Are you saying that we are still in a recession? I thought we were supposed to be comparing to previous recoveries!
Hentor: I agree that reading the Dow as an indicator of economic health in the short term can be dangerous.
However, once the Dow does rise, it has beneficial effects in an era when so many people are invested in the market. Remember the ‘wealth effect’? The idea was that when the market was booming, people would see their net worth rising so much that they would leverage it more, spend more, and cause an even greater increase in the economy.
Well, the opposite happened as well. When so many people saw their portfolios get hammered, they lost a lot of confidence. They stopped spending. That increased the magnitude of the slowdown.
But now the Dow has recovered almost half of its peak value. And consumer confidence is coming back in a big way. That’s another great economic number, BTW. Consumer confidence has skyrocketed in the last four months or so. Retail sales are up.
Jshore: Stop nitpicking, will you? No, we’re not in a recession. The point is, I’ve been hearing a lot of people saying how horrible this economy is. It’s not. It’s a period of modest growth with low inflation, low interest rates, and low unemployment. But Democrats have a vested interest in making people think the sky is falling, so people like Krugman are doing flips and twists to make it look a lot worse than it is.
Even the deficit, while much larger than I think it should be, is not that bad in historical terms. As a percentage of GDP, the deficit is only about half as big as Reagan’s deficits.
I’m gonna give you my “Sam” index of the economy.
I buy coins and jewelry, diamonds for a living.
We are INUNDATED with sellers. We are hoping for more buyers. And the sellers ain’t just poor people.
I talked to a buddy in California last week, who’s in the same biz. He’s in San Rafael, not exactly a slum district. He said just what I’ve contributed–Got lines of sellers, at fire sale prices, no buyers.
People who have money today are OK. They don’t need to sell. But the lower 1/3? of the economic base NEEDS to find money.
And Things aren’t getting better for them.
The low interest rates are helping to prop up the economy. If they weren’t there over the last year or more, the US economy would have collapsed.
It’s still all smoke and mirrors. Time will be the final arbiter.
Sam, my own measure of the economy is this:
I have been either gainfully employed by a company or state agency, or running my own business, continuously from April 1971 until June 2001, with obvious gaps ranging from a few days to two six-month holes.
Since two years and two months ago, I have worked only temporarily or as a consultant for my semi-retired ex-boss in cleaning up some aspects of his business.
I’m part of that group that doesn’t show up as “unemployed” – my eligibility, even with extensions and sheer luck in having enough weeks in under NC policy to re-up for a short second round of unemployment, ran out last December.
You can juggle statistics all you like – what I know is, there are no jobs out there with someone with a record of 30 years of steady employment and a wide assortment of skill levels in a variety of diffrent positions. And this is in an area with a supposedly healthy local ecpnomy and substantial growth.
Yes, but you and december still won’t stop spinning…
“Look! Fox News says the economy might not suck as bad as you think! Bush is vindicated!” :rolleyes:
I can’t speak for other industries, but the industry my company is in is really showing signs of remarkable growth–this after two years of shrinking. Our sales are up 25% on this time last year, we can’t fill all of our orders, our customers can’t fill all of their orders. Something has broken loose.
It was due. Manufacturing has been pretty bad for some time.
Julie
Polycarp said:
Samclem said:
Come on, guys. personal anecdotes are irrelevant. The reason I gave the information about my company is because it is one of the largest in the world, and a major driver of the Dow. But whether you know people who are out of work, or your personal fortunes are doing well or poorly, is irrelevant.
During the middle of the dot-com boom, my brother’s industry had been destroyed. He was unemployable. Right now, he’s got far more work than he knows how to handle. So what?
rjung said:
First, I didn’t say Bush was vindicated. Try not to misrepresent my position too much. I said that BUSH would be able to spin the data in his favor. I even said I didn’t like his deficits, and I damned sure don’t like his spending spree. I think the tax cuts have had a modest stimulatory effect, and so do most economists. I think his rampant spending is going to eventually come back and bite Americans in the ass.
And I never quoted Fox News. The numbers I offered were the median estimates of 55 different professional economists.
The people who are being partisan here are the ones who are spinning what looks like a decent recovery into an economic disaster.
Sam, the constant whinging about how everyone who disagrees with your conclusions is “partisan” and “spinning” works strongly against your credibility, as I’d hope you’d understand. One example might be your vigorous historical defense of the Reagan budgets and deficits as entirely necessary things, while now you’re referring to the current deficits as “not as bad” as Reagan’s, and to “the massive bubble of the late 1980’s”. I do wish you’d make up your mind there.
