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Triple C
10 Jan 14,, 16:59
A record low since Nov. 2008 (http://www.nytimes.com/2014/01/11/business/economy/us-economy-added-only-74000-jobs-in-december.html?hp), says Labor Department. Some economists call it an outlier; some point to the weather; other notes weak fundamentals.

Finger pointing games shall commence. Yes yes yes.

On a serious note: theories?

bonehead
10 Jan 14,, 19:40
I wouldn't get my hopes up or jump out the window because of any single month report being good or not so good. The medium and long term trends give a much better indication.

DOR
11 Jan 14,, 03:36
And then there’s the other way of looking at it:

zraver
11 Jan 14,, 05:25
U6 number is more honest but even it does not account for people no longer attached to the labor force because they've given up. But I never expect you or any krugbot to post honest numbers.

Half a million people gave up.... Of the lucky ones who found jobs- 37,000 of them found only part time jobs. That is what passes for the American dream these days- dreaming of days gone by when being able to keep the light son was a given, not a goal. Mean while krugbots keep fiddling against a flame lit back drop or re-arranging deck chairs to get the best view what they claim is a rising economic tide, not a sinking ship. its so bad that illegal immigration is near zero. The ones here don't want amnesty, they want a bus ticket home....

snapper
11 Jan 14,, 10:22
35117

Labour force participation is now back at 1978 levels but because people are not actually looking for jobs - they have given up or are living on the black economy which is tax free - they are not counted as 'unemployed'; a statistical misrepresentation of the truth that Goebbels would be proud of. Just a little more stimulus? Sure why not! It has proved to make the richest richer and the poorest poorer after all so that must work right?

JAD_333
11 Jan 14,, 19:31
As an isolated indicator, I wouldn't put too much stock in it until we see the next few reports. These numbers tend to bounce around. The trend is more important. DOR's chart shows that clearly.

DOR
12 Jan 14,, 02:17
zraver,

We’ve been through this before (and probably will again): U-6 is not a measure of unemployment the way that most people understand the term. It doesn’t take into account demographic or educational adjustments.

snapper,

Labor force participation rate . . . see above.

In the end, these are only really useful in the context of highly sophisticated modeling. And, right-wing politically motivated talk shows.

zraver
12 Jan 14,, 02:25
DOR, and the unemployment number is not a real reflection of the state of the economy because it counts all non-farm non-seasonal the same. Regardless if they are part time or not. It also only counts those still attached in some way to the labor force, not those who have dropped out. The real headline should have been half a million give up hope.

snapper
12 Jan 14,, 12:06
zraver,

We’ve been through this before (and probably will again): U-6 is not a measure of unemployment the way that most people understand the term. It doesn’t take into account demographic or educational adjustments.

snapper,

Labor force participation rate . . . see above.

In the end, these are only really useful in the context of highly sophisticated modeling. And, right-wing politically motivated talk shows.

Whereas not counting those who are not working as 'unemployed' is not a politically motivated way of cooking the books?

astralis
12 Jan 14,, 23:12
sigh, if U3 is meant to be a "politically motivated way of cooking the books", why does the BLS also release U4/U5/U6 data?

Table A-15. Alternative measures of labor underutilization (http://www.bls.gov/news.release/empsit.t15.htm)

zraver
13 Jan 14,, 01:13
sigh, if U3 is meant to be a "politically motivated way of cooking the books", why does the BLS also release U4/U5/U6 data?

Table A-15. Alternative measures of labor underutilization (http://www.bls.gov/news.release/empsit.t15.htm)

'The media and Whitehouse focus on the U3 when the U6 is a far more accurate reflection of the economy.

DOR
13 Jan 14,, 01:57
zraver
Some may think one man’s labor is more worthy of being counted than another; some may think mere working stiffs don’t deserve the same respect as those with “proper” jobs. I’m not one of those people, and from an economic statistics perspective, neither are unemployment figures.

