Where is the US economy headed?

@realjohnboy,

rjb, Here's one link I found on the 88%.

http://www.frbsf.org/publications/economics/letter/2011/el2011-25.html

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Thanks, Tak, for the link to the FRB-SF analysis on the impact of "Made In China." I had not seen that. I read it, but not carefully enough yet. I quibble with some of it, I think. I fail to see how it affects U.S. unemployment.
Obama today laid out his argument on extending the Bush era tax cuts: extend them to people making less than 250K but not to anyone making more. He caved on that last year but says he won't this time around. "Trickle down" didn't work, he says. The Repubs want to see the tax cuts extended for everyone. I wonder how much tax revenue would be lost one way or the other?
We need job creation on a large scale - not by tweeking the tax code.
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@realjohnboy,

It's a difference of about 260 Billion a year for all tax cuts, and 180 Billion or so for just the wealthy going back to Clinton levels.

I agree re: the job creation on a large scale. Obama did push a bill this year to do exactly that, which, of course, died in the House of Representatives, who hate him and would rather see the entire country burn than pass a bill he sponsored.

Cycloptichorn

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@Cycloptichorn,

We can give it a good push if the government spends on infrastructure investments; it's needed to keep our economy grow, because good transportation and communication is necessary for any economy to grow.

Spending on our infrastructure creates addition demands for all other goods and services in our country, and that multiplies into more demands for other goods and services. A dollar spent circulates and creates more jobs. Shrinking spending only creates a greater handicap for our economy. That's the reason why government spending during WWII was a good impetus for our economic growth after the war. People had money to spend, and as housing projects developed all over the country, the suppliers of building materials, appliances, and all relevant services and products needed to maintain those homes created new industries. We didn't have Home Depots or Walmarts in those days. They are the creation of good management of cost that increased demand.

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@realjohnboy,

I don't know the numbers, but for what it's worth, our largest trading partners continue to be Canada and Mexico.

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@roger,

The gist of the article Tak referenced had to do with the "Made in China" label. It may sell at a store for $1.00 and may have cost 10 cents to produce and another 3 cents to ship to SF. The remaining 87 cents is shipping within our borders, warehousing and retailing rent, wages and other costs with little bits of profit along the way.

As noted before, I have issues with the author's argument.

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@roger,

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I don't know the numbers, but for what it's worth, our largest trading partners continue to be Canada and Mexico.

How is this measured? In terms of the volume of cargo or in terms of the cost of the cargo cargo?

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@reasoning logic,

I assumed it referred to value denominated in dollars. I no longer have the article, but I have the sense it referred to goods and resources. It may or may not have included services. I can't be more specific, though I'm sure it didn't refer to volume of cargo.

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@roger,

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I'm sure it didn't refer to volume of cargo.

Yeah I kinda thought the same thing but I am a laymen. I would think that the volume of cargo comes from china and other places even though the cost to us is pennies on the dollar as far as it's value goes.

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@realjohnboy,

rjb, Look at Table 1, "Import content of U.S. personal consumption expenditures by category" that shows what's produced in the US and purchased by Americans. It's not only about Made in China products.

As you can see Housing is 100%.

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@cicerone imposter,

At a sprawling manufacturing complex here, hundreds of Chinese laborers are now completing work on the San Francisco-Oakland Bay Bridge.

http://graphics8.nytimes.com/images/2011/06/26/world/26bridge-span/26bridge-span-articleLarge-v2.jpg

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The assembly work in California, and the pouring of the concrete road surface, will be done by Americans. But construction of the bridge decks and the materials that went into them are a Made in China affair. California officials say the state saved hundreds of millions of dollars by turning to China.

When you are having massive infrastructure projects like this Frisco to Oakland Bay bridge done in China to be shipped home, there's really something very smelly going on with the supply chain.

Full story here

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@Builder,

Builder, I believe in comparative advantage; everybody benefits when some things can be done offshore, while others can be done at home. In a world economy, that's how it's supposed to work.

Many developed countries learned that lesson very early in their economy; that's the reason why most clothing are not made in the US as compared to when our economy was young.

When cost is saved at home, other projects at home can also get funded at lower cost.

That's smart business.

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@cicerone imposter,

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That's smart business.

Business is a tool not the whole enchilada. It is dumb living to send the work to the Chinese and then be bored, no mater what the business numbers say. Work is good for the soul, and most folks need a paycheck to survive. If I have anything to say about it my fellow americans will get the work if there is not enough to go around....as seems to be the case.

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@hawkeye10,

That's because you fail to comprehend the concept comparative advantage.

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@cicerone imposter,

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When cost is saved at home, other projects at home can also get funded at lower cost.

When these massive projects are done at home, the money stays in the local economy, supporting thousands of individuals, who then inject their money back into the rest of the infrastructure surrounding them and their children.

So, the supposed "millions saved" is actually millions injected into another country's economy, because the job would not actually be cheap at all. Probably in the billions of dollars. That money is now gone from the local economy forever.

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That's smart business.

That's outsourcing. Keep it up, and don't wonder why there's no cash left in the local economy, and jobs are scarce.

Sure, the Fed Res can keep printing greenbacks, but they won't have the purchasing power they once had. When there's no more oil to back the greenback, selling reserve notes internationally will become a joke.

