The US Economy

Well, let's think about it for a minute, Blatham. We could sell all those who are presently unemployed to India and China, thus further increasing the work force there and increasing the numbers of those who are so desperate they work for very little. Then our unemployment rate would be good and the rich could continue to get richer while the poor and unemployed would be no longer with us.

Gee whiz, we might be able to continue our gluttony because the rich can affort to pay for health services, and their workers, now in foreign countries won't need any health coverage. When they get sick, they can just die early, reducing health care costs all around.

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That's a dangerous idea, Lola. If they buy into that, we may have greater outflow than inflow in immigration. It'll be interesting to watch. Aren't we now at about 280 million people in the US?

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cicerone imposter wrote:

Aren't we now at about 280 million people in the US?

Closer to 300 million than to 280 million.

Quote:

U.S. POPClock Projection
According to the U.S. Bureau of the Census, the resident population of the United States, projected to 1/8/2004 at 2:26:52 PM EST is

292,338,213

COMPONENT SETTINGS

One birth every.................................. 8 seconds
One death every.................................. 13 seconds
One international migrant (net) every............ 25 seconds
Net gain of one person every..................... 12 seconds

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Wow! Thanks for the stats, timber. Gain every 12 seconds. Almost scary.

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Here's a recent CBS Marketwatch press release. "Ignoring signs of a recovering economy, insiders continued selling shares in droves last year even as the stock market bounced back from three-year lows. Insider sales surged 40 percent to $29 billion over the prior year - nearing 2001's selling activity."
I've always followed the rule, "don't do as they say, but what they do." It tells me much more than what the financial pundits have been saying for the past 12 months.

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not sure of this stat, heard it on the local news, 150,000 people join the US work force monthly, so i am assuming that 150,000 new jobs monthly would be the break even point for job growth.

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Check the Bureau of Labor Statistics website for the stats, Dyslexia.
Anything over about 150,000 new jobs per month is considered indicative of strong growth; breakeven is around 137-140,000.

One item of note is that the unemployment rate since WWII has averaged 5.4%. Today's "Employment Crisis" is mostly a media event.

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Thomas,

Well, you left out the following sentence, which I believe is relevant.

"Odd that most of those same economists were, just a few years ago, taking direct and present credit for the projected long term surpluses during what was obviously an aberrant short term bubble."

The Congressional Budget office is a bureaucratic creature of the Congress, which has, for most of the past several decades, been dominated by Democrats. Most of its career employees and managers were selected and appointed by the Democrat political leaders of the Congress. It is highly politicized and is not at all a source of dispassionate advice.

You are indeed correct about social security reform merely transforming savings from the public to the private sector, and therefore achieving no net change in the total. However its proponents argue that direct citizen participation in and management of this savings program may reduce the sense of entitlement and induce more responsible behavior on the part of many people, leading to an increased savings rate. The point is certainly debatable and cannot be proved.

Why don't Americans choose to save more? I don't know, but I don't think it is a result of any particular government policy.

The relation between tax rates and economic activity and growth is complex and non-linear. If a tax reduction yields more efficient allocation of capital and induces enough added economic activity by enough people, then the tax collections (in dollars) by government can well be the same as would occur with higher tax rates but lower levels of less efficient economic activity. As you well know, this is the theory which the Republicans use to rationalize their policies in this area. That it is true to a degree and in some cases is beyond doubt. The question is how much and when. An added factor in the Republican strategy is their desire to slowly starve the government of resources and thereby limit its growth. Both, in my view, are noble goals.

It would be difficult to argue with the notion that governments and the types of people who inhabit them are nothing if not intensely self-perpetuating. It's functionaries will always find reasons for their continued existence, empowerment, and growth. The power of government makes this impulse inherently dangerous. The spectacle of European attempts to "harmonize" tax policies in the EU (thereby penalizing countries with lean, efficient governments) is a perfect illustration of my point here.

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ok, so seriously foks, I find this confusing; CNN this morning reports joblessness drops from %5.9 to % 5.7 for December but new jobs expected @ 130,00 but actually 1,000 leaving 129,000 jobs short of expectations.

