Where is the US economy headed?

And you likewise do not make a convincing case that our economy is "great."

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georgeob1 wrote:

We enjoy a resiliant and adaptive economy that, unlike many in Europe, doesn't protect people from the knowledge of the unwise choices they make. This is, of course, the first step in correcting them.
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huh? With all due respect, could you expound on that?

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It's too bad that you bookended a nice post with logical fallacies.

georgeob1 wrote:

I believe that Cicerone, Cyclo and the others here should do a better job of putting their somewhat hysterical forecasts of economic doom in some kind of rational context.

Here you Appeal to Extremes. I've said that I don't think our economy is healthy or doing well for the majority of those who are in it. That's not the same thing as 'economic doom' at all. Please don't exaggerate our arguments for effect.

Quote:

So far I have seen references to a growing income disparity, low personal savings rates, the negative trade balance and the cost of medical care. None of it, however includes any reference points or comparative data. What, for example, would you guys consider to be a well-performing economy? Can you give me an example of one?

The fact is the United States enjoys one of the world's highest levels of GDP/capita and one of the most flexible, adaptive economies - better able to absorb immigrants and adjust to changing economic conditions than almost all of our major competitors. Compared to other major economies we have relatively low unemployment and high GDP growth rates.

No country is entirely free of economic and social issues. The recent elections in France demonstrate the tensions that can arise as a result in an otherwise rich and prosperous country. Undoubtedly France will deal with these issues to some degree and continue as one of the world's most prosperous countries. The same can be said for the issues we face.

I run an engineering consulting company that employs about 800 people, mostly civil & chemical engineers, Biologists, Chemists, and Geologists. We are in our sixth consecutive year of >10% year over year profit growth. Our principal problem is the difficulty in finding qualified entry level staff and the rising salary levels required to get them. I don't think that these are the signs of a failing economy.

And here at the end you attempt to use Anecdotal Evidence as a sign that the economy is doing well. You really should know better than this.

As for the other points, I'll come back later today and address them; but I think that if you look back over the thread you will see that there have been reams of data presented, in many different formats and judging many different aspects of American life. Just because noone has done so in the last few pages, doesn't make those promoting our side of the argument intellectually dishonest.

Cycloptichorn

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realjohnboy wrote:

georgeob1 wrote:

We enjoy a resiliant and adaptive economy that, unlike many in Europe, doesn't protect people from the knowledge of the unwise choices they make. This is, of course, the first step in correcting them.
.

huh? With all due respect, could you expound on that?

I don't think the concept is either unclearly stated or hard to grasp, but here goes. Relative to many other well-developed economies, ours provides high rewards for education, hard work, and adaptability. As a consequence, we get a lot of these very beneficial behaviors.

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goergeob, When I say the US economy is in trouble, that doesn't include 100 percent of Americans; never has, never will. I'm in the "lucky" group; retired, and with enough assets to last the rest of my lifetime without scrimping on what to eat, where to eat, or where I wish to travel in this world. There are many like me, and many are even much better off than we are. The proof is that some of the richest people in the world are Americans.

What we are talking about are the current "middle class" families trying to survive, and their children trying to find jobs after they graduate from high school or college. One just needs to look at the US Census Reports on poverty (more middle class families falling into provery), US savings rates falling or disappearing, increase in the number of Americans losing their health insurance, increase in defaults on mortgages, the higher cost of fuel, and the so-called job creation during the past six years. It requires about 200,000 new jobs every month to meet the demand from new high school and college grads. The unemployment rates published by the government doesn't even meet the laughter test; it's rediculous to think that only including those who stopped looking for jobs during the past two months is all inclusive or conclusive has to have their common sense questioned.

From my observation of many of our friends and family, many of our adult children are now living with their parents - and that's not by choice.

I left home when I was 17 years old. Our younger son, 40 years old, is still living at home. He graduated college cum laude.

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From achieve.org:

Diploma's broken promise

Once an entry pass into a productive adult life, today's high school diploma represents a broken promise: earning one no longer guarantees that a graduate is ready to compete after high school, either in the college classroom or the modern workplace.