The media and White House use the same unemployment figures used for decades. To do otherwise would simply invite accusations of manipulation.

More to the point, part-time and full-time work are specifically defined, and calculated over the history of the data. You may not like it, but the unemployment rate it coming down.

Get used to it.

= = = = =

snapper,

Counting the same thing, in the same way, regardless of who is in office or which party is trying to wreck the economy for mere partisan gain is not the problem.

= = = = =

astralis,
In order to facilitate sophisticated economic modeling, governments frequently release data sets that measure something similar, but not identical, to the more common measure. The confusion arises when people unfamiliar with the differences – or motivated to twist the facts to suit their particular political views – pretend that there is some sinister plot afoot.

Doktor
13 Jan 14,, 03:07
The media and White House use the same unemployment figures used for decades. To do otherwise would simply invite accusations of manipulation.

Counting the same thing, in the same way, regardless of who is in office or which party is trying to wreck the economy for mere partisan gain is not the problem.


Can you say the same about measuring inflation?

That said, one month shows nothing and more to the point it still shows creation of jobs, so why the fuss?

zraver
13 Jan 14,, 05:28
zraver
Some may think one man’s labor is more worthy of being counted than another; some may think mere working stiffs don’t deserve the same respect as those with “proper” jobs. I’m not one of those people, and from an economic statistics perspective, neither are unemployment figures.

The media and White House use the same unemployment figures used for decades. To do otherwise would simply invite accusations of manipulation.

More to the point, part-time and full-time work are specifically defined, and calculated over the history of the data. You may not like it, but the unemployment rate it coming down.

Get used to it.

The real un/under employment rate is above 13%. It is not 6.7%. 6x more people gave up on finding jobs that found one. of those who found one, half were part time. Thats the real story from those numbers, not a declining unemployment rate that isn't really declining.

DOR
13 Jan 14,, 07:50
Doktor,

Yes, I can say exactly the same about inflation. If you understand why economists find value in “core inflation,” which omits fuel and food; and you don’t head off on a tangent about “how can you measure inflation based on the assumption that people don’t have to eat or travel,” then using that highly specific measurement can be very useful.

Same for import prices, for example, or the domestic demand deflator. Each has its uses, and sometimes these measures get used for the wrong reasons.

One month shows nothing . . .

35141

Couldn't agree more.

= = = = =

zraver,

We can solve this very easily: call it U-6, and not unemployment. You won't get any arguments from me, and we'll all know exactly what you're talking about.

For the record, U-6 is higher than the unemployment rate, always has been and (by definition) always will be.

snapper
14 Jan 14,, 08:40
snapper,

Counting the same thing, in the same way, regardless of who is in office or which party is trying to wreck the economy for mere partisan gain is not the problem.

I am not partisan when it comes to US politics; Bush was a tool of the corporate interests that seem to run the US today and so is Obama. I deplore both in much the same way and for the same reasons as I deplore the EU and it's behind the scenes distribution of tax payers money to bankrupt banks and corporate lobbyists. State redistribution of capital is inefficient and monetary intervention since 2008 has impoverished the least wealthy.

My problem with US statistics is that every adjustment to the method of calculation - whether it be in GDP as last year, inflation or unemployment is always designed to show a more optimistic picture. We know that less US citizens of working age are working now than in 2012, 2008 or 2000 but yet these misleading statistics show that unemployment is falling. You are misleading your own population and deluding yourselves. It is as if we were living in a new Ice Age yet the Government denies it by classifying 'warm' as -10C so anything above 0C would be positively 'hot' - it doesn't stop people freezing to death.

DOR
15 Jan 14,, 03:05
snapper, didn’t we have this conversation already?

How do you weigh the price change of a telex when they’ve been rendered obsolete? Why should clothing and footwear, which comprised 10.4% of household spending in the 1930s, still be given that weight when it only accounted for 3.5% of spending in the 2000s? If not the 1930s, what period should be used as the "correct" reference point, and why?

