Sinking ECONOMY vs. Right-Wing Spin (1 Viewer)

[unlawflcombatnt]

SINKING ECONOMY vs. NEOCON-ARTIST SPIN

Today's GDP report showed the slowest quarterly growth since 2002. Consumer spending was the lowest since 2001. The NeoCon-Artist spin machine was immediately put in high gear following the report.

The immediate response by some was that the economy had just "hit a pothole." A more accurate statement would be it "fell off a cliff." The DECLINE in the Final Sales number to -0.3 from the previous +4.6 is especially worrisome. Also, the huge increase in inventories gives further indication that much of production contributing to GDP was unsold.

Below is a partial copy of today's GDP report from Briefing.com

Here's a link to Briefing.com's GDP report: GDP

Given that consumer spending is 2/3 of all economic activity, the 1.1% change gives further evidence that the economy is slowing down. Christmas spending would be expected to make 4th quarter spending higher, rather than lower. Had the 4th quarter not included Christmas, consumer spending would have been lower still.

With New Home prices declining sharply to a -3.4%, the source of home equity loan spending is also shrinking. Combined with a yearly decline in real hourly wages of 0.49 %, consumer spending can only be expected to decline further. (Wage information can be found at: BLS: Real Hourly Wages )

In 2005, consumers spent 115% as much as they earned. The savings rate has declined to below 0. Can consumers continue to increase spending when their income is declining and the source of their borrowing is declining in value? Will production continue to increase if consumers' ability to purchase that production decreases? Will capital investment increase if purchase of the production it facilitates decreases?

unlawflcombatnt

EconomicPopulistCommentary

Economic Patriot Forum

 

[Kandahar]

The economy is probably cooling off a little bit, but I don't see any reason to believe we're about to enter a recession. I think the biggest problem we need to worry about is inflation rearing its ugly head again; if Iran continues to be belligerent about its nuclear program, oil prices (and therefore ALL prices) will increase.

 

[oldreliable67]

Right-wing, left-wing? Whats that got to do with picking apart the numbers?

Some points:

> Lets see what happened in last month of the 3Q and most likely had lagged effects well into the 4Q? Oh, yeah! Hurricanes! BEA did not estimate the impact for this data, but I suspect that there are some dampening effects.

> Don't forget that this was the Advance estimate for 4Q GDP, meaning that incomplete data (2 months) was used (as usual) in some cases and some other series will be revised as per usual. Early reads on that data that will be revised and/or incorporated suggest modest upward revisions. For this data, two revisions to go, incoporating much more complete data. Next revision is due 2/28. See the 'Technical Note' for info for the components that were estimated.

> It is unrealistic to expect the economy to continue grow at 4 percent and higher rates quarter after quarter. Growth at those rates is simply not sustainable for a mature economy. A slower quarter should be no surprise. The long-term trend growth potential has long been thought to be in about the 2.5%- 3.0% range. Given the number of solid quarters above that range, a quarter, or even two, below that would not be shocking. Now, more than two below that, or should the numbers get into negative territory, well, thats another story!

 

[unlawflcombatnt]

The average of the last 2 quarters' GDP growth was 2.6%, according to economist Dean Baker. If the housing bubble continues to cool, the GDP growth will continue to decline. A cooling housing market means less home equity available for home equity loans, and a reduced contribution from home equity related spending to our economy. Last year's home equity extraction was between $200-300 billion, or 1.7-2.5% of our $12 trillion GDP. Just the direct loss of the spending financed by this money would put our GDP growth at 1%, or even less. And this does not account for any multiplier effect or for loss of income in the home construction industry.

 

[Middleground]

Here's an interesting article in the latest Maclean's magazine.

Is America going broke?

Record deficits, colossal debt and no clear plan for digging itself out. If the U.S. sinks, it will take Canada down with it.

STEVE MAICH

David Walker can see the future, and it scares the hell out of him.

