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Where is the US economy headed?

 
 
cicerone imposter
 
  1  
Reply Fri 26 Oct, 2007 12:24 pm
For sale: 2 million empty homes
Number of vacant homes on the market nationwide equivalent to all homes in Detroit; another sign of weak housing market.
By Chris Isidore, CNNMoney.com senior writer
October 26 2007: 12:13 PM EDT

NEW YORK (CNNMoney.com) -- The number of vacant homes for sale rose in the third quarter, according to the latest government reading that casts new harsh light on the weakness of the housing market.

The Census Bureau report puts the number of vacant homes for sale at 2.07 million in the period, up about 2 percent from the second quarter, and 7 percent above year ago levels.
In another sign of the weak housing market, the number of vacant homes for sale rose in the third quarter.
In another sign of the weak housing market, the number of vacant homes for sale rose in the third quarter.
Special Reportfull coverage
Mortgage Meltdown

* For sale: 2 million empty homes
* Staring into Countrywide's abyss
* Countrywide joins foe to help borrowers
* Home sales: Bad and worse than they seem

The number is down 5 percent from the record high reading reached in the first quarter, though.

For purposes of comparison for the current situation, imagine the Detroit metropolitan area, which the Census Bureau estimated had 2.08 million households in its 2000 Census. Now picture virtually every house or condo empty, with a for sale sign in the front yard of every home, from inner-city Detroit to its suburbs, all the way to nearby cities such as Flint and Ann Arbor.

There are always some homes vacant and for sale, even in a booming real estate market.

But the combination of overbuilding by home builders in the middle of the decade and problems in mortgage markets this year that made it more difficult for buyers to get the financing they needed to buy a home has swelled the inventory of vacant homes on the market.

Because the mortgage market meltdown has thinned the ranks of potential home buyers some home owners have been forced to move out of homes before they can find a buyer. And those who bought homes or condos as investments during the real estate and building booms of a couple of years ago have found an exceptionally weak market for their property. That in turn has lifted the number of vacant homes for sale by 57 percent in just the last three years. And some see the situation only getting worse.
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georgeob1
 
  1  
Reply Fri 26 Oct, 2007 02:39 pm
cicerone imposter wrote:
For georgeob and anyone else interested. This is the new Supercarrier, USS Ronald Reagan.


Actually Reagan is a standard Nimitz class design - the same as my ship. Some of the info listed is far out of date. The standard fuel load on these carriers in 1980 was good for 25 years. Since then, accumulated data & experience plus improved fuel element design have extended the fuel life in the latest ships in the class to over 50 years - all this with about 200Kg of enriched uranium.

The ship looks big in the sketch, but in the ocean when you are trying to land on it, the damn thing looks fairly small.
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georgeob1
 
  1  
Reply Fri 26 Oct, 2007 03:09 pm
Thomas wrote:
georgeob1 wrote:
In effect you are asserting that the dynamic equations for gross economic activity are somewhat dependent on the time rate of change of taxation, but not at all on the level of taxation. This defies common sense and it is not at all difficult to construct contradictions, based on the proposition.

Yes I do assert that -- at least for time periods greater than three years, and for rates of taxation that free countries from Hong Kong to Sweden might realistically enact.
I don't buy your implied reasoning. High and low growth rates have been achieved by different countries, each with different tax strucctures, as you say. However that does not imply that the level of taxation in a given country has no effect on its economic trajectory.

Thomas wrote:
georgeob1 wrote:
The US economy in the post WWII years was buoyed up by the physical facts that (1) we retained most of the undamaged physical plant and productive capacity of the world; and (2) we had most of the capital.

If I understand you correctly, you are saying that America's growth in the fifties and sixties was primarily export-driven, and that's why it's weak evidence for my point. I'm not buying your argument for two reasons.

a) The numbers don't match. During the period we're discussing, the current surplus as a share of GDP was some single-digit number of percents. (I'm too lazy to look up the precise value.) Therefore, even if the growth in net exports had been really spectacular during this period -- say 10-20% per year -- it would still have been way too small to account for much of America's GDP growh.

b) The timing doesn't match, either. If export driven growth explained America's growth ca. 1950-1970, we should see America's trade surplus crash when GDP growth slowed to a crawl. But we don't see this in the data. By contrast, GDP growth slows in the early 70s, but the current account surplus doesn't turn into deficit until the 80s.
I am not suggesting our growth during the period was export driven. That is your conclusion, but not mine. Pent up demand (and savings) during the war years and the influx of millions of returning servicemen into the labor force alone were enough to stimulate demand. During the immediate post war years the United States was merely one of the few countries with available plant capacity to meet that demand. Our war-ravaged former trading partners had too many problems of their own to create a spike in imports from the U.S. Indeed during those years we exported quite a few dollars to Europe to stimulate economic renewal.

Thomas wrote:
georgeob1 wrote:
I think you will agree that our current economic era began with the end of the "stagflation" of the late 1970s & early 1980s.

No, actually I don't agree with that. After correcting for the business cycle, GDP growth in the 80s remained as slow as it had been since the early 70s. It didn't resume its pre-70s speed until the end of the 90s.


I believe you should recheck your data here. The increase in our GDP growth rate began in 1985 as the inflation rate subsided and the tax stimulus took effect, not the late 90's as you stated. This is easily confirmed by a glance at a graph of real GDP over time.
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cicerone imposter
 
  1  
Reply Fri 26 Oct, 2007 04:15 pm
georgeob, You're trying to relate taxation and tax rates to economic growth. That's a very myopic way to look at any economy. The economy of any country has many variables that impacts growth or recession; much of it has to do with the world's economic environment.

