The US Economy

While this government mortgages our children's future. yeah, yeah.......

0 Replies

c.i., the future is already mortgaged to the hilt ... The Public Debt is a feature of the economy. It currently stands at about $6.87 Trillion. While an annual budget surplus is prefereable, generally, to a deficit, it is long-term deficit growth or contraction which materially affects the Public Debt. The surplusses of the late '90s whittled a little off, the current deficits are adding a bit to it, though at a rate below projections. That's not altogether a good thing by any means, but its not altogether bad, either. We grew our way out of the annual deficits of the '80s and the ''90s, we'll grow ourselves out of the current annual deficit; we'll never grow ourselves out of The Public Debt. In many ways, it is itself a very positive measure of the underlying strength of the US Economy.

0 Replies

under clinton more private sector jobs were created than public sector jobs. under bush it was the opposite.
is it time to reassign the spending policies of the 2 parties?

in light of the data i'm considering reevaluating the effectiveness of the economic policies of the republican party or at least the bush administration. what more could bush have done to create jobs?

granted that they're still fiscally irresponsible.

0 Replies

McGentrix wrote:

Oh yeah?! Well see if I post in THIS thread again!!

0 Replies

timberlandko wrote:

Total employment for December of 2000 was 137,620,000, or 983,000 fewer than the 138,603,000 all-time record set this November. [..] More Americans are employed today than ever in history ... for the second month in a row.

Timber, I'd bet my bottom dollar that there are more Americans than ever in history ... so this really is one of the more meaningless stats.

Thats why I attach greater value to percentage-of-population numbers (in as far as those are counted comprehensively). At 5,9%, unemployment now would be half a percent lower than half a year ago, but still over 2% higher than in 2000. You're still only at the beginning of recovery in this respect ..

0 Replies

ye, timber talks about the current deficit while trying to compare it to the past. That's not necessarily the best way to view national debt, because the US economy today and it's place in the world market is not the same as in years past. What we must and should look at is the slow growth in jobs, the loss of factory and high tech jobs to other countries, and the upcoming retirement of the baby-boomers in about ten years when we'll have more retirees on social security and medicare than we will have workers to support it. That means those paying taxes towards their social security will not draw the same benefits we are today - if at all. Continued deficits creates monetary problems and inflation. We are seeing some of the effects by the devaluation of the US dollar against the Euro and the yen as we speak. When we lose more foreign investments out from the US, the only way to keep dollars from falling too low is by increasing interest rates. That in turn fuels inflation. Deficits aren't all that's cracked up to be by some that wish to continually support this administration. We no longer have the luxury of running high federal deficits, because our economy is tied to the world's economic and political changes. Japan now holds most of our US treasuries. If they find that the value of the US dollar is losing in the world markets, the only way they will continue to keep and support US treasuries is by the US increase of the interest rate. If they dump US dollars in the world market, that will only devalue the dollar more, and we will have inflation like we've never seen it before in our life time. The US dollar will become worthless.

0 Replies

i aknowledged that bush is fiscally irresponsible. but what more could he have done to create jobs? i have no problem with bashing bush on a wide assortment or issues but is it really fair to blame him for unemployment?

also if someone can educate me...
how do rising interest rates cause inflation? shouldn't it be the opposite?
and does a weak dollar discourage non-interest bearing investments inside the US? if so why?

0 Replies

We can only blame Bush to the extent he told the American people that his tax cuts will create jobs. Since he didn't say how many jobs, I guess you can read that any way they wish to interpret his rhetoric. No, presidents do not have that much influence in creating private industry jobs. If you compare the tax cuts to the middle class and the poor during the past two years, it's a drop in the bucket when compared to the GDP of the US. Much of the spending by consumers have been financed by debt - mostly in the form of refinance of their mortgage and credit card debt. There has also been an increase in the number of bankruptcies during the past couple of years. Too many are buying homes they really can't afford. When the housing market is strong, most can sell their homes before the creditors take it over. We just gotta hope this housing market remains strong, but more importantly, the job market must increase substantially to sustain our economic growth.

0 Replies

nimh wrote:

Timber, I'd bet my bottom dollar that there are more Americans than ever in history ... so this really is one of the more meaningless stats.

There are indeed more Americans than ever in history, and employment as a percentage of working age population has been declining in the early 2000s. But I don't think that was timber's point. His point was really about inconsistency. I suspect he would agree that absolute numbers of employment and the budget are less meaningful than the relative ones. (deficit as percentage of GDP, empoyment as percentage of working age population). As I understand it, his complaint was about liberals who use absolute numbers for the deficit but relative numbers for employment. I'm sure he is equally annoyed by conservatives who talk about the deficit in relative numbers and employment in absolute ones.

ye110man wrote:

i aknowledged that bush is fiscally irresponsible. but what more could he have done to create jobs? i have no problem with bashing bush on a wide assortment or issues but is it really fair to blame him for unemployment?

