 10-year Treasury notes, whose yields have risen because investors predict higher inflation might return as the US economy ...

Democrats step up attacks over US economy
Financial Times (subscription), UK - Aug 25, 2003
... The increase in bond yields in recent weeks, which continued on Monday, seems related more to rising optimism about the US economy and expectations that the ...

Factory Orders, Confidence Seen Rising: US Economy Preview
Bloomberg - Aug 24, 2003
... The economy ... Gross domestic product, the sum of all goods and services produced in the US, may have increased at a revised 2.9 percent annual rate in the second ...

US economy forges ahead leaving euro zone behind
Gulf Daily News, Bahrain - Aug 22, 2003
... But "while the US, and even Japan, have shown a distinct improvement in their ... Three members - Germany, the biggest economy, Italy and the Netherlands - are in ...

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I especially love the irony of that 4th headline; news sources from around the world continue to suggest our economy is on the mend, and Democrats continue to talk it down. Very Happy

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So true, Scrat. They are trying anything to get at Bush in 2004. Lying about the state of the economy is just their speed. They learned from the best, after all.

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Scrat, You must learn to read between the lines. Factory orders are up? Intel is building a new factory in -----China. So much for the US employment prospects. c.i.

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Scrat, Do you understand why home sales in the US is up? I'm ready to listen to your opinion. c.i.

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Don't you find it curious that somebody in Melbourne has to identify the US economy growth? I find that humerous. c.i.

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From your link: "Japan's vice finance minister for international affairs, Zembei Mizoguchi, says a further rise in the yen will be unwarranted considering that the recovering US economy is stronger than that of Japan." The important words here are "the recovering US economy is stronger than that of Japan." The fact is, Japan's been in a recession for the past 13 years. That statement made by Mizoguchi is not worth the print. c.i.

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CI - No offense, but your arguments summed up seem to be: any good indicator is being misinterpreted and any bad one is being ignored. I respect your opinion on a lot of things, but you seem a bit too eager to shoot holes in any positive news about our economy. Just my opinion, of course.

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From today's NY Times:

U.S. Economy Growing Faster; Economists Raise Forecasts
By JONATHAN FUERBRINGER

he American economy grew at a revised annual rate of 3.1 percent in the second quarter, the government reported today, and the unexpected strength is leading economists to raise their forecasts for the rest of the year.

Among the positive signs are the continued strength of consumer spending, the bounce-back in business capital investment, the leanness of business inventories and a jump in corporate profits.

A surge in military spending connected with the war in Iraq was also a big contributor to second quarter growth.

Inflation as measured by the gross domestic product is still low, rising at an annual rate of 0.7 percent in the second quarter, a fact that analysts said would reinforce Wall Street's belief that the Federal Reserve would keep short-term interest rates low for a long time.

"So far, the data have been pretty encouraging," said Richard Berner, chief United States economist at Morgan Stanley, who said third-quarter growth could be as high as 5 percent, a full percentage point above his current forecast.

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The problem with my opinion is it's obvious disagreement with all the experts out there. Oh, well..... My opinion also differed last year and the year before. They were all saying our economy was going to grow, so I'm waiting for that "real" growth when companies stop reducing their staff, and begin to increase them. What I've been seeing is more layoffs than more hires, more jobs exported to other countries, and the stock market p/e ratio too high at 30+. I don't see how a three percent growth justifies paying thirty times earnings for any stock. c.i.

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cicerone imposter wrote:

The problem with my opinion is it's obvious disagreement with all the experts out there. Oh, well..... My opinion also differed last year and the year before. They were all saying our economy was going to grow, so I'm waiting for that "real" growth when companies stop reducing their staff, and begin to increase them. What I've been seeing is more layoffs than more hires, more jobs exported to other countries, and the stock market p/e ratio too high at 30+. I don't see how a three percent growth justifies paying thirty times earnings for any stock. c.i.

And again, like many core party Democrats out there (not that you are one, but that this is something they are doing), you have chosen to fixate on a LAGGING INDICATOR while discussing the CURRENT or FUTURE outlook for the economy. By definition, looking at jobs will only tell you what has already happened in the economy. You are of course free to fixate on this one datum, but it is not logical or rational to do so. And, while it may not be the case with you, I am convinced that many hard-line Dems are focusing solely on jobs precisely because it allows them to paint the worst possible picture of our economy.

This will of course backfire and bite them in the butt in 2004. Very Happy

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Scrat wrote:

I am convinced that many hard-line Dems are focusing solely on jobs precisely because it allows them to paint the worst possible picture of our economy.

Some weeks ago, a hardline Rep told me on this forum that jobs in Europe were down due to Socialist politics and painted the worst possible picture of our economy. :wink:

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Good news! The economy is up! Bush says so. Chao says so. The promise that the tax cuts will bring jobs is right around the corner. Someone from the Budget office said last night that the deficit is not important. That in the long run, it might be disastrous, but not now!

Jobs are the least of our worries!

Rbert Reich ponted out a simple and basic principle of economics - growth is fueled by consumer spending. Consumer spending occurs when the disposable income is there. Disposable income comes from people holding paying jobs who then make the money to buy the goods to keep the economy afloat.

So who needs jobs? Yes sir, Dr Pangloss, good to see you.

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Quote:

I'll feel comfortable with our economy when companies begin to purchase capital, because they've maxed out capacity. That isn't going to happen any time soon; many factories are still being closed down. c.i.

Looking and watching for this to happen also. From what I see, it's not really happening except the government sector.

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info I just got in an email:
IT Confidential: Privacy Is Overrated; So Is The Job Market Sept. 1, 2003
Forty-two percent don't expect to do any hiring next year.
By John Soat

Quote:

Even though almost half of senior executives say their companies are understaffed, most of them don't expect to do any significant hiring in the next year. That's the finding of a survey of 148 executives at public companies conducted by executive search firm Christian & Timbers during the week of Aug. 14. Seth Harris, a Christian & Timbers partner, says the survey, which represents all business sectors, strongly reflects what's happening in the tech sector, partly because the demographics of the survey are tech heavy. "The survey matches what we've been seeing," Harris says. "There's a need for people, but IT hiring is just not happening." Offshore and domestic outsourcing of IT functions such as application development and application hosting is a key reason why companies aren't hiring in IT, he says. "But the flip side is that there are opportunities for an uptake in jobs at those outsource companies--if people are willing to take substantial cuts in pay and have less responsibility," Harris says. While nearly half of the executives admit they're understaffed, 23% say they're correctly staffed, and 31% say they are actually overstaffed.

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So what happens next? Is it true, as scrat says, that the jobless rate is a lagging indicator?

And will somebody please explain this to me:

"By definition, looking at jobs will only tell you what has already happened in the economy"

This seems to be a statement stuck out there in space. Nothing constructive follows it.

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mamajuana wrote:

So what happens next? Is it true, as scrat says, that the jobless rate is a lagging indicator?

And will somebody please explain this to me:

"By definition, looking at jobs will only tell you what has already happened in the economy"

This seems to be a statement stuck out there in space. Nothing constructive follows it.

Perhaps you simply don't understand the term "lagging".

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