Where is the US economy headed?

It was a one-trillion plug on a four-trillion hole in aggregate demand. Of course the boost was dismal!


In this case, though, we wanted a hole and didn't get one because because the hole-digging effort was underfunded. It's time to start digging!

Agreed George. The kinds of jobs provided by the stimulus package that many of us saw were short termed jobs, things like repaving sections of highway, some of which were not even all that necessary according to my observation. Once those jobs were done, the jobs were over and the construction guys were laid off again.

The real lasting jobs are in the private sector, and I think we can now see the contrast between the results of the government merely spending money in an effort to stimulate the economy, versus providing tax incentives for business to be able to create jobs and produce real goods and services in a more lasting manner. The latter philosophy was implemented under Bush, and unemployment stayed in the 5% range throughout his presidency.

And the captains of industry will continue to send jobs overseas in the name of fattening their own wallets.

Where is the US economy headed?





National bike to work month; May 12, San Francisco.

Cycloptichorn

Only if Obama get's his way.

Then I take it you disapprove of Obama doing what he is doing: kissing the collective republican ass. How strange!

Why is he doing it?

Year Quarter 1 Quarter 2 Quarter 3 Quarter 4 Annual
2008 207.715 212.903 215.495 208.097 211.053
2009 206.542 209.224 211.001 211.752 209.630
2010 212.879 213.974 214.136 214.878 213.967
2011 217.986

The April number came out yesterday at 221.743 which, if were to hold up, through the quarter would give retirees about a 4% COLA this year.

Good afternoon. I took my laptop into my shop today for its and my tuneup. One employee did a bunch of punching on the computer (de-fragging) after which another re-educated me on moving data from a source to, for example, A2K. That was the post above which is the very important CPI-W. I'll get back to that in a bit.
Yesterday, trustees for Medicare, Medicaid and Social Security released new estimates about (as reported by many in the media) the programs' trust funds would "run out of money."
For Social Security, the date is 2036, one year earlier than projected a year ago. Medicare comes in at 2024, five years sooner then projected a year ago and for Medicaid, particularly for the program assisting disabled, the date is now set for 2018.
"Running out of money" is a misnomer. Rather, the rules state that the various funds must not get into a situation where expenditures for a given year exceed revenues (2036, 2024, 2018). If expenditures do exceed revenues the likely scenario is to reduce benefits by some amount.
That, I guess, is where the debate rages now. We could raise the age at which SS kicks in. We could raise the threshold for high income taxpayers such that they pay more SS Tax then they do now.
We could cap the amount of benefits paid to Medicare recipients or redefine what a disability is, excluding perhaps some people from that program.
The thing that grabs my attention is the Medicare timetable. In one year the timeline for "bad stuff" to happen advanced five years. Does that mean in that two more years, the tipping point could drop from 2024 to 2014? I am not sure that we can fully recover from the Great Recession in two more years.
Which brings me to the post above: the CPI-W (which came out on Friday for April, 2011). This is a huge stat to watch because it determines the Cost Of Living Adjustment (COLA) for Social Security recipients. The 3rd Q number is compared to the 3rd Q number for the year(s) before.
In the 3rd Q of 2008, CPI-W stood at about 215.8 after a spike in gas prices. Then, as the recession set in, the index fell in the 3rd Q of 2009 and 2010. Hence, retirees got no increase in SS for 2010 or 2011. In the 1st Q of 2011, the index came in at 218 and rose to 221.7 in April, 2011. My projection is that gas and food, which are components in the CPI-W, will continue to rise in the next few months and the 3rd Q index will end at 229.8.
229.8 (3rd Q 2011) - 215.8 (3rd Q 2008) = 14 divided by 215.8 = a COLA of 6.5%.
The COLA alone will add about $1,000 to SS checks of the 60Mn retirees. $60Bn a year.
Meanwhile, in the rest of the economy, particularly in the labor sector, average hours and average wages show little increase according to the BLS.
Thank you for anyone bothering to actually read this. I take a certain amount of pride in writing stuff like this myself, for better or for worse rather than cutting and pasting. A major part of my argument is that 2036 seems so far off; so far off that a lot of people and certainly a lot of politicians are quite happy to "study this" until after the next election. But if you do that, the situation gets more dire each year. And even small-e economists like me know that.

The only problem I see with a 4% COLA is that any increase in benefits would a be accompanied by an increase in Medicare premium, which has been frozen for two years. Facing three years' adjustment just might eat up the entire COLA.