He could have focused on short term stimulus to reduce the drain on the long-run budget outlook, and he could have directed the tax cuts at people who'd spend more of them and save less of them. In my view, it isn't fair to blame Bush for the recession and the job losses it initially brought. That would have happened under any president. But fighting a recession is an easy economic policy problem with a textbook solution. We don't know Bush addressed the recession by going through the list of textbook prescriptions, then doing the opposite. But judging by what he ended up doing, he might as well have done that. His reaction was inadequate under any established model of the economy, and I think you can blame him for that.

ye110man wrote:

how do rising interest rates cause inflation? shouldn't it be the opposite?

It's kind of in between. The Fed will raise interest rates if it expects inflation in the future and wants to prevent it. One thing that causes it to expect that is a slowdown of disinflation, or even slight inflation, in the present. That's why causality can look reversed to a casual observer.

ye110man wrote:

and does a weak dollar discourage non-interest bearing investments inside the US? if so why?

A weak dollar per se doesn't but the expectation of a weakening dollar does. When US investors expect a fall in the dollar, they find that they'll get a better return on their investment by exchanging their dollars into foreign currency, buying foreign stocks and bonds, waiting for the foreign currency to appreciate, then changing them back. This reduces the amount of investment available inside the US.

0 Replies

Thomas wrote:

But I don't think that was timber's point. His point was really about inconsistency. I suspect he would agree that absolute numbers of employment and the budget are less meaningful than the relative ones. (deficit as percentage of GDP, empoyment as percentage of working age population). As I understand it, his complaint was about liberals who use absolute numbers for the deficit but relative numbers for employment. I'm sure he is equally annoyed by conservatives who talk about the deficit in relative numbers and employment in absolute ones.

Yup. Pretty much.

Here's an interesting tidbit:

Quote:

Revisions: Economy Shrank Pre-Recession
Wed December 10, 2003 08:38 AM ET
By Andrea Hopkins

WASHINGTON (Reuters) - The U.S. economy shrank in the third quarter of 2000, the government said on Wednesday in revisions to official figures that showed America was on the brink of recession months earlier than previously thought.

The sweeping changes by the Commerce Department also downgraded the expansion that followed the 2001 slump, albeit only slightly.

However, the revisions were not applied to third-quarter 2003 data -- leaving the most recent measure of growth unchanged at a swift annual clip of 8.2 percent. The next reading of third-quarter growth is scheduled for later in December.

Until now, statisticians at Commerce's Bureau of Economic Analysis believed the economy did not start shrinking until early 2001. But extensive revisions dating back to 1929, incorporating both improved statistics and changes to definitions, revealed a contraction in gross domestic product, or GDP, in the July-to-September quarter of 2000.

Instead of inching ahead at the first reported 0.6 percent annual rate in that quarter, GDP shrank 0.5 percent, Commerce said. The weaker estimate is mostly due to a larger drop in private inventories than previously reported.

President Bush and his economic team have long insisted he inherited a recession from the former Clinton administration, and the White House may seize on these new numbers to back that claim.

The economy bounced back smartly in the fourth quarter but the revisions show the economy weakened just before hitting the top of the business cycle late in 2000.

"The cyclical peak is still the fourth quarter of 2000, but this does indicate that there was perhaps more slowing before the downturn than the estimates had previously shown," said Brent Moulton, who is in charge of compiling the GDP report for the Bureau of Economic Analysis.

The National Bureau of Economic Research, a private firm deemed the official arbiter of U.S. business cycles, officially dated the slump from March to November 2001.

PROFITS UP, SAVINGS DOWN

The revisions alter how Commerce measures key parts of the economy, including insurance and banking, and incorporate new source data from tax returns and the Census Bureau.

Many of the shifts cancel each other out, leaving the overall history of economic growth largely unchanged. For example, annual inflation as measured by the GDP report remains a muted 1.8 percent for the 1992-2002 decade.

But the adjustments pushed down the pace of the expansion since the recession's end to the second quarter of this year to a 2.6 percent annual rate, from an originally reported 2.7 percent pace.

They also make the recession milder than first thought, with the economy shrinking 0.5 percent during the downturn rather than the previously estimated 0.6 percent contraction.

Corporate profits were revised up substantially for 2002 due to a change in the treatment of stock options. Profits of domestic industries as a percentage of gross domestic income were 7.1 percent compared with 6.3 percent previously.

Savings, however, were pushed sharply lower beginning in 1987 because personal spending was higher than previously thought and personal income was revised down, Commerce said.

While Americans have for years put progressively less money aside for rainy days, the erosion now seems worse than first thought.

Savings hit just 2.3 cents out of each dollar of disposable personal income in 2002, compared to a previously estimated 3.7 cents. That declined to 1.9 cents in the first quarter of 2003 and 2.3 cents in the second quarter -- down from the originally reported 3.5 cents and 3.2 cents, respectively.