That wouldn't be terribly unusual if he were one of the thousands of lobbyists, legislators and activists crawling all over Washington on any given day, pontificating about the urgency of their pet issues. There is a thriving industry here built on pushing policy prescriptions for every ailment, real or imagined. But Walker isn't a lobbyist or an activist, he's an accountant. His title is comptroller general of the United States, which makes him the head auditor for the most important and powerful government in the world. And he's desperately trying to get a message out to anyone who'll listen: the United States of America's public finances are a shambles. They're getting rapidly worse. And if something major isn't done soon to solve the country's intractable budget problems, the world will face an economic shakeup unlike anything ever seen before.

Seated in his wood-panelled office in downtown Washington, Walker measures his words, trying to walk the fine line between raising an alarm and fostering panic. He cringes when he hears prominent economists warning about a financial "Armageddon," but he makes no bones about the fact the situation is dire. "I don't like using words that are overly inflammatory," he says, leaning forward in his chair. "At the same time, I think it is critically important that the American people, as well as their elected representatives, get a better understanding of just how serious our situation is."

<snip>

http://www.macleans.ca/topstories/world/article.jsp?content=20050307_101541_101541

 

[RightinNYC]

Uh....employment just dropped to 4.7%, we created 2 million jobs in 2005 alone, and GDP for the year stood at 3.6%.

The economy is sinking?

"According to the report, U.S. employers added a net 193,000 jobs in January, short of the roughly 250,000 jobs many economists had been predicting. But that shortfall was muted because the government also revised upward the job-creation data it previously issued for November and December, adding an aggregate 81,000 to the number of jobs created in those months.

The revised data mean the economy has been creating about 229,000 jobs monthly over the past three months, an extremely robust performance.

The latest report also showed that workers' average hourly earnings rose a slightly stronger-than-expected 0.4 percent last month."

http://www.chicagotribune.com/news/...,1,4940418.story?coll=chi-newsnationworld-hed

 

[Middleground]

Uh....employment just dropped to 4.7%, we created 2 million jobs in 2005 alone, and GDP for the year stood at 3.6%.

The economy is sinking?

"According to the report, U.S. employers added a net 193,000 jobs in January, short of the roughly 250,000 jobs many economists had been predicting. But that shortfall was muted because the government also revised upward the job-creation data it previously issued for November and December, adding an aggregate 81,000 to the number of jobs created in those months.

The revised data mean the economy has been creating about 229,000 jobs monthly over the past three months, an extremely robust performance.

The latest report also showed that workers' average hourly earnings rose a slightly stronger-than-expected 0.4 percent last month."

http://www.chicagotribune.com/news/...,1,4940418.story?coll=chi-newsnationworld-hed

You might want to take a gander over here:

http://www.debatepolitics.com/showthread.php?t=7911

 

[danarhea]

Here's an interesting article in the latest Maclean's magazine.

Is America going broke?

Record deficits, colossal debt and no clear plan for digging itself out. If the U.S. sinks, it will take Canada down with it.

STEVE MAICH

David Walker can see the future, and it scares the hell out of him.

That wouldn't be terribly unusual if he were one of the thousands of lobbyists, legislators and activists crawling all over Washington on any given day, pontificating about the urgency of their pet issues. There is a thriving industry here built on pushing policy prescriptions for every ailment, real or imagined. But Walker isn't a lobbyist or an activist, he's an accountant. His title is comptroller general of the United States, which makes him the head auditor for the most important and powerful government in the world. And he's desperately trying to get a message out to anyone who'll listen: the United States of America's public finances are a shambles. They're getting rapidly worse. And if something major isn't done soon to solve the country's intractable budget problems, the world will face an economic shakeup unlike anything ever seen before.

