NationStates Jolt Archive

Gee, I can't tell you the number of times I've heard people say that the US was, for all intents and purposes, in a dire recession with no hope of getting out.

http://www.breitbart.com/news/2005/12/06/D8EAPBKG1.html

WASHINGTON - The productivity of American workers shot up at the fastest pace in two years during the July-September quarter, helping to ease fears that inflation pressures were threatening to get out of hand. The Labor Department reported Tuesday that productivity, the key component for rising living standards, rose at an annual rate of 4.7 percent during the summer, a big upward revision from the 4.1 percent initial estimate made a month ago.

/yawn

...rose at an annual rate of 4.7 percent during the summer, a big upward revision from the 4.1 percent initial estimate made a month ago.

How much did it rise 'at an annual rate' on the 5th of July?

How much did it rise 'at an annual rate' on the 5th of July?
Interestingly, the effects of the hurricanes seem to have been only temporary.

The economy has grown four quarters in a row, between 3 and 4 percent.

Despite dire predictions to the contrary.

I'm no economist, but I seem to recall that productivity is not the only basis for economic structure. Maybe I'm wrong.

I'm no economist, but I seem to recall that productivity is not the only basis for economic structure. Maybe I'm wrong.
Shall I post the jobs report?

Shall I post the jobs report?
ooohhh! oooohhh!

And the GDP growth! And the unemployment rate!

Shall I post the jobs report?

If you'd like, but it won't help me. Too many people could post too many reports showing our economy in the crapper - such as the jobless rate, homeless rate, etc.

The economy is like Jesus, either you believe or you don't. Facts show both ways.

I am indifferent. I know my budget, how much I earn versus how much I spend, and what I need to do to ensure I don't end up homeless and, really, that's all that concerns me.

The rest of the country will just have to suffer without my opinion on this matter. It's not how I base my vote anyway.

Interestingly, the effects of the hurricanes seem to have been only temporary.

The economy has grown four quarters in a row, between 3 and 4 percent.

Despite dire predictions to the contrary.

yeah, including the (ahem) liberal media.

Dow/NASDAQ/S&P: strong (investor confidence), though there's still a lot of money on the sidelines.

unemployment: fine (fairly low)

Rule: Rising interest rates is generally a sign of a robust economy.

ooohhh! oooohhh!

And the GDP growth! And the unemployment rate!
Well, let's see.

215,000 jobs created in November (for a total through November of 1.7 million jobs this year).
4.5 million jobs created since mid-2003.

The unemployment rate is 5.0 percent.

In annualized terms, the economy grew 4.3 percent larger during the third quarter of 2005, which also happened to be when three massive hurricanes ripped up the Gulf Coast.

Not that I'm disagreeing with you, Kimchi, since I don't know enough about the US economy to argue either point, but wouldn't massive reconstruction efforts actually boost the economy?

Not that I'm disagreeing with you, Kimchi, since I don't know enough about the US economy to argue either point, but wouldn't massive reconstruction efforts actually boost the economy?

It was growing like that GDP-wise for the two quarters before the hurricanes.

(...)If you forget the massive trade deficit Greenspan warned people about many times in the past, the inflation and the housing bubble which is beginning to collapse, then yes. It's a robust economy worth investing in.

Must be nice. The Michigan economy is rather disconnected from the US economy right now, and we're about to experience our 6th straight year of job losses. The best thing economists are saying about the Michigan economy is that it probably won't get much worse.

If you forget the massive trade deficit Greenspan warned people about many times in the past, the inflation and the housing bubble which is beginning to collapse, then yes. It's a robust economy worth investing in.

Housing bubble still holding steady.

And I wonder why foreign investors still think the US is a worthwhile investment...

(...)Sounding like some negative doom preacher isn't my type of debating but an economy resting on several bubbles, an ever increasing oil price and a strong dependency on foreign investment isn't what I (and many others with me) a strong economy worth investing. You see, China and a lot of other banks and individuals invest in the US economy because if they don't, the shit hits the fan. America finances her own existence with money invested by China and others. Two billion a day I believe. Talk about a trade deficit...

Anyway, if people had so much confidence in the (world or US economy, whichever suits you) why is the price of precious metals climbing, gold reaching the 18 year record price of over $500 per troy ounce? Banks and the big time investors don't purchase these goods because they look so damn shiny on the mantelpiece.

Say it ain't so.

Anyway, if people had so much confidence in the (world or US economy, whichever suits you) why is the price of precious metals climbing, gold reaching the 18 year record price of over $500 per troy ounce? Banks and the big time investors don't purchase these goods because they look so damn shiny on the mantelpiece.

Say it ain't so.

I remember when gold was over 800 dollars an ounce. During the Carter Administration.

The economy is like Jesus, either you believe or you don't. Facts show both ways.

