Where is the US economy headed?

old europe, You hit it right on the needles head; brand names mean very little in today's market place.

CHINA'S PROBLEM : WHAT TO DO WITH THE SMALL CHANGE ?
------------------------------------------------------------------------
when your country has the world's largest foreign currency reserves ,
what are you going to do with all that cash floating around ?
it looks you have to start investing some of that money rather than keeping it in u.s. treasury notes forever .
nice work if you can get it , as the saying goes !
hbg

hbg, China is headed towards big economic problems not only inside China, but internationally. Their accumulation of paper money only manages to decrease in value the more they hold onto. It's a simple economic principle of supply and demand. They could have prevented this crisis by letting their currency float in the world markets, but instead kept it pegged too low. It's getting to the point that all that paper money they hold can't be spent any time soon too quickly, or they'll lose more value. They're in a bind they built all by themselves.

The unemployment rate drops to 4.5%. As we have discussed, it depends on how you report the news and what statistic you focus on. Depending on which site you look at, they say:

MSNBC: U.S. employers added 97,000 jobs in February
Unemployment rate falls to 4.5 percent, wages up
CNN: "Job growth weakest in 2 years but .."
Fox: Employers Add 97,000 Jobs in February as Unemployment Rate Dips to 4.5 Percent
ABC: Unemployment Rate Dips to 4.5 Percent
NYT: Economic Growth Pace Revised Lower
LAT: Jobless rate down to 4.5% on Feb. growth
Wall Street Journal: U.S. Job Growth Drops to a Two-Year Low

http://www.msnbc.msn.com/id/17534336/
http://money.cnn.com/2007/03/09/news/economy/jobs_february/?postversion=2007030915
http://www.foxnews.com/story/0,2933,258031,00.html
http://abcnews.go.com/Business/wireStory?id=2937524
http://select.nytimes.com/gst/abstract.html?res=F60E14F6345A0C728CDDAA0894DF404482
http://www.latimes.com/business/la-fi-jobs10mar10,1,6392587.story?coll=la-headlines-business&ctrack=1&cset=true
http://users2.wsj.com/lmda/do/checkLogin?mg=wsj-users2&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB117344634221132150.html%3Fmod%3Dhome_whats_news_us

To cicerone, I am virtually certain you will focus on the negative aspects of the stories. I prefer the positive.

okie, You don't understand what the "unemployment rate" represents. It's not the rate of total Americans out of work.

There is good news about the US economy; but there is also bad news and more of it
Posted by Richard Lander 12:07 Thursday 08 March 2007

If last week's market meltdown reflected nervousness about the state of the US economy (as opposed to the yen carry trade, the level of the Chinese stock market or Arsenal's continuing decline and fall) then we should not get too lulled by this week's comparative calm.

US economist Nouriel Roubini today lists (http://www.rgemonitor.com/blog/roubini/181123) five pieces of good news about the US economy but a much much longer list of bad news which leads him to expect:

'A hard landing for the economy starting in Q1 or at the latest, in Q2. This hard landing will certainly be, at a minimum, a painful growth recession and, much more likely, a much more ugly outright recession.'

Here's the five pieces of good news:

* The February manufacturing ISM surprised on the upside going back to a 52.3 level that is the critical contraction level of "50";
* Existing home sales were up 3% in the last month;
* January personal incomes went up 1% while personal spending went up 0.5%;
* Mortgage applications were up 3% in the last week.
* The Conference Board's January index of consumer confidence unexpectedly rose to a level of 112.5.

His bad news lists starts with these five:

* The Q4 GDP growth estimate was revised from 3.5% to 2.2%
* Based on the Q4 growth revision all of the four components of investment fell in Q4: residential investment, business investment in software and equipment, non-residential investment in structures, inventories investment
* Inventory to sales ratios remain high - in spite of the Q4 inventory adjustment - so that further cutbacks of production to reduce inventories will be necessary in Q1 and Q2.
* Durable goods orders were sharply down in January including, most importantly, capital goods orders and shipments, good proxies for current and future investment. At current rates, real investment in software and equipment could be down 10% in Q1 alone. The sharp and unexpected fall in durable goods orders was a crucial trigger for the US stock market sell-off on Tuesday.
* New home sales collapsed 16.6% in January. On the heels of a 14.4% fall in housing starts in January it is clear that the housing recession is worsening.