Seated in his wood-panelled office in downtown Washington, Walker measures his words, trying to walk the fine line between raising an alarm and fostering panic. He cringes when he hears prominent economists warning about a financial "Armageddon," but he makes no bones about the fact the situation is dire. "I don't like using words that are overly inflammatory," he says, leaning forward in his chair. "At the same time, I think it is critically important that the American people, as well as their elected representatives, get a better understanding of just how serious our situation is."

<snip>

http://www.macleans.ca/topstories/world/article.jsp?content=20050307_101541_101541

You might want to take a look at how many of those jobs are meaningful jobs. Minimum wage jobs as greeters at Wal-Mart and burger flippers at McDomald's are definitely on the increase. That must be good, since the Bush administration now classifies burger flipping as manufacturing.

 

[RightinNYC]

You might want to take a gander over here:

http://www.debatepolitics.com/showthread.php?t=7911

Are you referring to the post where unlawfulcombatant made an incredibly biased, factually vapid argument and was immediately torn apart by numerous posters for his poor analysis? What exactly were you trying to show me?

 

[RightinNYC]

You might want to take a look at how many of those jobs are meaningful jobs. Minimum wage jobs as greeters at Wal-Mart and burger flippers at McDomald's are definitely on the increase. That must be good, since the Bush administration now classifies burger flipping as manufacturing.

Got a source for that? I'd love to see anything backing that up, cause last I checked, the US was shipping its menial labor jobs overseas and having them replaced by technology jobs which pay more hourly.

 

[danarhea]

Got a source for that? I'd love to see anything backing that up, cause last I checked, the US was shipping its menial labor jobs overseas and having them replaced by technology jobs which pay more hourly.

Actually, that quip was tongue-in-cheek, but was based on Bush's report of 2004, in which he made arguments for counting burger flipping, and other fast food operations, as manufacturing jobs. The suggestion was dropped after Congress and the media went ballistic over it.

However, the basis on which Bush is claiming job creation is the same. Millions of manufacturing jobs have been lost, replaced by low-wage service sector jobs. The low wage jobs are the basis for the Bushevik spin about how the economy is getting so much stronger.

Response based on this article.

 

[Stinger]

You might want to take a look at how many of those jobs are meaningful jobs. Minimum wage jobs as greeters at Wal-Mart and burger flippers at McDomald's are definitely on the increase.

And you have evidence that these are they types of jobs being created?

Maybe you should get some facts

February 3, 2006
Unemployment falls and wages rise as job market shows clear improvement

The nation’s unemployment rate fell to 4.7% in January—the lowest rate since July 2001— and payrolls expanded by 193,000 jobs, according to today’s report from the Bureau of Labor Statistics (BLS). Hourly wage growth also accelerated, up 3.3% over the past year, the highest growth rate since February 2003. Also, the share of the jobless population stuck in long-term unemployment fell to 16.3%, the lowest rate since March of 2002, suggesting an increase in the availability of jobs.................................
Employment in most industries expanded last month. Construction added 46,000 jobs, and continues to be a dependable source of growth, even as the housing market appears to be cooling (a statement by the BLS suggested that warmer-than-usual temperatures last month may have played a role in the job additions). Factory employment was up slightly, by 7,000 jobs, exclusively in durable goods. Interestingly, over the past few months, employment among production workers (as opposed to managers) in manufacturing has grown more quickly than the overall sector, suggesting a possible occupational shift favoring blue-collar workers.



http://www.epinet.org/content.cfm/webfeatures_econindicators_jobspict_20060203

That must be good, since the Bush administration now classifies burger flipping as manufacturing.

I believe you will find those in the service sector.

 

[RightinNYC]

Actually, that quip was tongue-in-cheek, but was based on Bush's report of 2004, in which he made arguments for counting burger flipping, and other fast food operations, as manufacturing jobs. The suggestion was dropped after Congress and the media went ballistic over it.

However, the basis on which Bush is claiming job creation is the same. Millions of manufacturing jobs have been lost, replaced by low-wage service sector jobs. The low wage jobs are the basis for the Bushevik spin about how the economy is getting so much stronger.