At least 28 percent of students entering two- and four-year colleges immediately need remedial English or math, and more than half will take at least one remedial course before graduating. Yet students taking even a single remedial course are 20 percent less likely to earn a bachelor's degree.
While 70+ percent of high school students enter college, most never complete a degree. Students' preparation in high school is the best predictor of whether they'll end up with a bachelor's degree. The degree-attainment gap between white and minority students shrinks by half when all have taken similarly rigorous courses in high school.
More than 60 percent of employers rate high-school graduates' skills in basic English and math as fair or poor; one study estimates the cost to a single state's employers for remedial training at nearly $40 million a year.

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Cycloptichorn wrote:

georgeob1 wrote:
I believe that Cicerone, Cyclo and the others here should do a better job of putting their somewhat hysterical forecasts of economic doom in some kind of rational context.

Here you Appeal to Extremes. I've said that I don't think our economy is healthy or doing well for the majority of those who are in it. That's not the same thing as 'economic doom' at all. Please don't exaggerate our arguments for effect.

My quoted reference was to the collection of comments by those cited on the preceeding few pages. I believe that overall my description was accurate in that there were no acknowledgements of anything good or healthy in the economy to be found in any of them. Neither were there and comparative references to the incidence of similar or comparative issues in other well-developed economies. In short it was just a litany of what is wrong with all of the impolications that suggests. If any of you had anything less than doom in mind, there were many ways in which you could have said that or just qualified or put in context the negative things you were saying. You did not.

Cycloptichorn wrote:

And here at the end you attempt to use Anecdotal Evidence as a sign that the economy is doing well. You really should know better than this.

As for the other points, I'll come back later today and address them; but I think that if you look back over the thread you will see that there have been reams of data presented, in many different formats and judging many different aspects of American life. Just because no one has done so in the last few pages, doesn't make those promoting our side of the argument intellectually dishonest.

I have found that my experiences and observations from my business operations are indeed a good indicator of how at least several segments of our economy are operating.

I'll concede that I did not consult the early pages of this 130 page thread, but I made it very clear that I was addressing the comments on the immediately preceeding pages.

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cicerone imposter wrote:

From achieve.org:

Diploma's broken promise

Once an entry pass into a productive adult life, today's high school diploma represents a broken promise: earning one no longer guarantees that a graduate is ready to compete after high school, either in the college classroom or the modern workplace.

At least 28 percent of students entering two- and four-year colleges immediately need remedial English or math, and more than half will take at least one remedial course before graduating. Yet students taking even a single remedial course are 20 percent less likely to earn a bachelor's degree.
While 70+ percent of high school students enter college, most never complete a degree. Students' preparation in high school is the best predictor of whether they'll end up with a bachelor's degree. The degree-attainment gap between white and minority students shrinks by half when all have taken similarly rigorous courses in high school.
More than 60 percent of employers rate high-school graduates' skills in basic English and math as fair or poor; one study estimates the cost to a single state's employers for remedial training at nearly $40 million a year.

That is an interesting commentary on the declining standards of a school system locked in the death grip of a self-serving and entrenched bureaucracy and an equally self serving (and often corrupt) union organization. I believe it is also a commentary on the ineffectiveness of the flabby social values we have imposed on the schools themselves. I generally agree with you in these areas.

However I note that these are not really economic issues. Indeed our economy is responding to them correctly. The "graduates" of this system, if they do not take some positive action to develop some truly useful skills, will be penalized by the economy. That is the indispensable first step in inducing people to find a solution. Our economy likewise rewards the hard work and committment of often poorly educated immigrants who are willing to learn adapt and invest in their own futures.

Meanwhile I have a number of ready job openings for entry level engineers, geologists and scientists who are willing to work hard and constructively solve problems. The starting salarys are good and the working environment is challenging and stimulating.

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georgeob, It's obvious you only speak from your own observations and experience; we are speaking in more global terms. Our educational system is directly tied to our economy. If you fail to realize that simple truth, there's no logical reason to continue this discussion.