BUSH WATCH...THE BUSH ECONOMY



"Haven't We Already Given Money To Rich People," Asks Puppet Bush?
"The Price of Loyalty," the book by a former Wall Street Journal reporter [Ron Suskind] draws on interviews with high-level officials who gave the author their personal accounts of meetings with the president, their notes and documents.

But the main source of the book was [former Bush Sec. of Treasury] Paul O'Neill. Correspondent Lesley Stahl reports....

"The thing that's most surprising, I think, is how emphatically, from the very first, the administration had said X during the campaign, but from the first day was often doing Y," says Suskind. "Not just saying Y, but actively moving toward the opposite of what they had said during the election."

The president had promised to cut taxes, and he did. Within six months of taking office, he pushed a trillion dollars worth of tax cuts through Congress. But O'Neill thought it should have been the end. After 9/11 and the war in Afghanistan, the budget deficit was growing. So at a meeting with the vice president after the mid-term elections in 2002, Suskind writes that O'Neill argued against a second round of tax cuts.

"Cheney, at this moment, shows his hand," says Suskind. "He says, 'You know, Paul, Reagan proved that deficits don't matter. We won the mid-term elections, this is our due.'  O'Neill is speechless."

"It was not just about not wanting the tax cut. It was about how to use the nation's resources to improve the condition of our society," says ONeill. "And I thought the weight of working on Social Security and fundamental tax reform was a lot more important than a tax reduction."

" Did he think it was irresponsible? Well, it's for sure not what I would have done," says ONeill.

The former treasury secretary accuses Vice President Dick Cheney of not being an honest broker, but, with a handful of others, part of "a praetorian guard that encircled the president" to block out contrary views. "This is the way Dick likes it," says ONeil....

Everything came to a head for O'Neill at a November 2002 meeting at the White House of the economic team.

"It's a huge meeting. You got Dick Cheney from the, you know, secure location on the video. The President is there," says Suskind, who was given a nearly verbatim transcript by someone who attended the meeting.

He says everyone expected Mr. Bush to rubber stamp the plan under discussion: a big new tax cut. But, according to Suskind, the president was perhaps having second thoughts about cutting taxes again, and was uncharacteristically engaged.

"He asks, 'Haven't we already given money to rich people? This second tax cut's gonna do it again,'" says Suskind.

"He says, 'Didnt we already, why are we doing it again?' Now, his advisers, they say, 'Well Mr. President, the upper class, they're the entrepreneurs. That's the standard response.' And the president kind of goes, 'OK.' That's their response. And then, he comes back to it again. 'Well, shouldn't we be giving money to the middle, won't people be able to say, 'You did it once, and then you did it twice, and what was it good for?'"

But according to the transcript, White House political advisor Karl Rove jumped in.

"Karl Rove is saying to the president, a kind of mantra. 'Stick to principle. Stick to principle.' He says it over and over again," says Suskind. "Dont waver."

In the end, the president didn't. And nine days after that meeting in which O'Neill made it clear he could not publicly support another tax cut, the vice president called and asked him to resign.

With the deficit now climbing towards $400 billion, O'Neill maintains he was in the right. --60 Minutes, 01.11.04

Like that old Indian said, "You can't eat money".

Economy

Bush Administration Fails to Jumpstart Economy
As of May, 2005, there have been 893,000 jobs created over the first 52 months of the Bush presidency - a gain that is due solely to the 917,000 jobs created in the government sector that offset the 24,000 jobs lost in the private sector. Since the Great Depression, no other president who served at least 52 months has overseen a net loss in private sector jobs through this point. In addition to lack of job growth, real weekly and hourly wages have declined since the start of the recession. At a time when middle-class Americans are experiencing stagnant wages and vanishing benefits, CEO pay continues to rise.
Source: Center for American Progress, Economic Policy Weekly, Jenna Churchman, June 6, 2005

We've had those discussions about unemployment rates already, cicerone. You are wrong to say I do not understand it.

In regard to the stock market, market corrections of the magnitude recently experienced are to be expected, and if they did not occur, then you would need to be even more worried. In fact, it could have been a more severe correction and it would not have been surprising.

okie, If you "really" understand what the unemployment rate represents, why are you so upbeat about the 4.5% unemployment rate while the creation of private sector jobs under Bush is the worst since the depression?

I don't really have a dog in this fight, so feel free to ignore me.

