FOLLOWING THE ECONOMY

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I'm one of those who is interested in the economy as it affects society, but I have very limited ability to understand the numbers which are thrown at the media. What do they mean? How do they compare with the last low period in the general economy? HELP! As time goes by, I will (or others) will post articles. Hopefully, some of our more informed members will tell us whether the numbers are significant, or link us to a more informed source of information.

TO KICK US OFF, will someone summarize or link us to a discussion of the state of the US/EU/World economy as of July 2003?

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The leading media coverage on the world economy has been the unemployment rates. The last major crisis was the SARS outbreak from China that has affected the world economy. How much and how long has not been determined. c.i.

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http://www.abs.gov.au/Ausstats/abs%40.nsf/0/83e530a0df77abb3ca256cbf001721b2/Body/0.18A8!OpenElement&FieldElemFormat=gif

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Unemployment in EU Member States

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Mapleleaf, Good charts on unemployment rates. Be careful about reading too much into those numbers. Most countries underscore their unemployment rates for many reasons, the primary one being that most who could not find employment fall out of the statistics. c.i.

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Seems Australia follows a similar trend line as the US, but I'm not sure why that is. c.i.

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U.S. economy slows, while the rest of the world follows.

Topics covered:
*U.S. Will Avoid Recession
*Europe Alone Provides Momentum
*The Asian Recovery Cools
*Ready to Rethink Japan?
*It Feels Like a Recession

http://www.hawaiibusinessmagazine.com/hb82001/images/hb82001chart1.gif

http://www.hawaiibusinessmagazine.com/hb82001/images/hb82001chart2.gif

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One of the important articles in the link you provided is the claim the Europe's growth surpassed the US, but that was when the Euro had a currency advantage which it no longer has. The value of the Euro increased by over 20 percent over the US dollar during the past year. That will drag Europe's economy to pre-2000 levels against the US. c.i.

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THE HINDU

China, EU hail WTO ruling on US tariffs

Quote:

Beijing, July 12. (PTI): China and European Union were among those who welcomed the World Trade Organisation's ruling that emergency tariffs imposed by US on steel imports were illegal and hoped that Washington would rescind its WTO incompatible measures.

In a joint statement, the eight complainants in the case -- the European Union, China, Japan, South Korea, Switzerland, Norway, New Zealand and Brazil -- welcomed the WTO panel's ruling and called upon the US to "terminate its wto incompatible safeguard measures without delay."

If the US government appeals the panel's decision, the co-complainants will continue to work together to ensure the WTO appellate body confirmed that the US steel duties violate global trade rules, the statement said.

The WTO ruled yesterday that the emergency tariffs imposed by the United States on steel imports were in breach of WTO's global trade rules.

Meanwhile, reports said Washington has decided to appeal against the WTO ruling.

On March 5, 2002, US president George W. Bush introduced the tariffs of up to 30 per cent emergency tariffs on 10 types of imported steels in the name of protecting the ailing US steel industry.

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GWB again shows his ignorance. c.i.

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Re: FOLLOWING THE ECONOMY

Mapleleaf wrote:

I'm one of those who is interested in the economy as it affects society, but I have very limited ability to understand the numbers which are thrown at the media.

The three most important macroeconomic numbers with regard to your question -- the ones that affect large numbers of people -- are per capita GDP, inequality, and joblessness. In the last recession, American GDP fell more, incomes were distributed more equally (but inequality isn't affected much by the business cycle), and joblessness was higher. For the exact figures, I recommend the Statistical Abstract of the United States

Mapleleaf wrote:

TO KICK US OFF, will someone summarize or link us to a discussion of the state of the US/EU/World economy as of July 2003?

The IMF's World Economic Outlook reports, published twice a year, are always a good starting point for this. I especially recommend chapter 1: "Economic Prospects and Policy Issues" These reports also contain lots of background information you will find helpful as you dig deeper into the subject.

-- Thomas

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Good source links, Thomas. Thank you. Will read later when I have time. c.i.

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Thanks Thomas....
Thanks Thomas.....

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Mapleleaf and Thomas: It's about bedtime for this little puppy but I did want to make one comment while on this rarely used site.
It seems to me that there is a radical change going on in the US. People aren't just being temporarily laid-off only to be hired back when the economy recovers. Rather, their jobs are disappearing.
Forever.
Perhaps your links address that. I'll try to wade through them tomorrow.
Thanks and good night.

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Thomas, I looked at some of those trend lines, and what I saw was that their projections are wrong. GDP growth shows over four percent from 2003 through 2005 and beyond, but it's actually decreasing. I believe the world economy is in big trouble, and the safest place for personal investments is in US Treasuries. The stock market doesn't know where it wants to go, because there is nothing keeping the DOW and Nasdaq up at the current levels. The p/e ratios are still too high, and economic outlook for the next several years does not look good. c.i.

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Economic Damage Seen in Asia After Latest Terror Attack

Quote:

Kurt Achin
Hong Kong
06 Aug 2003, 13:22 UTC

AP
Southeast Asian finance ministers are worried that terrorism could damage their countries' fragile economies. Their meeting in the Philippines is being overshadowed by Tuesday's bombing of a hotel in Indonesia.

