Where is the US economy headed?

the roots go back the the REAGON era, and we all know that Clinton and the Dems of Congress were fully complicit. Best not to attack the GOP for this.

you can't truthfully say that, the employment change situation in June was worse than May, so the recent history is of acceleration. You can HOPE that next month is different, that this is not a trend.

hawkeye, Your negativity is evident; there are more good signs on our economy besides the drop in unemployment rate. You look at one issue, and assume something that's not the sole mover of any economy.

The stimulus plan will take hold in this second half of this year, and continue into next year. The toxic loans that did us in was really not home mortgages but commercial properties. These are news from the past week that also supports the increase in housing starts.

People are still holding onto their money, because they're trying to prepare for the event that they may get laid off of their jobs. The savings rate for Americans have improved dramatically, but its at the expense of less retail sales that makes up 75% of our economy.

Patience is called for; it's not going to be the end of the world - yet.

The unemployment rate is dropping?? Really??

Retail is never coming back to what it was, and the commercial loan situation is not killing the banks yet only because the banks have extended the terms of the loans in the hope that retail does pick back up and the lease revenue picks back up. It will not happen, there is no reason to expect that it will happen, so we know right now that these loans are bad but have not yet been dealt with.

Stop with the label the speaker and dismiss the argument nonsense, deal with facts, support your opinion with facts.

Good afternoon, Hawk. Are you suggesting that the American consumer will go on a diet about buying "stuff" and start saving more over the long haul? That would be a dramatic change in our culture, wouldn't it?

and if they are saving, they are getting precious little for it.

interest rates on 1 year certificates of deposit have dipped to less than 1%.

I had an IRA in a bank savings account that paid me .35c for the month on a $7K balance, so I pulled it out as income for this year.

yes, it is a change in the last 30 years of hyper consumption. You not only have the continuation of the 30 year trend of living wage jobs disappearing, but now you have households tapped out on credit, their wealth reserve (401k and home) has shrink and you have the government needing to raise taxes substantially. Recent history is of the class warfare struggle being won by the rich, so unless this changes the government will be balancing its books on the backs of the middle class and working poor. Discretionary income will continue to shrink rapidly.

We still have a lot of wealth to disappear, because homes at the upper end will not regain their value. The McMansions are too big, too far away from jobs, and unlike the mansions that were cut up during the last depression these are not suitable for reuse as apartments. We have McMansions going at auction for 1/3 of the stated value. This loss of wealth has yet to be accounted for on the banks books. The current owners are in a holding pattern, they pay their mortgage in the hope that they will at some point get out of their property by selling, and not even trying to sell now because they know the market is frozen.

Americans will be making due with less consumption. We have been pigs for a long time so this is not a huge problem, except for those segments of the economy that were dependent upon hyper consumption. We are starting to see them go away, but this reshaping of the landscape has only just begun.

You can pay down your mortgage at get something like 5%. You can pay down your credit card balance and save 8%-20%. This is what people are doing.

Yes, it is a huge change in our culture, but it's this economic shock that gave us no choice. Even then, most Americans think that the stimulus plan signed last February should already have a huge impact on our economy when in fact most of the money hasn't even been distributed. The "I want it today" syndrome is still alive and well. People have very short memories, and fail to comprehend the extent to which this world economic crisis has impacted most everybody.

The roots go back to at least FDR, with his buy now, pay later programs. The Great Society of LBJ also needs to be scrutinized as a big culprit, wherein alot of single women found out it was profitable to have children without fathers. One of the biggest drains and crisis in this country and our economy is the breakup of two parent households. This fact is not publicized, or talked about, because it goes against the grain of the liberal view of the world. Inner cities have become almost akin to war zones, wherein high school dropout rates and drug use are sky high.

okie, Have you ever tried living on welfare? Women do not go out having babies to live on welfare; it destroys their future. Have you no common sense?

I'm talking about people without either of those things.

some folks live off their savings. lots in fact...

(and to answer c i, ...none)

no, the societal debt as a portion of societal GDP did not explode until the early eighties, and it was a direct result of Reagan programs to "unshackle" the economy from government interference. We saw in the seventies the beginning of this trend with the deregulation of the airlines and the railroads, but it was Reagan who took this idea and blew it up.

hawkeye, things like Social Security can flourish for a while, but eventually the cost becomes larger, and as ratio of workers vs retirees decrease, the cost accelerates. Surely you would know that is why the full negative effects of programs like Social Security are delayed and not felt until decades later. The ceiling on wages from which Social Security and Medicare was deducted was drastically increased since the 70's. The price tag is accelerating and will grow much worse before this is all over with.

I would like to see any evidence that you have at all that Reagan's deregulation has caused any of this. I don't think you have any. I think it is directly tied to government intrusion into markets, such as trying to make sure every person could buy a house, whether they were a good credit risk or not. And growing the Social Security and Medicare costs has proven to be a huge drain on the budget, and promising to get worse. And as I said, single parent households and an education crisis have place huge strains on the infrastructure of the American economy, to seek to maintain the standard of living that people have come to expect.

Also, single women having children have decreased, not increased as you stated.

From Christophor Jencks, Professor at Harvard:


okie wrote:

okie, Where do you draw your facts from?

Most Americans think that the government shouldn't be in the business of pushing consumers to borrow more, spend more, and get into debt that they can't afford.

That is exactly what Bush proposed doing after 9/11. And that is exactly what Obama is proposing we do now.

Hawkeye is right that the culture in America needs to change, the government should be embracing that change and helping to redesign the economy based on what people are already choosing to do (save more, spend less). We should not be making credit cheap, bailing out banks so that they lend more money, and giving tax incentives to people who finance new cars/homes.

we have known since the mid seventies that we either needed to save more to pay for what was promised for the boomers re SS, or else change the rules. We could have means tested SS, which would mean that if a person did not need SS for basic survival in old age then they did not get it, that their contribution into the fund become A form of wealth redistribution. Or we could have extended the collection of the tax upwards, instead of only taxing the first $75 k or what ever it is currently. Or we could have raised the tax rate for everyone.

We did nothing but raise the min age for collection a few years. This is not a fault in the concept of SS, this is a failure of the American people to behave responsibly.

Who knows, maybe the flu will save the day, kill enough boomers that we will have enough to pay the rest. At this point, given our refusal to deal with the problem this is the only way this problem gets solved.

Admittedly the internet is tough to find this info, and the Census Bureau does not make it readily found, but the numbers of single parent households has increased markedly since the 1950's, and 1970 for that matter, and the liklihood of them being in poverty is much more likely. Look it up. I will try to find a good graph, but so far not much good luck. I get the feeling the government, and the politicians, do not want to draw attention to this, but it is a huge elephant in the room of economics discussions, an elephant that many people would rather ignore.

Here is an interesting graph, and a statement to summarize: And I believe if I can find data from the 50's, the difference would be even more stark.

"In The United States nuclear families now consititute a minority of households with rising prevelance of other family arrangement such as blended families, binuclear families, single-parent families. Today nuclear families constitute roughly 24.1% of households, compared 40.3% in 1970.[3] Roughly 75% of all children in the United States will spend at least some time in a single-parent household."