I’m not sure if this should be a great debate, but I’ll ask.
Is the US Enconomy getting worse, or is it actually getter better, just at a very slow rate so it’s not particulary noticable?
The evidence I’ve gathered so far points to “not better yet, at least as a whole”. I’ll point out that some industries may be doing better than others.
Two supporting points:
- The dollar is down by 13% in trade-weighted terms over the past year. [Jan 30th, 2003, Economist Magazine] Doesn’t sound like a healthy economy to me, although exchange rates are kinda’ weird. But when Asia sucks, and Europe is basically stagnant, it’s depressing for the dollar to drop. Sure to help US manufacturing, though…
- Seasonally adjusted unemployment rates in Jan 2002 was 5.6% and by December 2002 had risen to 6.0%.
[Bureau of Labor Statistics per http://stats.bls.gov/news.release/empsit.nr0.htm ] That doesn’t exactly support arguments that the economy is getting better, though it could be much worse.
I ran across the Bureau of Labor Statistics’ “PRODUCTIVITY AND COSTS Preliminary Fourth Quarter and Annual Averages for 2002” and some primitive data mining on my part helped me reach the conclusion that 2002 was OK, in that it sucked less than 2001, but that it was still the second-worst year out of the last ten.
My criteria for this in this case is "Average annual changes in output.
Extensive table to follow:
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Table B. Annual average changes in productivity and related
measures, 1993-2002
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Measure 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
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Business:
Productivity 0.5 1.3 0.7 2.8 2.3 2.6 2.6 3.0 1.1 4.7
Output 3.1 4.9 3.1 4.4 5.2 4.9 4.7 4.1 -0.2 2.6
Hours 2.6 3.5 2.4 1.6 2.9 2.2 2.0 1.0 -1.3 -2.0
Hourly 2.5 2.0 2.1 3.2 3.1 5.5 4.6 6.8 2.9 2.9
compensation
Real hourly 0.0 -0.1 -0.3 0.5 0.9 4.0 2.4 3.4 0.2 1.3
compensation
Unit labor costs 1.9 0.7 1.4 0.4 0.8 2.8 1.9 3.7 1.8 -1.7
----------------------------------------------------------------------
Nonfarm Business:
Productivity 0.5 1.3 0.9 2.5 2.0 2.6 2.4 2.9 1.1 4.7
Output 3.3 4.7 3.4 4.3 5.1 5.0 4.6 4.0 -0.1 2.7
Hours 2.9 3.3 2.4 1.7 3.1 2.4 2.2 1.0 -1.2 -2.0
Hourly 2.2 2.1 2.1 3.1 3.0 5.4 4.4 7.0 2.7 2.8
compensation
Real hourly -0.3 0.0 -0.3 0.4 0.8 3.9 2.2 3.5 -0.1 1.2
compensation
Unit labor costs 1.7 0.8 1.2 0.5 0.9 2.7 2.0 3.9 1.6 -1.8
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Manufacturing:
Productivity 1.9 3.0 3.8 3.5 4.2 4.9 5.1 4.1 0.8 4.6
Output 3.3 5.3 4.3 3.1 6.0 4.7 4.3 2.5 -4.9 -1.0
Hours 1.4 2.2 0.4 -0.4 1.7 -0.2 -0.8 -1.5 -5.6 -5.4
Hourly 2.7 2.8 2.1 1.4 1.9 5.3 4.0 7.4 1.5 3.8
compensation
Real hourly 0.2 0.7 -0.3 -1.3 -0.2 3.9 1.8 3.9 -1.2 2.1
compensation
Unit labor costs 0.8 -0.2 -1.7 -2.1 -2.2 0.4 -1.1 3.2 0.8 -0.7
----------------------------------------------------------------------
In all 3 measured business sectors, output failed to grow at the same rates in 2002 that it did in any prior year except for 2001. And 2001 pretty much sucked by all accounts. [Bureau of Labor Statistics per http://stats.bls.gov/news.release/prod2.nr0.htm]
The 4th quarter was not trending in a positive direction last year, either, as evidenced by the output column in the following table from the same source as cited in the last paragraph. Although it did beat 2001…
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Table A. Productivity and costs: Preliminary fourth-quarter 2002
measures
(Seasonally adjusted annual rates)
----------------------------------------------------------------------------
Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
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Percent change from preceding quarter
Business -0.7 0.9 1.5 4.3 1.8 5.0
Nonfarm business -0.2 0.8 1.0 4.6 2.2 4.8
Manufacturing 0.7 -2.4 -3.0 5.3 2.9 4.6
Durable 3.4 -1.6 -4.8 6.2 3.7 2.7
Nondurable -2.5 -2.9 -0.4 4.3 1.9 7.0
----------------------------------------------------------------------------
Percent change from same quarter a year ago
Business 3.8 3.1 -0.6 4.3 2.0 0.5
Nonfarm business 3.8 3.3 -0.6 4.2 1.9 0.3
Manufacturing 4.5 1.3 -3.1 4.9 2.6 0.4
Durable 6.8 2.3 -4.2 5.4 3.1 -1.3
Nondurable 1.7 0.4 -1.3 4.4 2.0 2.6
----------------------------------------------------------------------------
Ok, I overstated part of the case. “Seasonally adjusted productivity and costs versus previous quarter” for Business and Non-Farm Business are actually positive numbers, but for them to look anything like what most of us are used to (not part of a recession, etc), they’d need to be closer to 3.0% annualized than 0%.