I'm *so* adding that to my sig.

Although not constantly at $800, those record prices occurred between the Teheran debacle in 1979, the invasion of the USSR in Afghanistan, the first major oil crisis... Can it get any worse? Still, you can see the same pattern constantly: when the world economy is going down, gold's going up. It's not too difficult to find yourself a scenario for a raising gold price.

It's worth noting the ever increasing demand also raises the price, but that's only minor fraction considering gold mines all over the world cannot keep up with demand and several national banks going to fill up their gold reserves. I believe those are the Russian, South Korean and Argentinian National Banks. Perhaps I miss a few.

I'm *so* adding that to my sig.

Hooray! :D

I remember when gold was over 800 dollars an ounce. During the Carter Administration.

What is your point, that it has been worse before? Why don't you listen to what he said, they are signs that the economy has several weak factors that could become severely detremental. Why do I think it is doing well? People have money and they want to spend it on something (by people I mean investors) they are tired of being scared of stupid shit like 9/11 and hurricanes. I think it also has to do with the Bush's record low approval rating and the negative feedback on the war. These things only serve to weaken his administration and thus prevent him from having too much power. This probably means there won't be any sudden policy changes on his part to affect the economy. Also Greenspan's replacement was actually a good choice and people are bloody jolly about that. I have my money invested in the market right now and I'm not too worried about it. Then again, as many people have said, I am not an economist either. Kimchi also seems to have a chip on his shoulder about proving the "liberal media" has lied and the economy is fantastic. Frankly I just think we're a strong country and the real economists see an opening in the fallout from the Iraq war (since people realize the situation is crap and aren't spooked by it everytime someone dies now) to make a little money. The economy runs a lot on what people percieve and it appears people have finally caught on to all the bullshit so they can get over it and not pull their money out as quickly. Is it booming with no severe problems, hell no, but if we pretend it is than we can get through it.

Anyway, if people had so much confidence in the (world or US economy, whichever suits you) why is the price of precious metals climbing, gold reaching the 18 year record price of over $500 per troy ounce? Banks and the big time investors don't purchase these goods because they look so damn shiny on the mantelpiece..

There's a higher risk of inflation, that's why gold is over $500. However, at the same time inflows in to all other types of securities are strong as well; if anything it is a hedge against inflation and nothing more. Gold will fall if oil prices subside and rise if they go up.

The US economy is fundamentally strong in all measures; however, there are some problems that need to be addressed. The housing bubble has slowed rather than burst, and if we remain vigilant it may be deflated without significant adverse economic effects.

If energy prices remain stable, we should be alright. Employment growth is strong and the economy is expanding with high productivity. We simply can't fix the trade deficit (after all, you can't force people not to buy things), but we can mitigate it if we take steps to balance the federal budget. That provided needed leverage during the 1990's to mitigate the trade deficit.

I don't think anybody who's looked into it claims the American economy is in any sort of recession. It certainly seems to be in a transitional stage, and that always hurts groups of people, but that doesn't mean it's necessarily a bad thing.

The bigger concerns are what that economy is based on, and these are threefold:

1. The American economy is becoming the world's largest reseller. This is the transition I spoke of. This works fine and dandy until your buyers and sellers realize they don't need the middleman. However, the US has positioned itself very strongly in this market, partially by using the IMF to impose liberal trade regimes on economies that aren't truly ready for it yet, and partially through Iraq by ensuring that the oil dollar did not convert to Euros. So the danger here is minimal.

2. The incredibly over-valued American dollar. This is a more serious danger, and is one being supported by both the current administration and the one previous. It works great for bankers and financiers, so does wonders for the GNP, but makes things far more difficult for the few producers left. Part of this over-value is the reason for the current off-shoring of employment, a trend that will continue and strengthen until the dollar is corrected.

3. The trade deficit. Supported by the previous two points, the US has been able to amass a trade deficit never before seen in history. While not outrageous in terms of the GNP, when you realize that the GNP is inflated with money movements rather than production it becomes more concerning. It's also supported, for some investors, by a little bit of fear. As the saying goes, if you owe a few million to the bank, you're in trouble, if you owe a few billion, the bank is in trouble. Well, the bank that is the rest of the world is in serious trouble. Our economies are all tied to America's economy now, whether we like it or not. The problem is that America really isn't producing anything that gives it anywhere near what it's valued. So long as we're all willing to let America continue in that vein, things will work, and the world will get steadily poorer while America gets richer. Fortunately, the world is still much bigger than America, so it may take a while before we realize what's happening.

Unfortunately, at a certain point, the world will realize, and won't want to (or more likely, just won't be able to) continue to fund the trade deficit for America. I just hope the realization comes to people slowly enough that the American economy is allowed to slowly deflate, and hopefully start ramping up production again, rather than becoming a rout that'll bring almost all of us down.