So far as raising or eliminating the earnings ceilings on payroll taxes, is it possible there would be a corrosponding rise or elimination in SS benefit limits. If so, the system might become more 'fair' in some sense or other without actually having an effect on the soundness of the system.

Thank you, Roger, for reading my lengthy post. The SS COLA is a "deus ex machina" based on the CPI-W.
I assume you are talking about Medicare Part B deductions. My research, albeit minimal, does seem to show that the 6.5% in SS will be eaten up by increased Medicare premiums.
I must admit I am in denial about Medicare. I turn 65 on May 31st and I have been inundated with stuff, which all goes into a drawer. Unread.

I am going through the same process, rjb. We talked to the Social Security Medicare reps, and were told that if I did not sign up for Medicare that we would put our insurance at risk down the road, that eventually they would find out and very possibly or probably drop our coverage, so I went ahead and signed up. I also went with a supplemental insurance and Medicare Part D, with an agent that we trust, with companies that he recommended. It was frankly a little surprising how much extra that Medicare Part B will cost. I thought Medicare was sold as a free program that we had already paid for in our working years, but apparently not so. I can also tell you that Part D is a disaster, this I know from my experience with my parents. I am aware that this program can be blamed on Bush.

To say the least, the experience leaves a very bad taste for government programs, as it all seems like one huge mess in my opinion. It is no surprise to me that the programs are riddled with fraud and inefficiency, and probably drive the overall cost of medical care and medications up.

Okie Can I joke around with you about being on A government program without you taking offense to it?

It would only be a joke and I really do not mean it because I do think that you are entitled to it!

Go ahead and joke. After all, the programs are jokes. Believe me, I would not have signed up for Medicare if I had much of a choice about it. If I had the choice starting at the beginning, I would probably have kept my 200 grand plus that has been paid into Social Security and Medicare, which would probably be 400 grand plus or more with interest or investment growth by now. I could have then continued purchase of a good insurance program, along with my other retirement funds that I have besides Social Security. One intelligent thing that I did was to realize that Social Security was not to be relied upon as a sole source of retirement income.

Please keep in mind that I do not mean what I say, I just find it amazing all of the different types of philosophy that are used when discussing this matter!

I study many different news sources because I want to know what is being preached to the people!

Is there anyone out there that you would agree with most of the time? Would it be Rush, Neil, Shawn, Glen Beck or any one close to these?

So you went ahead and signed up for Medicare Part B straight away, Okie? A given? But then you went to a trusted agent for Part D and supplemental. That makes sense, I guess, but what do I know. I find it very confusing.

I do have to agree it seems over my head! I just cant wait tell I get old enough to have to sort threw all that garbage

I am an accountant. I worked as a CPA and I have an MBA. I know numbers. But, as Okie notes, the system is a maze that is totally befuddling, particularly to people getting older. Something is wrong here.

It is confusing. And the amount of junk mail received is also a bit disconcerting. Folks must have good databases on people turning 65.

Regarding supplemental medical insurance, I concluded from my experiences with my parents that one needs a good supplemental medical insurance to cover stuff that Medicare does not cover. For example, Medicare will only cover the basic stuff, and I can't tell you what all that is, but one example is that they will not pay for more than certain numbers of days in the hospital or certain minimal costs of some treatements, and then they will cut you loose to pay for the rest of it. Thats where good insurance is crucial.

Regarding Part D, that is prescription drug coverage, and much of that comes down to what medications a person is taking, such as high blood pressure medicine, etc. I think if the list of medications is fairly short, that it is a fairly manageable cost for the insurance. It is optional, but on balance it is probably less expensive to go with the insurance. I am frankly not sure, but that is my conclusion so far. I think there is a window of time once per year that you can enroll or change coverage.

I shared this a few days ago! I do think that we have members on both sides of the isle that are also behaving the same way!

I would rather have people like layman Joe the plumber in his aging years to oversee all parts of government to keep the bull **** out.
I would think that even Okie would do a good job being that he lived a layman life, He knows what it is like to work for a living compared to those who are paid off for different reasons.

Do not get me wrong I do think that even someone like Okie could get it wrong but I do think things could be better!


part1
http://www.youtube.com/watch?v=SKImQ-0BQHE&feature=related

part2
http://www.youtube.com/watch?v=VuhHQWQs2-8&feature=related


part3
http://www.youtube.com/watch?v=juhGMEWZqNk&feature=related

part4
http://www.youtube.com/watch?v=xlk3ltydTlY&feature=related
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