Concerning how the unemployment numbers in the States are calculated, I was looking for some numbers to compare unemployment in the US and in Europe. This is from Wiki:



Interesting.

Now carry on.

cicerone, I know people that earn between 20 and 25,000, and when tax time comes, they not only receive everything they paid in income taxes back, but receive an additional around 4 to 5,000, because of the earned income credits and child tax credits. I do not think such tax breaks for low incomes have ever happened to this extent prior to the last few years, with Bush in office. When I was younger and made meager money, I always had to pay something, and never got back more than I paid in.

cicerone, I am curious, do you contend that tax breaks are only for the rich? What do you consider these tax refunds received by low income people? In fact, the people that pay absolutely no income tax, and many receive much back because of the credits, those people are nearly 50% of potential tax payers now.

I want to clarify that I am not necessarily opposed to these tax breaks, because they reward people that work. Millions of these people buy lots of things with these refunds, including paying bills, buying cars, upgrading their homes, and so forth.

I hope you do not mind I cut out the quote to save space, oe. I do find it interesting, but I wish to point something out here. The fact that a percentage of employable adults are not looking for work, and I think it is around one third of the adult population here in the U.S., may not be entirely negative as cicerone argues, but it may simply mean that people are not that bad off. Spouses can quit working, perhaps stay at home with the children, because they do not have to work, they are financially secure. Ciceron interprets most of these people as "giving up," whereas in reality, a large portion of them simply prefer not working because they do not need the money and have other things to do. Of the people I know, that is the case with the vast majority of them. They are not rich, but they choose to go on one income instead of two for various reasons so one drops out of the labor market for months, or years.

I wonder what kind of brain continues to seek out positives in an environment where so many middle class and poor are falling into abject poverty, and the people without health insurance continues to increase every year.

Special.

cicerone, how can you be negative about a country that millions are risking their very skin just to get here?

If you are responsible, study, get a diploma, or diplomas, and work, don't become a drunk or a drug addict, show up at work on time, and work while you are there, and don't quit a week after you start, you will do just fine in this country, trust me.

Quit yer whinin!

Sure. In that case, they aren't included in the unemployment figures in the States. And they aren't included in the unemployment figures in France either.

Other factors lower your unemployment number, too. For example, 1.5% of the available working population are incarcerated. I wonder whether the majority of these people would be financially secure... As it is, they are in prison, and disappear from the unemployment statistics.

But as the comparison shows, giving "unemployment figures" may not be the best way of measuring how the labour market or the economy is doing. US unemployment numbers have always been notoriously low in comparison to European numbers.

Prisons are called "country clubs" here. 3 squares a day, a comfortable bed, tv, reading material, not much hard work, and free health care. And you get to hang out with friends 24/7.

Well, I'm not going to suggest what you should call your prisons......

Apart from all that, the incarceration rate still has an influence on the unemployment numbers, it appears. It's not dramatically changing the numbers, but it's not negligible either.


As an aside re unemployment numbers: I just noticed that, according to the CIA World Factbook, Mexico only has an unemployment rate of 3.2 percent.

okie, I'm not whining for me! I've been retired since 1998, and all I do now is world travel (8 trips last year, and seven planned for this year). It's about our children, our grandchildren and the rest of America that are being put into jeopardy of living the kind of lifestyle we enjoyed during my generation, because Bush has trashed our economy. We're one of the lucky ones, because we saved and our investments have done well. BTW, our savings is multiples of the average American family, and our investment returns is greater than the average income in San Jose, CA (one of the highest in the country), and we don't have a mortgage or car payments; we're quite comfortable, thank you.

Many of us have provided you with facts about our economy, but you have insisted on attempting to paint a pretty picture when more Americans are falling into poverty and losing their health insurance. You refuse to see the effects of this economy on more Americans, but that's because you are "deaf and dumb" to the facts readily available on the internet - and on this thread. That you don't care that more Americans are falling into poverty with higher debt and lower savings rates is beyond comprehension and common sense. You also lack compassion for those suffering within our damaged economy. Your blindness to the realities is pathetic.

c.i. wrote :



the market seems to suggest that a lot of that "paper money" are good old u.s. treasuries . are you telling me to stay away from them :wink:
as a good american should you not encourage the purchase of u.s. treasuries :wink:
i'm planning to wallpaper our living-room , any suggestions as to the pattern to use ?

is this a pattern you can recommend ?
hbg