Response based on this article.

For that argument to work, you have to prove that the jobs being lost were higher paying than the jobs being created, which you can't do. Kerry tried and failed, there's even a factcheck article about it.

 

[Stinger]

Actually, that quip was tongue-in-cheek, but was based on Bush's report of 2004, in which he made arguments for counting burger flipping, and other fast food operations, as manufacturing jobs. The suggestion was dropped after Congress and the media went ballistic over it.

That's a complete fabrication. From the article YOU cited:

"The report does not recommend that burger-flippers be counted alongside factory workers. "

The entire gest of the article and the report was that the definition of manufacturing can be fuzzy at best. And that those definitions can effect the tax status of some employer expenses.

"Mixing water and concentrate to produce soft drinks is classified as manufacturing," the president's report reads. "However, if that activity is performed at a snack bar, it is considered a service."

No where does the Bush adminsistration say that the person in the snack should be counted as manufacturing or do they suggest changing that.

However, the basis on which Bush is claiming job creation is the same. Millions of manufacturing jobs have been lost, replaced by low-wage service sector jobs. The low wage jobs are the basis for the Bushevik spin about how the economy is getting so much stronger.

http://www.cbsnews.com/stories/2004/02/20/politics/main601336.shtmlOr construction jobs or high paying technology jobs, but if you are bound and determined to be in a manufacturing job then move South where we are begging for people to come work high paying good benifit manufacturing jobs.

 

[oldreliable67]

As noted in an earlier post, the 4Q GDP report was the Advance report which is essentially based on two months of data. Subsequent data for December most always leads to revisions. This morning's mfg sales and inventories data provides one of those missing pieces of December data. In this case, Wholesale sales and inventories for December suggests upward revision to 4Q GDP...

Sales at wholesalers also increased 1% in the month, led by durable goods and petroleum.

Despite the biggest increase in inventories in a year, the inventory-to-sales ratio remained at a very tight 1.15 in December, up from a record low 1.14 in October. The typical wholesaler had 35 days of sales on hand.

Tight inventories should lead to higher production later as wholesalers try to keep up with rising demand by increasing orders to producers, economists say.
[...]
Sales are up 8.3% in the past 12 months. Inventories increased 6.7% year-over-year.

The figures are seasonally adjusted but are not adjusted for price changes.

The bigger-than-expected increase in nonauto inventories implies an upward revision to the initial 1.1% estimate for fourth-quarter gross domestic product growth, said Michelle Girard, an economist for RBS Greenwich Capital. She now expects GDP to be revised to 1.5%. [emphasis added]

Source

A revision to 1.5% is still below long-term growth rates of 2.5% - 3.0%, but after a number of quarters of above-trend growth at 4% or better, its still pretty darned good. Above-trend growth at rates greater than 4% are just not sustainable for any extended length of time.

 

[jfuh]

Bush Inc. in charge, why am I not the least bit surprised of the economy going into the ghetto?
With the GOP still playing trickle down economics.
Who knows though, I was surprised on his SOU. Perhaps this truly will booster basic sciences to back on focusing on practical applications and fundamental sciences as opposed to the rediculous and inconclusive millions spent on genetic sequencing.

 

[jfuh]

Actually, that quip was tongue-in-cheek, but was based on Bush's report of 2004, in which he made arguments for counting burger flipping, and other fast food operations, as manufacturing jobs. The suggestion was dropped after Congress and the media went ballistic over it.

That's a complete fabrication. From the article YOU cited:

"The report does not recommend that burger-flippers be counted alongside factory workers. "

The entire gest of the article and the report was that the definition of manufacturing can be fuzzy at best. And that those definitions can effect the tax status of some employer expenses.

"Mixing water and concentrate to produce soft drinks is classified as manufacturing," the president's report reads. "However, if that activity is performed at a snack bar, it is considered a service."