The US of A is so far in debt now, I'm not so sure there's ever going to be a way out for you guys. Not under the current scheme, anyways.

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@Builder,

It's based on simple supply and demand in the world market place. When everybody gains that provides labor to all competing countries, all benefit.

Did you study Economics? It's about comparative advantage. It's a simple concept about farming out jobs to countries that can produce products and services at cheaper cost. That's one of the reasons why the US doesn't produce clothing like it used to in the period immediately after the WWII. That's the reason why we can still purchase clothing and other products at relatively good prices.

I worked for Florsheim Shoe Company after college. When Asia started producing shoes at cheaper cost, Florsheim went bankrupt, because they couldn't compete on price. Our country now produces good cars and high tech products to export. That's the reason why science and math is important as well as R&D to our countries continued ability to compete in the world marketplace.

Ask any Econ professor.

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@cicerone imposter,

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Our country now produces good cars and high tech products to export.

We import more than twice as many cars as we export so they no not support your argument.

http://www.trade.gov/wcm/groups/internet/@trade/@mas/@man/@aai/documents/web_content/auto_stats_auto_trade_pdf.pdf

When one is trying to play expert it is best to not make idiotic statements.

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@hawkeye10,

Quote:

High-tech trade deficit remains high
The U.S. trade deficit in high-tech goods such as aircraft, optical equipment, and medical devices improved slightly to just under $97 billion in the 12 months through November 2011, the last month for which we have data. The improvement in November 2011 is a departure from recent trends, however. Over the past two years, U.S. imports of advanced technology goods grew more than twice as fast as the already-smaller exports of high-tech goods, at 7.5 percent and 3.1 percent respectively on an annualized basis. Despite improving over the previous year, the 12 months through November 2011 mark the fourth-largest high-tech trade deficit on record.

The trend in the high-tech trade deficit is not a result of the overall direction of other U.S. trade. Compared to other U.S. exports high-tech exports are growing slowly. In contrast to high-tech exports, other U.S. exports grew 21 percent annually for the past two years.

This means that even though U.S. exports overall are becoming more competitive in the global marketplace, the U.S. high-tech sector is not keeping pace. Lagging performance of advanced technology trade also weighs on the overall U.S. trade deficit, amounting to 13.5 percent of the overall trade deficit in the year through November 2011.

http://www.americanprogress.org/issues/2012/02/prod_snapshot.html/print.html

So not only are we no longer making toys, shoes and clothes, but we are losing at high tech as well. We have also lost "green", Obama's favorite type of jobs the the Chinese.

Your argument is smashed to smithereens. .....you are ten years out of date, almost no one today is going to fall for that snake oil you are trying to peddle.

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@cicerone imposter,

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It's based on simple supply and demand in the world market place.

It's actually based upon complex trade balance quotas, but do go on.

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When everybody gains that provides labor to all competing countries, all benefit.

How does "everybody gain"? when it's obvious that China is booming, and the US and Europe is not? You seem to have the chit-chat down pat, but there's always more to it than a sound-byte, ya know?

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Did you study Economics?

I'm a builder. The state of the economy is directly reflected in our supply chain. You sold shoes, apparently? Before the company went bush.

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It's about comparative advantage.

Who's advantage? The corporation's? Or Americans in general?

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It's a simple concept about farming out jobs to countries that can produce products and services at cheaper cost.

It's a rather complex equation based upon balancing trade accounts. For example, China buys shitloads of coking coal off us(Australia) while also producing more coking coal than they will need in the next twenty years.

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That's one of the reasons why the US doesn't produce clothing like it used to in the period immediately after the WWII.

Not even high quality western gear? I'm wearing RM Williams jacket, jeans, and boots. All made right here in Australia, from Australian materials. We don't mind paying a bit more for the best quality in clothing. Particularly the boots and jeans.

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That's the reason why we can still purchase clothing and other products at relatively good prices.

My experience with Chinese clothing is, it lasts about six months, and then it's a rag. I don't think it represents good value for money at all.

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I worked for Florsheim Shoe Company after college.

So you said. Did you also study economics? I'm only asking, because you asked me.

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When Asia started producing shoes at cheaper cost, Florsheim went bankrupt, because they couldn't compete on price.

Florsheim missed out on a classic opportunity to fill a market void in the high quality shoe market. They failed to do market research, and act upon that research.

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Our country now produces good cars and high tech products to export.

Last I heard, GM needed bailing out, again, and you still import cars way in advance of what you produce. Disprove that claim for me.

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That's the reason why science and math is important as well as R&D to our countries continued ability to compete in the world marketplace.

Very important to shoe salesmen as well, no doubt. But tell me why, in a country that obviously excells in R & D, major infrastructure development has to be outsourced to China? In your own words, that is.

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@Builder,

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But tell me why, in a country that obviously excells in R & D, major infrastructure development has to be outsourced to China?

Because we dont give a **** about it, as evidenced by the fact that over the last decades as we have burned through massive piles of money we never hardly bothered to spend money on infrastructure but for roads. It is what happens as a result of a lack of ability and/or willingness to properly prioritize.

I blame the failed education system.

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Where is the US economy headed?

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