With Business at .9% and Non-Farm Business at .8%, they fail to meet the bill
By the way, I am a pessimist by nature, but I do not enjoy harping on negative economic news. It makes me very sad to do this research and come up with these results. I realize the tremendous pain that being unemployed or underemployed can cause someone.
Instead of statistics and studies I submit another indicator, daily labor pools. These are the agencies that advertise “Daily Work – Daily Pay.” They have sign-up sheets and provide work on a first come first served basis. They open at 5am. But 5am is no longer early enough to get what little work is available. Transients are now sleeping on the doorstep in order to be the first in and thereby be assured work for the day. Non-transients are lining up at 3:30am.
Part of my job in the coin/jewelry store is to buy diamonds and jewelry from the public. And we’re being inundated. And I hear more stories lately(the last 6-9 months) about how bad the economy is for many.
While I’m only talking about Northern Ohio, I think the general economy in the US is sucking worse, day by day. I, also, don’t enjoy saying this. But it’s true.
Don’t rely on one month’s statistic to judge what is happening. The long-term trend is still downward in most indicators. Business just isn’t investing money as yet. They want to see a sustained improvement before they plunk down the money.
samclem:
Funny that we both answer this, and both live in the same town.
Then again, I’m guessing that exposure to NorthEast Ohio economic conditions makes use both very aware of how bad things can get.
For our non-Ohio readers: Akron, Cleveland and vicinity are rust-belt towns, built around a now-decaying American industrial base. The traditional jobs around here have all been sucked overseas.
Well, we are not in a recession, but the economy is growing rather slowly. I just wish wish Bush would quit spending money like a drunken democrat and at least pretend that he’s trying to hold the line on deficit spending.
Oh, and I wish Bush would hurry up and start his war soon, so that gas prices can come back down.
I really don’t think very many people are hurting however, because I keep seeing brand new Lexus’ and Lincoln Navigators on the highway. That and all the brand new 200,000 dollar new homes that they are selling in my neighborhood that are sold out 6 months before construction is complete.
Oh, Hey, Jonathan Woodall, What part of Akron do you live in? I was born and raised there, but havent been back in 20 years.
And I think that much of the bad feelings about the economy is due to the stock market drop. Most working Americans have their retirements tied up in the stock market. When it takes a dive, as it has for the last 3 years, people feel poorer, even though their losses are on paper only. This causes them to pinch their pennies and put off major purchases, which in turn hurts the economy. Its a vicious circle.
I Think with the way the gas prices are going that the economy isn’t going to be up for quite some time. The price of gas effects alot of the businesses in the usa.
I must note that car and home sales are being inflated somewhat by the extremely low interest rates we’re seeing right now. The people who still have jobs are certainly encouraged to go ahead and buy that Lincoln Navigator/etc when they can get 60 months at 0% APR. And my monthly payments do go down by hundreds a month when I can get a mortgage rate at current rates, instead of what we had 5 years ago.
By the way… I’m in Green, OH now. I was formerly in the North Hill district, near Chapel Hill mall.
John Let’s do dinner some night. Just email me. I work at Hartville Coin and Jewelry, just east of Green. Will meet you at Bobby’s Bistro sometime.
handy. I personally dont think the price of gasoline will go much farther. I think we’ve seen the worst of it, unless some catastrophic event involving Iraq.
samclem: You’re undoubtedly right regarding gas prices. A guest I heard interviewed on NPR seemed to believe that for them to substantially go up, we would have to A) engage Saddam and B) have him respond to us by destroying oil fields in not only Iraq but also two or more neighboring countries.
How the h-e-double-hockey-sticks can we lose against him? We haven’t actually lost a fight since… was it Rwanda? And we have more commitment here than in that debacle.
And thanks for the dinner invitation. I’ll write you.
Just read in USNews&WorldReport (I think, or else BusinessWeek) about all the US jobs being exported overseas: software engineering, other engineering, support, architecture, analysis, lots more well-paid American-style brain jobs. They go to countries who have created English-speaking educated specialist populations. China designs a lot of Silicon-Valley type hardware for instance. The magazine asked if all this might not be all that, umm, good for America.
These jobs were of course preceded by a lot of laboring-class jobs like data entry and making clothes.
“That and all the brand new 200,000 dollar new homes that they are selling in my neighborhood that are sold out 6 months before construction is complete.”
Home prices are high & continue selling because people are investing their money in them now as investment instead of the stock market. Odd thing about this idea is that you have someone selling cause they think prices may drop & someone buying cause they think home prices may rise.
All recessions since 1970 have occurred immediately after or during a spike in oil prices.
Follow oil prices, that will tell you what to expect. They are currently going up quickly with no indication that they are coming down soon. In order to come down, the situations in Iraq and Venezula will have to change for the better. And the latter is being completely ignored.
I’ll tell you one thing. I want a house. And I want these stupid house prices to come down. Over the last 5 years, houses in my Metropolitan Statistical Area are up right around 25%… that looks like a bubble to me. So I guess that’s one bubble I wouldn’t mind seeing break.
Housing is the last bubble. And it’s a bubble. What keeps it alive except the lowest interest rates since the post-WWII generation came out and started buying houses?
John. Have patience. You MAY be able to buy a house at a bargain within the next few years. It’s certainly not worth buying in now with the possibility of a crash.
I think that Warren Buffet’s comments today about the stock market(equities) still being overvalued says volumes, although people perceive them to be “way down” currently.