Here are some stats from the US Census Bureau for 2005 on household income:
Those earning less than $35,000 makes up 38.38% of our working population.
Those earning $35,000 to v$50,000 makes up 14.87% of the working population.
Those earning $50,000 to v$100,000 makes up 29.52% of the working population.
The remaining 17.23% working folks earn over $100,000.

In other words, the majority in our economy was earning less than $50,000 per household in 2005. High in terms of average household income compared to other industrialized countries, but they're not spending more than they earn like in the US with our out of control debt.

If you want to tag that as "doom and gloom" you have my permission.

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Well, given that our GDP per capita is about $45,000 (CIA World Fact Book) the income distribution you gave us indicates that about half of our people do worse than the average and half better. That sounds about right to me. Indeed any other expectation is unrealistic.

Our GDP is growing at a much higher rate than the average for well-developed countries and, at its present level it is one of the highest in the world. Our government debt as a % of GDP is in the normal range for developed countries.

Evidently you believe our consumers are spending too much of their relatively very good and fairly distributed earnings. If that is so there are ample feedback signals which will correct that.

Overall, your evidence doesn't go far in supporting your exaggerated claims.

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georgeob, What other "signal" do you need besides more Americans without health insurance (six million more sinc 2000), higher debt loads, increasing defaults on mortgages, and more difficulty in finding jobs for new graduates? I just don't see the "great" as you do - even though we are still the "richest" country. The question is, how much longer at the current trends?

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Well these situations are dynamic and changing. The real danger occurs when the appropriate feedback signals are masked by government regulatory and welfare programs -- as is the case today in France. I am confident that the pressures to reform our failing educational system will continue, and that college students will quickly begin to make better choices of subjects to pursue and skills to acquire.

Similarly, you should consider the fact that access to mortgage loans for housing is better in this country than anywhere else in the world. While the rate of mortgage defaults is rising, the rate at which new mortgages have risen is even greater -- the number of well performing mortgages has grown faster than the number of defaults. Thus you (and the news media) have been selective and biased in the facts you report and the trends you emphasize.

We are doing very well compared to other countries. To be sure we - like them - have our own social and economic problemns. However even recent history demonstrates that we tend to be more adaptive and willing to change things to meet new problems than many others.

I am optimistic, and you should be too.

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georgeob: Similarly, you should consider the fact that access to mortgage loans for housing is better in this country than anywhere else in the world. While the rate of mortgage defaults is rising, the rate at which new mortgages have risen is even greater -- the number of well performing mortgages has grown faster than the number of defaults. Thus you (and the news media) have been selective and biased in the facts you report and the trends you emphasize.

It is you who is being selective; it now takes much longer to sell homes in the US. This trend is generally true for the US as a whole; of coarse there are exceptions to every generality.

From CNNMoney:

Stuck! Homes sit longer on the market
It's taking longer to sell a house these days. Is this another sign that the boom is over?
By Les Christie, CNNMoney.com staff writer
June 27 2006: 5:28 PM EDT

NEW YORK (CNNMoney.com) -- The tell-tale sign of a stagnating real estate market? When homes for sale start lingering - and that's exactly what real estate brokers and other industry watchers say they're seeing now.

The National Association of Realtors does not maintain national time-on-market figures. But inventory - the number of homes for sale - spiked 37 percent for the 12 months through April 30, the most recent data available.

Homes are staying on the shelf longer.

Languishing in hot markets
There are no official regional statistics for the time homes spend on the market. Here are estimates for local brokers.
Market Time on market Up from
Hanover, NH 125 days 65 days
Napa, CA 60 days 10 days
Phoenix, AZ 60 days 7 days
Miami, FL 35 days 20 days

At the same time, the rate of sales has slowed, so that there is now 6 months worth of supply, up from 4.1 months a year earlier.

All that supply means homes are sitting around longer and that sellers are asking more than buyers are willing to pay -- an indication that prices may have to come down.