In a 1970s consumer price index, what weighting would you give to internet services? (For reference, spending in 1989, the first year of data, was $100 mn, and in 2012, it was $80.7 bn, a 39.7% annual [nominal] increase. The price index, which can only be measured since 1999, fell 30% by 2012.)

Your assertion that US statistics are "always designed to show a more optimistic picture" is pure malarkey, backed up by no evidence whatsoever and completely at odds with both economic and statistical best practices as accepted worldwide.

Get over it.

snapper
15 Jan 14,, 09:09
Your assertion that US statistics are "always designed to show a more optimistic picture" is pure malarkey, backed up by no evidence whatsoever and completely at odds with both economic and statistical best practices as accepted worldwide.

Get over it.

Which explains pretty perfectly why there were less people of working age in employment last year than in 2012 yet 'unemployment' fell. Don't worry though... best practices and all that! Can't question best practices - an area for 'experts' only.

The supreme irony is that our 'liberal' friends in their desire to defend a President who calls himself liberal - and he's coloured so they assume he must be - have defended the rich bankers and corporate lobbyists at the expense of those whom they claim to represent. People like myself however who were against the bank bailouts and have been critical of QE because it has only made the richest richer and the poorest poorer am regarded as a reactionary! It may be time for the 'Liberals' - if they do indeed hold the views they profess - to accept that their President has let them down.

Bigfella
15 Jan 14,, 09:23
and he's coloured so they assume he must be

Guess they were dumb enough to take their cues from conservatives - who continue to make the same link. :rolleyes:

EFP
15 Jan 14,, 12:32
It may be time for the 'Liberals' - if they do indeed hold the views they profess - to accept that their President has let them down.

There are many that are disappointed in what he has achieved so far but certainly must realized that a President is constrained in what he/she can achieve. Besides the whole bank bailout dilemma, can we have a discussion of substance that is not one in which people vent their frustrations but can actually refer to a policy failure?

Triple C
15 Jan 14,, 12:47
The supreme irony is that our 'liberal' friends in their desire to defend a President who calls himself liberal...

Now, now. "Liberals" in the US is a term interchangeable with regular Dem. voter. Since there are only two parties, that label covers a tent with room enough for four to five parties in a parliamentary coalition government. I know "liberals" who took quite a bit of umbrage at aspects of Obama's policy, and there are also a group of "liberals" who thought Obama turned out to be exactly the president they voted for--capitalist at the core with welfare trappings and a rather conventional international agenda. I am sure a lot of "conservatives" were displeased with G.W. Bush as well.

zraver
15 Jan 14,, 14:44
Your assertion that US statistics are "always designed to show a more optimistic picture" is pure malarkey, backed up by no evidence whatsoever and completely at odds with both economic and statistical best practices as accepted worldwide.

Get over it.

Really, when 535,000 people cant find the employment they want, hell 500,000 of them cpuldn;t find any employment and the government says unemployment is going down becuase 35,000 people did find full time employment... That is the pure malarkey.... 92 million Americans are not part of the work force....

PS- the U6 is far close to the real unemployment number than the U3.

snapper
15 Jan 14,, 15:59
There are many that are disappointed in what he has achieved so far but certainly must realized that a President is constrained in what he/she can achieve. Besides the whole bank bailout dilemma, can we have a discussion of substance that is not one in which people vent their frustrations but can actually refer to a policy failure?

