Where is the US economy headed?

The BLS came out Friday with data for May on "Credit Card Balances." For only the 2nd time in 33 months, the balance rose, up $3Bn to $793Bn. Back in June, 2008, the balance was $974Bn.
A couple of *'s:
*A balance is not necessarily a "past due" balance. So the news could mean that people are growing increasingly confident, dusting off their credit cards...or it could mean that they don't have any cash and are having to resort to credit cards to eat.
*The drop in balances from June, 2008, through May, 2011, is largely driven by banks which gave away credit cards like candy writing off balances.
The interest rates banks charge on past due credit cards they issue more judiciously now is down around a 1/2 of a percent, but it is still a very expensive way to borrow (+/- 14%).

If I had to make a wild guess, it's probably a combination of borrowings. Those households that have been saving probably felt it was a good time to buy a car or other big ticket item - and pay off the debt in a month or two, while others felt it was okay to get a loan for a needed vehicle that outlived its useful life - and felt confident enough about their jobs and/or income.

Another cause could have been all the storms that destroyed homes and businesses, and they were somewhat forced to buy the necessities through their credit cards.

I think consumer confidence took a dip during the same period.

To my knowledge all Obama has proposed and all his stimulus package did was to pay the salaries of generally useless government workers. The stimulus paid the wages of numerous state government employees in charge of administering road and infrastructure projects that weren't funded by the cash-strapped states (that's why there were so few "shovel ready" projects). The new proposals from the Administration have mostly involved extended unemployment benefits and various (and generally ineffective) job training programs (as if the government really knows what skills are needed).

Government jobs raise the income requirements of the government by at least the total salary and benefits costs of those employed. That money is either taken out of the economy through taxation or borrowed through bonds sold to Americans and Foreign buyers. To see where this leads just imagine that every worker in the country was employed by the government.

The only sustainable source of revenues for the salaries & benefit costs of government workers is the taxation of individuals employed in the private sector and the corporations that employ them. In short, the only way out of our jobs/government debt crisis is growth in the private sector and new non-government jobs.

Obama proposed nothing that would be effective in meaningful private sector job creation. Alternatively he could call off his EPA zealots and permit the oil pipeline from Alberta; encourage the construction of needed nuclear powerplants; permit oil exploration off the Gulf Coast and in other areas and other like steps ... in short get the stupid government out of the way of economic recovery.

And that will create how many new jobs in the next 6 months to a year?

I'll leave George to defend his own turf, but I think it's a matter of how many jobs are not going to exist down the road (more than six months) in the absence of oil and electricity.

I don't know and neither do you. Let's put it this way, if he hadn't put all these obstacles to economic growth in the way of our recovery in the first place we would be far better off than we are now. If he continues on his current path those jobs will NEVER materialize.

I have been thinking about the economy and how to fix it and create jobs.
The following is based solely on my opinion, so there will not be any links to evidence.

Eliminate NAFTA.
To be honest, I originally supported NAFTA.
But after seeing what it has done to jobs and the economy, I have changed my mind and believe it should be eliminated.
I think it has done more harm then good.

Change the rules regarding international trade.
We run a trade deficit with several countries.
China and Japan being just a couple of them, but I will start with China.
They need our money a lot more then we need their cheap crap.
As far as I know, there is nothing that we import from China that we cant make here, so we give China an ultimatum.
If they wanna play on our court, they play by our rules.
If they refuse, we can simply ban any imports from China.
That would create jobs here in the US.
Also, we tell China that we are going to change the rules. We are going to use their own rules against them, when it comes to imports.
If their rules are more restrictive regarding imports, then our rules will mirror theirs, so that they cannot claim we are being unfair.
We will do that with any country we are running a trade deficit with.

Start demanding cash.
We sell military hardware to countries like Taiwan and Israel, along with several other countries.
From now on, we start demanding cash, instead of credit.

Also, we stop paying for stuff that we havent gotten.
If a military contractor says they can build 100 new airplanes for 100 billion dollars, then the govt shouldnt pay them till all the planes are delivered.
You dont pay for work before its done, so neither should the govt.
They could put the money into the bank and collect the interest, and pay for the work when its done.

The sad thing is that neither party has the balls to even think about this, because they are all to busy worrying about getting re-elected.
So they are all afraid of doing anything.

mm, Have you ever heard of the WTO? They are the arbiter of trade issues around the world. There are 153 members, and the US is a member.

I know full well what the WTO does.
However, there is nothing that says any country has to do business with any other country.
If we choose to not do business with China, England, Canada, or any other country on earth, there is nothing the WTO can do about it.

And, if we decided to mirror another countries trade laws, by using their rules against their imports, how would that be a matter for the WTO?

That's because you don't understand elementary economics. The world is now a world-wide economic system; trying to limit trade with any one of them becomes a problem for everybody.

I am not proposing to limit trade, except as a last resort.

What I am proposing is that we use other countries laws regarding trade against them.
For example...
If Korea says that every vehicle exported to them by the US must be stripped and inspected at the dock in Korea, then we do the exact same thing with the cars we import from there.
What could be more fair then that?
If the law is good enough for them to use against us, then its good enough for us to use against them.

We do that for every country.

That's what the WTO does.

Thats what they are supposed to do.

But like any political organization, they dont often do what they are supposed to.

And even if they did, does the WTO have the authority to make and control US trade laws?
I dont think they do.

How does anybody get that naive?

Getting back to basics; we are a member of WTO. That means, we must negotiate fair trade issues with all countries that are members.

I 100% agree.
And what could be more fair then using another countries own laws against them?
Whatever rules another country has regarding anything imported from the US, we use those exact same rules regarding anything imported from that country.

You said the cars imported to South Korea must be stripped at the dock before they are sold in their country. They pay for the dis-assembly and reassembly of those cars, so what's your beef? That they add cost to the products is their problem, not ours. If South Korea did that with all products, they would stifle their own trade and economy, because it will add cost to consumers in their country. That's a bad trade practice no matter how you cut it. That's Econ 101.

It's really no different than an import tax. It raises the price to the consumer and therefore reduces demand for the imported product (automobiles in this case). I'm sure the unions in South Korea argue that it helps them retain their jobs by reducing foreign competition.

You are essentially arguing for the greater indirect benefits of free trade; something with which I happen to agree. Given that, do you support the Obama Administration's holding up the several free trade agreements negotiated by the Bush Administration just to placate their union paymasters?

Do you recall this headline from June 30th?
Senate Republicans on Thursday blocked (via a boycott - rjb) the Finance Committee from meeting to consider action on three trade agreements that have gained bipartisan Senate support.
We talked about that somewhere on A2K.

As rjb has pointed out, it's not Obama that's holding up the FTA.