Now, you’ve already had it carefully pointed out to you that unemployment rate numbers as quoted by the Dept of Labor are misleading - they don’t count those who’ve given up even looking. If you look at real people and real jobs, you get things like this (simply the first Google hit
That does accord with the anecdotal evidence you’ve also been presented with. Now, there is certainly a case to be made that corporations, engaged in the steady chase of lowest-cost labor around the world, have seen their share prices bottom out lately and have been able to sustain a certain portion of the economy. But, as John Mace points out, it depends on where you are. The people who do the spending live in fear, and in constant refinancing of mortgages for living expenses. But the equity pool is nearly tapped out, per some other reports, and then what? Consumer confidence, even at government-reported levels, remains very low. And yet those are the consumers on whom recovery and growth depends. The new growth industries that will act as the drivers of the next boom? Where are they?
So yes, the damage appears to have bottomed out for the major corporations and their stockholders. For the rest of us, most of us, it’s hard to understand how anyone could claim in good faith that there’s a real recovery that will really restore stable, growth-oriented jobs, and restore them to us. Or perhaps that’s just more “partisan spin”?
Do you have an example of my saying that Reagan’s deficits were entirely necessary? My position all along (since the actual Reagan years) is that Reagan’s chief flaw was his inability to get government spending under control. His deficits were most definitely NOT necessary.
As for the unemployment numbers, they have ALWAYS undercounted people who were not looking. That’s WHY the below-400,000 number is seen as a sign of actual pickups in hiring. Because reductions in the unemployment numbers when the aggregate number is higher than that is often due to the factor you just mentioned.
And as I pointed out, the reason people who want to bash the economy keep pointing to the job loss number, rather than the overall job number, is that historically, the unemployment rate right now is actually rather low. You want to keep portraying this horrible situation where the ‘rest of you’ are all unemployed and jobs are melting away, fine. The problem is, that doesn’t jibe with a 6% unemployment rate, when ‘full employment’ is today defined at being somewhere around 5%. That is a very small amount of unemployment. Canada, for example, has an unemployment rate of 7.8%. And it’s been as high as 11%.
Now, this board has a disproportionate number of IT types, and IT was particularly hard hit for the simple reason that the tech bubble caused a distortionary demand for IT jobs, and when the bubble burst so did the unsustainably high number of IT jobs.
If there were people here from, say, the housing industry, you’d hear a pretty different story.
…until the housing industry heads south.
And it will. Count on it. It’ll come back to bite you in the ass.
How could the housing industry NOT be good with 1% money?
Sam, the problem with using employment numbers like that while it says the economy isn’t doing so badly it still does absolutely nothing to help Bush. Arguing that things were so well under Clinton that Bush hasn’t managed to put us in a real recession yet isn’t going to help him.
A jobless recovery is exactly the thing that did Bush Sr. in.
Also IT jobs aren’t the ones being hardest hit. Manufacturing is.
Sigh … you used to say that pretty routinely when arguing that Clinton hadn’t done anything, using the Keynesian pump-priming argument. What’s changed?
Except that the job total continues to drop suggesting that there are more “discouraged workers” (the official term) than ever before. If hiring is picking up, how come the numbers don’t show it?
As already explained, the rate is meaningless. The job total, and its trend, matter.
I’m not an IT type or a housing type. Why do you bring that up? Especially when discounting anecdotal evidence, as you insist. I did ask what you thought the new growth-engine industry would be that would fuel the recovery you insist, against all evidence, is already beginning, and you haven’t answered.
jsgoddess, do you mind if I ask what your company does? Just curious.
ElvisL1ves:
Example? My position on Reagan has always been consistent. The deficits were the result of his inability to control spending. The deficits ended not because of tax hikes or spending cuts, but because the economy grew. Recessions do terrible things to government budgets - look at Bush I’s deficit. But Reagan could have cut spending, and didn’t.
Clinton’s surpluses were not the result of tax hikes or spending cuts, but of a red-hot economy that was in the middle of a growth bubble. But you might want to go back and notice that I haven’t been a big Clinton basher. I think he did a decent job with the economy. At least as good as Bush II is doing, and probably better.
That may be, but the under-400,000 number indicates that job pressure is starting to build. At least, that’s what the economists say. And you keep ignoring what you’ve been told about a dozen times in this thread - job creation is a TRAILING indicator of economic performance. Once we see a couple of quarters of solid growth, you’ll start to see a sharp uptick in hiring. Criticising the recovery for being ‘jobless’ at this point is like criticising someone for not spending money before they get paid.
Now, this could still be a jobless recovery - it depends on the kind of growth that happens and how much confidence there is in the business community. But we don’t have any evidence so far to indicate that this will be the case.
Uh, no. The rate is the job total divided by population. If the raw number was what was important, then 400,000 jobless claims a month in Canada would be the same as 400,000 in the U.S. That’s nuts. You simply can’t look at those numbers outside the context of total population, which is why the jobless rate is the key.
And yes, the trend matters, at least for predicting future jobless rates. So it’s a good thing it’s declining.
I brought it up to point out the follow of anecdotal reasoning. A poll of joblessness on this board will give you a very distorted view of the overall labor market. There probably aren’t a lot of carpenters and pipe-fitters here, y’know?