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Unemployment at new 12 Momth Low:

Quote:

Bureau of Labor Statistics: THE EMPLOYMENT SITUATION: DECEMBER 2003

Employment was virtually unchanged in December while the unemployment rate,
at 5.7 percent, continued to trend down, the Bureau of Labor Statistics of the
U.S. Department of Labor reported today. Following increases that totaled
277,000 in the prior 4 months, nonfarm payroll was flat in December (+1,000).

Unemployment (Household Survey Data)

The number of unemployed persons was 8.4 million in December and the unem-
ployment rate was 5.7 percent. Both measures continued to edge down from their
recent highs in June 2003. In December, the unemployment rates for adult men
(5.3 percent) and Hispanics or Latinos (6.6 percent) declined. The jobless
rates for the other major worker groups--adult women (5.1 percent), teenagers
(16.1 percent), whites (5.0 percent), and blacks (10.3 percent)--showed little
or no change from the previous month. The unemployment rate for Asians was 5.3
percent in December, not seasonally adjusted.

Given that these figures encompass the natural termination of temporary workers, primarily retail, discharged after the holidays, it is particularly encouraging, even given the shallow job growth.

Also of note is that yesterdy's DOW close at $10,592.44 is the highest since Mar 12 '02's close of $10632.40. I expect, however, that today's market activity will be flat to slightly down on profit taking, as today's unemployment news was mere good, not astounding. Only well-above-expected news seems to drive market gains anymore, which itself is an encouraging sign; folks are getting accustomed to good news.

Edited to correct typo: DOW should have been $10,592, not $19,592 ... typed that in a hurry Embarrassed

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The current year unemployment rate in Canada is 7.7%; in France it is 9.7%; in Germany the rate is 9.8%; Italy has 9.0%.

The UK and Japan are very marginally below the U.S. at 5.3% and 5.5%.

By what standard does anyone suggest we are doing badly in this area during the current economic cycle?

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In terms of looking at the percentage it appears good and low, looking at the number of unemployed it looks bad, that's where the hysteria comes from.

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There is no standard by which one can claim the US Economy is doing badly, George, beyond the inconvenience its continued strongly improving performance provides to those who wish to be critical.

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georgeob1 wrote:

By what standard does anyone suggest we are doing badly in this area during the current economic cycle?

timberlandko wrote:

There is no standard by which one can claim the US Economy is doing badly, George, beyond the inconvenience its continued strongly improving performance provides to those who wish to be critical.

A heaping double-helping of conservative horse droppings.

You're just ignoring the facts that make your case inconvenient.

And if you wouldn't make those statements with such assurity, I wouldn't be forced to prove to you that your statements look so foolish...

Quote:

Twenty five major American cities saw a 19% increase in the need for emergency food last year alone.

New jobs created during the 2004-05 period are forecast to pay an average of $35,855, far lower than the $43,629 average pay of those jobs lost between 2001-03.

Only 14% of CEOs are planning to increase the pace of hiring.

Movingideas.org and the CAP

Alas, there's more:

Over 2 million fewer people are employed since Bush took office, as companies are shipping jobs abroad.

Bush is still on pace to be the first president since Herbert Hoover to have a net job loss over his four-year term.

Now that's a standard, no matter what you think.

Look, fellas, the bottom line is that everything is not all ****, but neither it is all roses.

This absolutism when it comes to proclamations on the economy is just plain ignorant.

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It is often those who are most willing to cast subjective judgements about the knowledge and intelligence of others who are themselves the least informed and most lacking in understanding.

Unemployment in the United States is low by both current world standards (as has already been demonstrated} and, as well by our own historical standards, as I will now demonstrate;

U.S. unemployment rates by year;
1990 6.9%
1991 7.5
1992 6.9
1993 6.1
1994 5.6
1995 5.4
1996 4.9
1997 4.5
1998 4.2
1999 4.0
2000 4.8
2001 5.8
2002 6.0
2003 5.8

This list also demonstrates the recent effects of the economic cycle. 1991 was a recession year and unemployment peaked at 6.9%. In the recession from which we are emerging now the unemployment peak was reduced to 6%. In the previous 1981 recession under President Jimmy Carter unemployment peaked at 9.7%. Indeed, since the tax and economic reforms introduced in the Reagan years the peak unemployment during recessionary cycles has been reduced by more even than the average difference between unemployment during boom and recession years. That is a truly remarkable performance that has not been equaled by any other developed country.