I see you are new to WAB - welcome :) - and to the ongoing economics debate here. For some time myself and others have put the 'free market' argument; the low interest rates imposed by central banks contributed directly to the 2008 collapse, that the Obama fiscal 'stimulus' was a failure - the graphs prove it did not create anywhere like the number of jobs that was predicted - and that the monetary stimulus or QE has actually impoverished the poorest through currency devaluation and enriched the richest through asset inflation - seen by successive highs in the stock markets etc... Others such as DOR and astralis, both of whom might describe themselves as 'democrats' argue that in fact everything has been handled pretty well - bearing in mind the seriousness of the problems. They point to the fall inflation and unemployment as proofs of a growing 'recovery' and we counter that the statistics do not show a true picture - hence unemployment fell in 2013 though less people of working age were working so the unemployment statistic alone fell while less people actually had jobs. DOR however is a 'professional economist' informs us that such methods are the "statistical best practices as accepted worldwide". Which does not necessarily mean they are right - just that the world may be full of such statistical misrepresentations of truth.

I hope that brings you up to speed. See past threads particularly one called gold or something started by cyppok.

Julie
15 Jan 14,, 21:36
Being a small business owner and out among the work force on a daily basis, I say the 6.7% unemployment statistic is malarkey. I believe it is around 10-13%.

The Huffington Post even says the 6.7% is low-balling. I usually do not pay much attention to the Huffington Post, but being as they agree with my opinion, I will.

Will the Real Unemployment Rate Please Stand Up? | Jared Bernstein (http://www.huffingtonpost.com/jared-bernstein/unemployment-rate_b_4588623.html)

DOR
16 Jan 14,, 02:47
35155
Really, when 535,000 people cant find the employment they want, hell 500,000 of them cpuldn;t find any employment and the government says unemployment is going down becuase 35,000 people did find full time employment... That is the pure malarkey.... 92 million Americans are not part of the work force....

PS- the U6 is far close to the real unemployment number than the U3.

Cool.
Just call it U-6, and not unemployment and all problems are solved.

snapper
17 Jan 14,, 11:18
DOR

So to be precise then would you agree with zraver and I that between January 2012 - January 2014 U3 and U6 fell but labour force participation also fell? In your view were there more or less people in employment in real terms (ie getting up, going to work and being payed for it) in December 2012 than there were in December 2013?

35172

snapper
17 Jan 14,, 16:41
2013 a good year for property in the US Detroit style; Detroit Real Estate & Detroit Homes For Sale — Trulia.com (http://www.trulia.com/for_sale/Detroit,MI/price;a_sort/)

DOR
18 Jan 14,, 09:57
DOR

So to be precise then would you agree with zraver and I that between January 2012 - January 2014 U3 and U6 fell but labour force participation also fell?

That's what the data say.


In your view were there more or less people in employment in real terms (ie getting up, going to work and being payed for it) in December 2012 than there were in December 2013?

By "real," I assume you mean Seasonally Adjusted, since the term wouldn't make sense if it were to mean "adjusted for inflation." See chart.

astralis
19 Jan 14,, 04:48
snapper,


For some time myself and others have put the 'free market' argument

try not to lower the overall tone of the debate by putting forth this type of insinuation. the overall assumptions of both keynesian and austrian and monetary theories of economics all derive from basic accepted economic theory and maths; it's not marxist economics.

Econman33
19 Jan 14,, 07:47
These numbers will be adjusted.....

snapper
19 Jan 14,, 13:01
snapper,

try not to lower the overall tone of the debate by putting forth this type of insinuation. the overall assumptions of both keynesian and austrian and monetary theories of economics all derive from basic accepted economic theory and maths; it's not marxist economics.

Which is why I put 'free market' in inverted commas to indicate that I meant the term to be understood in a loose manner.

So to continue the subject;


That's what the data say.

This I fear is where the statistical misinterpretation comes in; the assumption is that whatever the statistic say must be right. But the falling labour participation rate feeds into the falling U3 and U6 numbers; less people are counted so less appear to unemployed. In reality though less people are working. Nearly 92m of US citizens are now not working but because they are not claiming unemployment benefits or whatever an increasingly small number are counted as 'unemployed'. This is what I mean when I say the statistics misrepresent the truth. There are lies, damn lies and statistics and sitting behind the pedantic interpretation of the statistics blinds those who still believe government statistic into thinking things are getting better.