It's not isolated by the country and/or state's tax rates. Government fraud can distress economic growth irregardless of the tax rates.
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georgeob1
 
  1  
Reply Fri 26 Oct, 2007 05:45 pm
Not true. I am merely saying the proposition that tax rates have no enduring effect on the economy is patently false.
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cicerone imposter
 
  1  
Reply Fri 26 Oct, 2007 05:56 pm
Can you illustrate this by real time examples?
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spendius
 
  1  
Reply Fri 26 Oct, 2007 06:01 pm
Why does the $ slip a little more nearly all the time.

It hit about £1.30 in 1985 as the recovery from the war and the greedy deals which were suffered in the name of freedom by those who carried the torch on behalf of those who sat by and waited to make a killing and it is now about £2,05 and seems set to continue in that direction with possibly no end in sight.
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dyslexia
 
  1  
Reply Fri 26 Oct, 2007 06:27 pm
during most all of my youth when living over-seas the pound sterling was pegged at $2.40 american
Under continuing economic pressure, and despite months of denials that it would do so, on 19 September 1949, the government devalued the pound by 30%, from US$4 to US$2.80. The move prompted several other governments to devalue against the dollar too, including Australia, Denmark, Ireland, Egypt, India, Israel, New Zealand, Norway and South Africa.

In the mid-1960s the pound came under renewed pressure since the exchange rate against the dollar was considered too high. In the summer of 1966, with the value of the pound falling in the currency markets, exchange controls were tightened by the Wilson government. Among the measures, tourists were banned from taking more than £50 out of the country, until the restriction was lifted in 1970. The pound was eventually devalued by 14.3% to US$2.41 on 18 November 1967
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spendius
 
  1  
Reply Fri 26 Oct, 2007 06:45 pm
Nostalgia dys.

Do you play the violin?
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dyslexia
 
  1  
Reply Fri 26 Oct, 2007 06:50 pm
spendius wrote:
Nostalgia dys.

Do you play the violin?
Yeah i'm like that, I often find that history is larger than last week. Violin? I play the 8-track.
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cicerone imposter
 
  1  
Reply Fri 26 Oct, 2007 07:47 pm
dys, Good observation; to peggy-back on the exchange rate of the US dollar against the English pound, there is also the issue of per capita income in both countries. Seen from "that" perspective, it doesn't make much sense, except from the standpoint of too much dollars floating around in this world without much to back it up.


This is a graph that shows the trend in real wages in the US.
http://img.photobucket.com/albums/v97/imposter222/realwage.gif

This is a graph that shows our debt load.
http://img.photobucket.com/albums/v97/imposter222/debt-total-per-person-1.gif

And finally the trend in the exchange rate of the US dollar.
http://img.photobucket.com/albums/v97/imposter222/exchange.gif

With higher energy costs, we're going to see this trend continue, because Americans are spending more and saving less, our purchase of imported goods will rise (exchange rate disadvantage), and our GDP will suffer as we continue to buy with ever cheaper dollars from future earnings.

The talk of recession will become more common in the pundit's vocabulary as the months trend towards 2008.
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Miller
 
  1  
Reply Sat 27 Oct, 2007 12:45 pm
Clinton wants to tax ALL capital gains at 28%...

Not good...
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Miller
 
  1  
Reply Sat 27 Oct, 2007 12:47 pm
cicerone imposter wrote:
dys, Good observation; to peggy-back on the exchange rate of the US dollar against the English pound, there is also the issue of per capita income in both countries. Seen from "that" perspective, it doesn't make much sense, except from the standpoint of too much dollars floating around in this world without much to back it up.


This is a graph that shows the trend in real wages in the US.
http://img.photobucket.com/albums/v97/imposter222/realwage.gif

This is a graph that shows our debt load.
http://img.photobucket.com/albums/v97/imposter222/debt-total-per-person-1.gif

And finally the trend in the exchange rate of the US dollar.
http://img.photobucket.com/albums/v97/imposter222/exchange.gif

With higher energy costs, we're going to see this trend continue, because Americans are spending more and saving less, our purchase of imported goods will rise (exchange rate disadvantage), and our GDP will suffer as we continue to buy with ever cheaper dollars from future earnings.

The talk of recession will become more common in the pundit's vocabulary as the months trend towards 2008.



Where's the graph of "real wages"?
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cicerone imposter
 
  1  
Reply Sat 27 Oct, 2007 12:56 pm
Miller: Where's the graph of "real wages"?

It's the top right graph.
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Miller
 
  1  
Reply Sat 27 Oct, 2007 01:18 pm
cicerone imposter wrote:
Miller: Where's the graph of "real wages"?

It's the top right graph.


Nothing there but a little box with nothing in it.
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Miller
 
  1  
Reply Sat 27 Oct, 2007 01:19 pm
I see a graph of "debt load".
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cicerone imposter
 
  1  
Reply Sat 27 Oct, 2007 01:50 pm
Miller, Graphs usually do not show "details" of wages, because there is no way to show all existing wages in a graph; it shows trends only. The graph shows that "real wages" have not kept up with inflation. In the real world, some will have gained more and some lost more, and graphs can only show the median or average effect on all wages.
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Miller
 
  1  
Reply Sat 27 Oct, 2007 01:55 pm
Are you talking about the "debt load" graph?
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cicerone imposter
 
  1  
Reply Sat 27 Oct, 2007 02:04 pm
No, but all the graphs are related in one way or another. The decrease in real wages have resulted in a) less savings, and b) more debt.
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Miller
 
  1  
Reply Sat 27 Oct, 2007 02:08 pm
I had to click on the little box, in order to see
the "real wages" graph...Now I have it.
0 Replies
 
 

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