No where does the Bush adminsistration say that the person in the snack should be counted as manufacturing or do they suggest changing that.



http://www.cbsnews.com/stories/2004/02/20/politics/main601336.shtmlOr construction jobs or high paying technology jobs, but if you are bound and determined to be in a manufacturing job then move South where we are begging for people to come work high paying good benifit manufacturing jobs.

It prooves Danarhea point that much of the so called growth in the manufacturing sect is attributed in the classification of even burger flipping as being manufacturing.

 

[oldreliable67]

the economy going into the ghetto?

And you think that because of what???

 

[ludahai]

The only spin I see in this thread is of the left-wing variety.

Bush inherited a slowing economy from Clinton in the wake of the burst of the dot com bubble. Since then, there has been 9/11, the War on Terror, and Hurricane Katrina, and there is STILL respectable GDP and wage growth.

Having said that, the deficit and debt is a major concern. Entitlement programs and the whole welfare dependency class is a major strain on the economy.

A sampling of public debt:

USA 64.4% of GDP
Canada 68.2% of GDP
UK 42.2% of GDP
Italy 107.3% of GDP
France 66.5% of GDP
Spain 48.5% of GDP
Germany 68.1% of GDP
Japan 170% of GDP!!!!
Taiwan 33.3% of GDP
South Korea 20.5% of GDP

The Apocalyptic statements of US debt are overstated. Too high, yes! But not apocalyptic. If so, Italy and Japan are in far worse trouble than the US. The US is on par with Canada, Germany, and France.

 

[Stinger]

It prooves Danarhea point that much of the so called growth in the manufacturing sect is attributed in the classification of even burger flipping as being manufacturing.

It does nothing of the sort, quite the opposite. It clearly says those types of jobs are NOT counted as manufacturing jobs. The economy remains strong and active with umemployement continuing to fall and over 3% growth in wage and salary's last year

 

[debate_junkie]

I have to admit.. I'm not much of an economist. I know, for me, my wages have increased over the last period of 5 years. Moving from the private sector, to civil service attributes to that. But moreso, for the FIRST time since my husband and I got married, we have a decent amount of money in the bank. We are able to spend a bit more, and not have to worry about where the money for the bills are going to come from. We have no credit card debt, as we pay off the 1 card we have each month.

While I cannot attribute this to any one president, I can attribute this to the fact that I CHOSE to do more for myself and my family. This is America, right? So figuring there are a bunch more of me, and what I've done, isn't what we earn, and what we put into purchases the deciding factor on what this economy does? (and no I'm not being stupid here.. I nearly failed economics in high school LOL)

 

[jfuh]

And you think that because of what???

That's exactly it. I think it. I don't have any facts to completely back me up except for the sudden decline in jobs since 1999. Of course that has much to do with the fact that the IT bubble burst. However other industries should've remained intact. Again though just my opinion.
Then there is the rise of the housing boom, which in most cases responds to a hum dum economy, again just my opion that this is ghetto economy.
Then the historical trend of the economies doing better during democratic administrations then during republican presidencies. Again though just my opinion.
The fact that so many high tech jobs have gone overseas more and more middle class wages have dissappeared. Just an observation.
I'm no economist. I have no idea how to interpret such information other than simply since Bush came to power it seems the economy has become oh hum dum.

 

[ludahai]

That's exactly it. I think it. I don't have any facts to completely back me up except for the sudden decline in jobs since 1999.

Who was president in 1999 and 2000?

The fact that so many high tech jobs have gone overseas more and more middle class wages have dissappeared. Just an observation.
I'm no economist. I have no idea how to interpret such information other than simply since Bush came to power it seems the economy has become oh hum dum.

Clinton was president for the year you cited. You seem to be ignoring the positive economic data over the past three years!

 

[jfuh]

Who was president in 1999 and 2000?