DOR
20 Jan 14,, 06:15
Actually, there were 171.7 million people not working last year (314.2 mn population, minus 142.4 mn civilian employment). More to the point, there were 100.8 million people of working age who were not employed, and 88.3 mn of working age not in the labor force.

The statistics represent a “truth” with which you disagree. That’s not the same as the statistics misrepresenting the truth.

Doktor
20 Jan 14,, 06:43
Why 36% of working age are not seeking jobs?

Julie
20 Jan 14,, 07:06
Why 36% of working age are not seeking jobs?Going back to school/college?

Doktor
20 Jan 14,, 07:15
Going back to school/college?

That's a helluva percentage of students.

Julie
20 Jan 14,, 19:06
That's a helluva percentage of students.Aint it. This debate is arguing the correct amount of unemployed, taking into consideration of the baby boomers leaving the work force, people giving up and going back to college.

I would like to get above all of that and find out WHY there are so many millions of people out of work, and not only the unemployed, but the UNDER employed.

The figure is still extremely high no matter how many times you beat it with a bat. The economy is supposed to be doing much better, and the unemployed and underemployed is not reflecting that. So what's up?

bonehead
20 Jan 14,, 19:16
Aint it. This debate is arguing the correct amount of unemployed, taking into consideration of the baby boomers leaving the work force, people giving up and going back to college.

I would like to get above all of that and find out WHY there are so many millions of people out of work, and not only the unemployed, but the UNDER employed.

The figure is still extremely high no matter how many times you beat it with a bat. The economy is supposed to be doing much better, and the unemployed and underemployed is not reflecting that. So what's up?



The economy is doing much better,but no where near the hey day before the fall. Wall Street rebounded nicely but too few jobs trickled down to the middle class and that is where the hold up is. There are many job openings for part time minimum wage and some very specific better paying jobs that few if any qualify for, but the want adds are nearly devoid of basic family wage jobs.

Julie
20 Jan 14,, 19:50
The economy is doing much better,but no where near the hey day before the fall. Wall Street rebounded nicely but too few jobs trickled down to the middle class and that is where the hold up is. There are many job openings for part time minimum wage and some very specific better paying jobs that few if any qualify for, but the want adds are nearly devoid of basic family wage jobs.Thank you.

snapper
20 Jan 14,, 21:12
35202

Why has the stock market hit record highs? $75-85bn per month?

astralis
20 Jan 14,, 21:28
in a nutshell, globalization and technology are long-term drivers of reduced employment.

Doktor
20 Jan 14,, 21:32
in a nutshell, globalization and technology are long-term drivers of reduced employment.

It's overhype, you had tech progress and globalization for a while, it took recession to reduce the employment.

astralis
20 Jan 14,, 23:18
doktor,


It's overhype, you had tech progress and globalization for a while, it took recession to reduce the employment.

well, no. the labor force participation rate has been declining in the US for the past 15 years+, concurrent with the expansion of the global economy. it's certainly no secret that the recession accelerated this process- it didn't start it. moreover, in the US the baby-boom generation has started its retirement process as well.

Julie
21 Jan 14,, 00:54
Here are some excerpts from the Forbes article:


...the “official” unemployment rate doesn’t count discouraged workers who have settled for part-time jobs or have given up looking altogether. Tracking those individuals, under what’s called the “U-6″ rate, gives a very different measure of the nation’s unemployment rate: 14.3%.

...One reason that the U-6 rate remains so high is because it’s so hard to get back into the workforce once you’ve been out for months — whether perception or reality, many employers see these would-be workers as damaged goods.

Essentially, the longer you’re without a job, the less likely it is that you’ll get called back for an interview — by the eighth month of unemployment, the callback rate falls by about 45%.

Those are the ones jumping off your labor force bridge Snapper. And there are lots of them that are not being considered or tracked.