Indonesia's finance minister canceled his trip to the meeting of Association of Southeast Asian Nations' finance ministers, to help his government respond to Tuesday's terrorist bombing in Jakarta.

The attack killed at least 10 people and wounded more than 100 others. The ASEAN finance ministers Wednesday acknowledged that such attacks could inflict long-term damage on investor confidence in the region.

In her welcoming speech, Philippine President Gloria Arroyo rallied ASEAN members to take a firmer stance on security issues. "The war against terrorism in the region must be pursued without let up through more intensive, multilateral operation," she said.

The venue for the two-day meeting is itself a reminder of the region's security issues. It is being held in Manila's Makati district, just a short distance from where more than 300 Philippine military personnel commandeered a building in a mutiny last week.

Regional finance ministers are expected to discuss ways to tighten financial controls and cut off the flow of funds to terrorist groups such as Jemaah Islamiyah.

JI is suspected of involvement in last October's Bali bombing that killed 202 people. The group appears to have ties to Osama bin Laden's al-Qaida network. Although Indonesian police have not yet named any suspects in Tuesday's bombing, many terrorism experts say JI may be to blame.

The annual ASEAN finance meeting also will focus on regional trade and finance issues, such as smoothing out customs regulations and establishing a regional bond market to attract international capital.

The finance ministers plan to discuss the dilemma they face as China emerges as an economic superpower.

China's ability to undercut production costs in the region has caused direct investment in Southeast Asia to plunge, especially from the United States.

But in the longer run, rising Chinese purchasing power creates opportunities for Southeast Asian exporters. Some Southeast Asian financial leaders want tighter integration with China, arguing that a large Asian trading bloc is needed to offset the power of the United States and the European Union.

ASEAN finance ministers hope to integrate member nations into a regional free-trade zone by the year 2020.

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There has been a lot talk recently saying that China is eating the lunch of American manufacturing workers. It has already emerged as a scapegoat in various 2004 presidential campaigns, including Bush's and Liebermans.

This talk is so widespread and so bipartisan you'd never believe it's almost completely bogus. Manufacturing employment is declining because manufacturing productivity is rising much faster than service productivity. Trade is only one of many factors in productivity growth, and not the most important one. And the consequence of productivity growth is not that the economy as a whole is losing jobs, it is that employment shifts from the manufacturing sector to the service sector.

Yes, the American economy is losing jobs, but that's because the Fed can't reduce interest rates below zero and because the Bush tax cuts are designed not to provide stimulus to the economy when it actually needs it.

Paul Krugman explained the economics behind the issue in two old Slate articles. The accidental theorist explains why productivity growth in one sector reduces employment in that sector but not in the overall economy, Vulgar Keynsians explains, among other things, why employment in the economy as a whole is determined by a country's monetary and fiscal policy, not the balance of trade. Both articles are fun to read while teaching a lot of economic theory. I admire Paul Krugman for the way he does that!

But why would politicians do their homework when it's so much easier to find a scapegoat and bash it?

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Thomas, good evening. I read the Krugman articles and tried to print them out. My computer says it can't find my printer. It's right here next to me, damnit. I must admit that I am not as enamored with his theories as you are. I hope to get back to that when I can get a printout of his articles.
Thomas, I'm having trouble reconciling the last sentence of your second paragraph with your third paragraph.

A Krugman-esk story: Last year I bought two Made-in-the-USA chairs from a factory for $50 each. I set them out on the sidewalk. I sold one of them for $100 but I had to pay my employee $40. So $100 in - $50 out - $40 out = $10 profit.

This year a chair of the same quality, but made overseas, cost $30. I wish I could get $100 for it but I can't. I can only get $60 and I'm only going to sell one because, even at a much reduced price from last year, there isn't a lot of demand. The skilled worker who made last year's chair is now in the "service" industry.
So I'll sell my new chair, but my employee still expects $40.
So now I'm at $60 in - $30 out - $40 out = $10 loss

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(redundant post deleted -- Thomas)

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realjohnboy wrote:

I must admit that I am not as enamored with his theories as you are.

In these particular cases, they're not just Krugman's theories. They're pretty much every other professional economist's theories too. And unlike the theories of the China-bashers in Washington, they 've been tested against the economic facts, and the facts turned out to support them.

realjohnboy wrote:

Thomas, I'm having trouble reconciling the last sentence of your second paragraph with your third paragraph.

Employment in the overall economy is controlled mostly by monetary and fiscal policy, and not at all by the balance of trade. In my second paragraph, I say that yes, productivity is growing, in part thanks to trade -- but that's not the reason American unemployment is rising. In my third paragraph I say that yes, American unemployment is rising, but the trade deficit isn't the reason for that. Does that make it clearer? If not, what do I need to explain?

I'm sorry to hear you are now selling chairs at a loss. But note that from the overall economy's point of view, you are also telling a story of great improvement: This year, American consumers are paying $40 less for their chairs than last year. They can now spend $40 more on other goods or services! The interests of American consumers are just as legitimate as those of American producers, and the interests of American manufacturers are just as legitimate as those of American service providers. So why would America as a whole oppose a trend like this?

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