Clinton of course. Following the Asian economic slow down during the late 90's (though still supported....ironically, by China), US IT bubble began to burst around December of 1999 but then really pitted out just as the November presidential election results came in. I guesstimate, and I'm sure some economist will point me wrong, that most investors saw the writing on the wall and the market place chilled.

Clinton was president for the year you cited. You seem to be ignoring the positive economic data over the past three years!

Not really positive IMO, considering that even though there has been job growth, it is also reportedly factual that most of that growth hardly even comes close to replacing the amount of jobs lost in terms of the same income and benefits.
Now the US has the largest deficit in it's history (yes I read your speal on that) and the largest wealth gap in history as well. Rich are getting richer and the poor are getting poorer, the middle class is shrinking considerably and there's a growing population of the poor.
Yeah the US is still #1 in wealth, but as #1 you're really held to higher expectations then any other nation.
Just try looking for a job these days, not that easy.

 

[oldreliable67]

The title of this thread suggests "right-wing spin". One analysis suggests there is some reason to believe that maybe its the "left-wing spin" that should be addressed. The crux of the analysis follows:

Is it any wonder than that a November poll by the American Research Group, a non-partisan polling organization that has conducted monthly economic surveys since 1985, showed 43 percent of Americans thought the economy was in a recession?

In fact, the lack of headlines prompted a search of the Lexis Nexis database to compare magazine articles written about the topic of economic recovery for President Clinton in 1993 and 1994 and for President Bush in 2004 and 2005; years when the economy began to show significant improvements for both presidents.

The search turned up 320 articles for President Clinton and 260 for President Bush. The searches produced articles published by well-known news magazines, financial publications as well as trade publications.

A review of the magazines revealed that far more articles were written about President Clinton in the weekly news magazines whereas the bulk of the articles written about President Bush were found in financial and trade magazines and in right-of-center publications like The National Review and The Weekly Standard.

Most glaring was the disparity in coverage by both US News and World Report and Time Magazine.

Not only did US News and World Report and Time Magazine publish significantly more articles about Clinton, but the tone of the articles was very different, as well.

As an example, Time Magazine published the following articles about economic recovery under President Clinton: "Overturning The Reagan Era," "Picking Up Speed," "Breaking Through," and "Who Needs a Boom?"

At a time when unemployment was at 6.5 percent, and GDP was forecasted to be 3 percent in 1994, Time Magazine wrote, "which would be no boom, but maybe something much better: a pace that could be sustained for a long time, keeping income and employment growing without igniting a new surge in inflation…. The circle (of spending, production and hiring) may not spin fast enough to produce a boom -- but who wants one anyway? Moderate, steady growth is better."

Now compare it to the one Time Magazine article ("How Real is the Squeeze?") written about economic recovery under President Bush. Keep in mind that at the time the article was written GDP grew 3.9 percent in the first quarter of 2004 (which was subsequently revised upward to 4.3 percent) and unemployment was at 5.6 percent.

"Jonathan Thornton finally found a job this spring after six months of unemployment. "My wife and I almost parted ways after 13 years because of the financial strain," he says. When he started work in April as a crane operator at a screw manufacturer in the Cleveland, Ohio, area, Thornton treated his wife Rita to a few little luxuries -- a day at the salon, an evening out with the girls. "My outlook has definitely brightened," he says. But Thornton's optimism goes only so far. His paycheck has grown, but the family is still just getting by…. There's supposed to be an economic recovery under way. But the numbers paint a confusing picture."

So where's the comment that "moderate, steady growth is better," particularly when the GDP growth and unemployment rate were better in 2004 than in 1993?

One would expect that a recovery from a recession would garner as much attention as any previous recovery and at least as much attention as the descent into one.

But it may be that the good news is finally reaching the public. The American Research Group found that in December only 28 percent of Americans believed the economy was in a recession, and 59 percent thought their financial situation was either "good," "very good," or "excellent."

Source.