From Mortgage Bankers Association:
Title: Mortgage Applications Decrease Slightly in Latest MBA Survey
Source: MBA
Date: 5/16/2007
Contacts:
Name: Phone: Email:
Carolyn Kemp (202) 557-2727 [email protected]
Aleis Stokes (202) 557-2741 [email protected]

--------------------------------------------------------------------------------
WASHINGTON, D.C. (May 16, 2007) ?- The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 11, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 675.5, a decrease of 0.8 percent on a seasonally adjusted basis from 680.7 one week earlier. On an unadjusted basis, the Index decreased 0.6 percent compared with the previous week and was up 13.8 percent compared with the same week one year earlier.

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Oh thats nothing... thats just the sound of the housing market bubble bursting.. or hissing.. either way its hot air.

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Mortgage Defaults Add to Middle Class Squeeze
By Christian E. Weller, Senior Economist, Center for American Progress

December 14, 2006

Contact: Daniella Gibbs Leger
Phone: 202.682.1611

WASHINGTON, D.C. - America's middle class is already burdened by a trifecta of economic pressures: the labor market is slowing, household debt burdens are reaching new record highs, and interest rates have been creeping higher for most of this year. Now comes a distressing new report from the Mortgage Bankers Association, which reported yesterday that delinquencies on mortgages rose sharply in the third quarter of 2006.

Delinquency and default rates on loans and personal bankruptcy rates are still at comparatively low levels?-only 4.7 percent of all loans in the third quarter?-but they have been rising rapidly over the course of this year. Other measures of financial distress are also pointing one way for American families?-up. With all pieces of the trifecta staying in place, rising delinquency rates on mortgages may be the beginning of a trend toward more middle class financial insecurity.

The labor market has been sub par over the last few years. Job growth averaged an annualized 0.5 percent per month for the entire business cycle, which started in March 2001. That is about one-fifth of the average of previous business cycles; only six out of 68 months of this business cycle posted job growth above the average of previous business cycles.

What's worse, job growth has slowed since 2004. There were on average 175,000 new jobs each month in 2004, compared to 165,000 new jobs in 2005 and 149,000 new jobs in 2006?-a drop of 14.6 percent since 2004.

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Cycloptichorn wrote:

Standards of living aren't based upon how big your house is, or how many technological doodads you own, but Security.

Cycloptichorn

So a guy that has all the security money can buy, but is homeless and owns no doodads is a rich man? If you describe security as those things that insure medical care, a retirement, blah, blah, blah, then I guess prison inmates have it made? Maybe we should all go rob a bank and then go out and stand on the corner holding the bag? I will trade a little security for a few other things. Its called freedom, cyclops, and there is no such thing as complete security anyway. We all have about 3 score and ten if we are lucky, and more if we are really lucky.

If you apply your principle to the animal kingdom, the most secure animals live in zoos, and I would not describe them as either happy or rich.

Your assertion is nonsense, cylcops.

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Oh, yeah, some people consider being a prisoner having "security." Nothing like considering a little "freedom" or not being on death row in the mix.

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A nice house and a few electronic doodads are nice too, imposter.

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Not when the majority of Americans purchase those goodies on credit or spend their savings that they will need for their children's college tuition or their retirement.

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okie wrote:

Cycloptichorn wrote:

Standards of living aren't based upon how big your house is, or how many technological doodads you own, but Security.

Cycloptichorn

So a guy that has all the security money can buy, but is homeless and owns no doodads is a rich man? If you describe security as those things that insure medical care, a retirement, blah, blah, blah, then I guess prison inmates have it made? Maybe we should all go rob a bank and then go out and stand on the corner holding the bag? I will trade a little security for a few other things. Its called freedom, cyclops, and there is no such thing as complete security anyway. We all have about 3 score and ten if we are lucky, and more if we are really lucky.

If you apply your principle to the animal kingdom, the most secure animals live in zoos, and I would not describe them as either happy or rich.

Your assertion is nonsense, cylcops.

I'm pretty sure he's referring to economic security Okie, not being holed up in a bunker waiting for the Rapture.

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Where is the US economy headed?

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