The effect of the revisions on data from the third quarter of 2003 -- including corporate profits and a final measure of overall GDP -- will be released on Dec. 23, Commerce said.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

© Copyright Reuters 2003. All rights reserved. Any copying, re-publication or re-distribution of Reuters content or of any content used on this site, including by framing or similar means, is expressly prohibited without prior written consent of Reuters.
Quotes and other data are provided for your personal information only, and are not intended for trading purposes. Reuters, the members of its Group and its data providers shall not be liable for any errors or delays in the quotes or other data, or for any actions taken in reliance thereon.

One of the most interesting things there is the weakness of the Personal Savings Rate (long a notable weakspot of the American Economy, actually; so much so its just about a tradition). That sorta blows away the contention that those "who benefitted most" banked rather than spent their tax savings. Of course, so does the marked uptick in the sales of luxury goods. Some folks will see only what they want to see.

0 Replies

Thanks Thomas.

Thomas wrote:

He could have focused on short term stimulus to reduce the drain on the long-run budget outlook, and he could have directed the tax cuts at people who'd spend more of them and save less of them. In my view, it isn't fair to blame Bush for the recession and the job losses it initially brought. That would have happened under any president. But fighting a recession is an easy economic policy problem with a textbook solution. We don't know Bush addressed the recession by going through the list of textbook prescriptions, then doing the opposite. But judging by what he ended up doing, he might as well have done that. His reaction was inadequate under any established model of the economy, and I think you can blame him for that.

Al Gore would not have proposed a tax cut at all. So even if Bush's tax cut was largely squandered, it should have provided more stimulus than the Democratic alternative; no tax cut.

0 Replies

ye110man wrote:

Al Gore would not have proposed a tax cut at all. So even if Bush's tax cut was largely squandered, it should have provided more stimulus than the Democratic alternative; no tax cut.

During the 2000 presidential campaign, there was no recession to be faught, so Al Gore presumably saw no need to present a recession-fighting plan. Bush didn't sell his own proposals as a recession-fighting plan at the time either. He sold them as a means of getting rid of the unwanted budget surplus.

When the recession was there, the Democrats proposed a package of tax cuts and spending increases that was smaller, more focused onto the near term, and more focused on the lower percentiles of the income distribution.

So you are mistaken in implying that the Democratic alternative was no tax cut at all. It's just that when the situation changed between 2000 and 2001, the Democrats adjusted their policy proposals to deal with the new situation, while the Republicans adjusted their rhetoric to justify the same old proposals as the solution to very different problems.

0 Replies

timberlandko wrote:

Thomas wrote:
But I don't think that was timber's point. His point was really about inconsistency. [..] I'm sure he is equally annoyed by conservatives who talk about the deficit in relative numbers and employment in absolute ones.

Yup. Pretty much.

Thats cool, so you wont engage in that henceforth anymore, then? Thanks!

0 Replies

Now, really, nimh ... I was just having fun with the "More Americans Employed Than ever Before"thing, using it to point out the superficiality of the "Raw Numbers" game., and I think you know that. I think my preference for relative numbers, percentages-in-context, if you will, is pretty clear.

0 Replies

Come on, nimh --

none of the conservatives here complained in any serious way when I quipped that the rise in the Dow since 1985 reflects a weakening of the Dollar. It's only fair to let Timber have a bit of fun with the relative-absolute game too.

0 Replies

cicerone imposter wrote:

While this government mortgages our children's future. yeah, yeah.......

Nonsense.

0 Replies

If it's nonsense, explain why.

0 Replies

With all this discussion of supposedly dismal performance in the US economy, it is worth noting that the recession from which we are now emerging afflicts all the world's advanced economies, and relative to the other members of the G-7 we are doing quite well. GDP per capita in the U.S. is about 20% higher than that in any other G-7 nation and our rate of GDP growth exceeds all of them (Canada, Germany, France, Italy, UK, Japan, U.S.A.). Moreover our net public debt (as a % of GDP) is lower than that of any of the other G-7 economies save only the UK, and (recently) Canada. In terms of unemployment only Japan and the UK have lower rates than we, and theirs are less than ours by very small margins (5.7% US, 5.4% Japan, 5.2% UK) while Germany and France have 9.8 and 9.7% respectively. For those who wish to judge political leaders solely by current economic indicators, then it is Schroeder and Chirac who should be so shamed.

0 Replies

george, As with most things in life, the economics of the US should be compared to the rest of the developed countries. Your post did that; and I thank you for sharing this very important information. It's easy to look at the glass as half full or half empty depending upon one's political leanings. I guess we all would like to see things better for everybody even at a time when we're still holding our own - relatively speaking.

0 Replies

Why is it that GDP grows faster than the US population, naturally? Do exports grow even faster or something?

0 Replies

Related Topics

Quick Links

My Account

able2know