In a recent study of ecomomic inequality the Economist magazine was chagrined to report that, although economic inequality in the United States, as measured by the ratios of the incomes of the top and bottom deciles of population, was greater than any other G 8 country, it was also true that the mean income of every decile, including the lowest, in the United States was significantly higher than the coresponding decile of any other G 8 country. In addition they found that economic mobility in the U.S. was much greater - people here tend to move out of the bottom decile much more quickly than in other G 8 nations. In short, the permanent underclass in Sweden is poorer and more permanent than its counterpart here.

One month's data about average salaries of jobs lost and created is not a reliable indicator of anything except what happened that month. Everything we know about economice suggests that new employment is a lagging phenomenon during a recovery and that marginal and temporary jobs are usually those filled first. We have every reason to expect that U.S. employment will continue to grow and will do so increasingly at higher wage levels.

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georgeob1 wrote:

By what standard does anyone suggest we are doing badly in this area during the current economic cycle?

Some serious people, like Berkeley's Brad deLong, think it's doing badly as judged by labor market indicators other than the unemployment rate. Specifically, participation in the labor force and the median duration of unemployment are behaving as if the economy is still in a rather deep recession -- even considering that employment is a lagging indicator.

For the record, Mr. deLong himself doesn't conclude that the economy is doing badly. He just kind of scratches his head about it.

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timberlandko wrote:

There is no standard by which one can claim the US Economy is doing badly, George, beyond the inconvenience its continued strongly improving performance provides to those who wish to be critical.

Amen, Brother Timber!

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Here's some more confusing data. Manufacturing lost 56,000 jobs last month. We've been told it'll take 150,000 jobs a month for our economy to continue it's growth, and keep our population employed. The economy is improving; GDP grew at over 8 percent in the third quarter of 2003. Retail sales did a bang up job during December. Most show an increase of 4 percent. There are now a greater number of middle class falling into poverty. Our newspaper is full of stories of high tech workers without jobs for two years or more. New and used home sales are on the increase. Mumbo jumbo you say? Yup.

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Thomas,

I don't at all doubt that there may be some adverse trends, detectable now only ambiguously or in second order effects. We should certainly be concerned that an increasingly service oriented economy might replace high wage, high content jobs with low wage, low content ones. That was a big concern here 15 years ago as our textile industry and others were moving offshore to China, South asia and Mexico. Happily that adverse outcome didn't materialize then, but that doesn't mean it never will.

I do believe that the United States sorely needs to improve the performance of its educational systems, particularly in the mid and lower skill levels. We are in the grip of a bureaucratic, heavily unionized and thoroughly self-serving system more concerned about its own interests and the current fashions of political correctitude than the measurable results it delivers in core skill areas. If we are to sustain high value added services and technology while (properly) watching the export of service and manufacturing jobs to lower wage countries, then we must focus more on the economic skills and capability of our population.

I do, hoiwever, object to the often simple-minded and always wrong-headed, politically motivated assertions that we are in some sort of downward spiral, based on some obviously mindless extrapolation from tenuous data.

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georgeob1 wrote:

it was also true that the mean income of every decile, including the lowest, in the United States was significantly higher than the coresponding decile of any other G 8 country. In addition they found that economic mobility in the U.S. was much greater - people here tend to move out of the bottom decile much more quickly than in other G 8 nations. In short, the permanent underclass in Sweden is poorer and more permanent than its counterpart here.

George, I think you are talking about this article in the September 6 issue (Subscription required). If so, they say nothing about income mobility being higher than elsewhere in the G8, and their graph doesn't support your claim that the lowest decile in the US is doing better than the lowest decile in every G8 country.

Edit: The A2K software appears to truncate the URLs of very long links. To go to the page, copy&paste this into your browser. Don't click on it.

http://www.economist.com/printedition/displayStory.cfm?Story_ID=S%27%298%2C%28PA%3F%26%20P%22%2C%0A

http://www.economist.com/images/20030906/CUS978.gif

I also suspect, without actually knowing, that the study they're quoting doesn't adjust the wages of European workers for their purchasing power, which tends to understate them. The CIA world fact book, which does make this adjustment, gives incomes for the lowest decile that are way lower in the US than in European G8 countries. (You have to calculate the figure from the figures on "GDP per capita" and "Household income by percentage share".)

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