Sorry, I don’t understand your second question. What is the growth engine? Is that it? If so, I would say it’s the typical growth engine you see in other recoveries - lower inventory levels create an increasing in production, fat-trimming during the recession leads to leaner operations, which increases profits when sales increase, and puts growth pressure on companies. Companies that cut too much start to have operational difficulties, and re-hire. More people buy cars, which causes new assembly lines to open. That sort of thing.
I don’t see a ‘growth industry’ like we saw with the dot-coms, and that’s probably a good thing. It means the recovery is broad-based and sustainable.
We make fiberglass. It’s quite a glamorous business. Woo! 
We serve the composites, housing, and automotive industries.
Julie
If you really want to be reminded of your supply-side ideologuism in earlier times, the threads might still be there despite the crashes since. But don’t kid us, or yourself either.
Do you also need reminding of how glorious a historical figure you’ve claimed he was for spending the USSR into disappearance?
For which you have habitually given Reagan the credit, in Clinton/economy thread.
By your own reckoning? I think not. You haven’t been as comical about it as some, but your odd and unquestioning partisanship about a different country’s politics has been the subject of many comments from many people here. The Iraq WMD subject, about which you’re an even stronger believer than Rumsfeld and Wolfowitz, is a case in point.
If budget-balancing and debt payment are as important as you now agree with me that they are, then you could be a little more effusive about it. But whatever.
Depends on which economists you want to listen to, and what “facts” they present, doesn’t it? Repeat: Jobs have been lost, and are continuing to be lost, at a rate not seen since the depths of the Depression. There’s a lot of negative momentum, to use a euphemism, to turn around first.
It’s been a lot longer than that already, and no, we haven’t yet; it’s still getting worse. I haven’t ignored anything but your handwaving.
We don’t have any reason to believe that a “jobless” phenomenon is a “recovery” at all. How do you define the term in the real world, then? Who has “recovered” if the jobs aren’t there?
No, the jobless rate as reported by the US DOL comes from the total of those eligible and able to and looking for work (which has its own detailed definition, not including those who have stopped, not the raw population. I don’t know why you’re missing the point here - the true unemployment rate has to include all of those who want to, and those who want full-time jobs but can get only part-time ones. If the total number of jobs is decreasing, the official unemployment rate can only be low if a large and growing number of people are no longer even looking. Unless you think the US population is shrinking, that is. But perhaps you’re used to fuzzier math up north.
The absolute number of jobs is declining. If the second derivative is reducing, that’s good news only to those with a need to think so.
No, I don’t know. I do know this board’s membership covers the world, and most of the US, with a broad variety of backgrounds here. If you’re not hearing what you want from them, it’s time to reconsider. I did toss that remark in in response to your simply (and haughtily) dismissing the real-world experience of those who did reply, for no other apparent reason than contradicting your Received Wisdom, while presenting your brother’s as real, solid information - and he’s not even in this country, right?
Essentially. You see the economy (however that’s defined) as about to recover. Well, why is that happening? What is the source of this new strength that you see? Nothing, apparently.
Except it’s still hypothetical, too. No, friend, if your truck is stuck in a ditch, you want a big engine to pull it out, not one that will give you better highway mileage if you ever do get it out.
ElvisL1ves, is there any chance you’re going to produce some cites for the stuff you’re claiming about Sam Stone’s past positions? Because while I can certainly see the guy saying things similar to what you’re claiming, it seems only fair to him and your readers that you prove your assertions instead of just relying on your own recollections.
Fair enough. I’ll give it a shot, but can’t promise the threads are still there. Later.
But it was tangential, and everything else I’ve said on this subject stands even without it, so I’ll provisionally withdraw the claim for now.
“historically, the unemployment rate right now is actually rather low.”
The problem is that many economists believe that in the late 90’s the US NAIRU (the rate of unemployement which the economy can sustain without accelerating inflation) fell to 4-5%. Within that context the current unemployment rate is high and is unlikely to fall significantly soon. To lower the unemployment rate you need growth above the trend growth rate so merely growing about 3.5% isn’t enough; that was one of Krugman’s points.
As for the role of the Bush tax plan any big tax cut or big spending increase will tend to stimulate the economy somewhat. However the Bush plan has several features which are less than optimal for that purpose. For instance the bulk of his tax cuts fall in later years and so won’t stimulate the economy much now. However they will raise projected deficits which will tend to raise long-term rates. That appears to be happening now with mortgage rates. This reduces mortgage refinancing which has helped prop up consumption the last couple of years.
A properly designed fiscal stimulus would have focussed on short-term tax cuts and short-term increases in government spending while at the same time trying to control long term deficits. The Bush policies don’t do this; instead they are pretty much the ideological agenda of his party implausibly dressed up as a recession-fighting measure.