Why The 'Real' Unemployment Rate Is Higher Than You Think - Forbes (http://www.forbes.com/sites/dandiamond/2013/07/05/why-the-real-unemployment-rate-is-higher-than-you-think/)

DOR
21 Jan 14,, 03:45
In nine recessions over the past 65 years, unemployment returned to the previous peak after an average of 8.67 quarters (ranging from 5 to 13 in 1980 and 1991-93, respectively).

The average fall from peak to trough was 1.66%, ranging from -0.44% (1971) to -4.51% (1954).

Those were recessions; what has happened since 2008 is not.

After 28 quarters, employment is still below the peak.
From peak to trough was a fall of 5.4%.

That was no recession, and to expect the recovery to follow any of the post-WWII patterns is simply denying reality. We have exactly one (US) example that might apply, and it isn’t a very good one: the 1930s.

zraver
21 Jan 14,, 06:14
That was no recession, and to expect the recovery to follow any of the post-WWII patterns is simply denying reality. We have exactly one (US) example that might apply, and it isn’t a very good one: the 1930s.

Where once again a Democrat president used massive federal stimulus, currency manipulation and wrong headed thinking about how to stimulate an economy to prolong the pain and delay the recovery.....

snapper
21 Jan 14,, 15:07
That was no recession, and to expect the recovery to follow any of the post-WWII patterns is simply denying reality. We have exactly one (US) example that might apply, and it isn’t a very good one: the 1930s.

Crikey! With 'unemployment' now at 6.7% there might be no 'unemployment' by then! Though maybe that would require just a few more $trillion of fiscal and monetary stimulus...

Stitch
21 Jan 14,, 17:43
Aint it. This debate is arguing the correct amount of unemployed, taking into consideration of the baby boomers leaving the work force, people giving up and going back to college.

I would like to get above all of that and find out WHY there are so many millions of people out of work, and not only the unemployed, but the UNDER employed.

The figure is still extremely high no matter how many times you beat it with a bat. The economy is supposed to be doing much better, and the unemployed and underemployed is not reflecting that. So what's up?

My personal opinion is that most of the "profit" we're making is going to the corporate bottom line (to make the company look more inviting to investors), investors (mostly overseas), and executive payroll; as bonehead said, too few jobs are "trickling down" to the broader economy. The company I work for is making record profits, and our numbers have been climbing like a rocket for the last year, but do I see any of that? I am getting paid exactly the same amount now as I was five years ago, yet my company is making money hand-over-fist; what's wrong with this picture? From my perspective, all of that "excess" money is being re-invested by the company (not a bad thing by itself, but it should be invested in it's employees, not more initiatives), and being paid to upper management (both in the foem of salaries and bonuses), yet none of those "benefits" are making it down to those of us who are "on the ground", or "in the trenches".

I do believe that the American middle class will soon become a minority (if they haven't already), and our economic demographics will eventually look a lot more like a third-world's demographics, rather than that of the richest country on earth (for now).

antimony
21 Jan 14,, 20:17
My personal opinion is that most of the "profit" we're making is going to the corporate bottom line (to make the company look more inviting to investors), investors (mostly overseas), and executive payroll; as bonehead said, too few jobs are "trickling down" to the broader economy. The company I work for is making record profits, and our numbers have been climbing like a rocket for the last year, but do I see any of that? I am getting paid exactly the same amount now as I was five years ago, yet my company is making money hand-over-fist; what's wrong with this picture? From my perspective, all of that "excess" money is being re-invested by the company (not a bad thing by itself, but it should be invested in it's employees, not more initiatives), and being paid to upper management (both in the foem of salaries and bonuses), yet none of those "benefits" are making it down to those of us who are "on the ground", or "in the trenches".

I do believe that the American middle class will soon become a minority (if they haven't already), and our economic demographics will eventually look a lot more like a third-world's demographics, rather than that of the richest country on earth (for now).

I can get down with re-investment; after all, if the company does not do so, then it will no longer be in the running and wioll soon be overtaken by young upstarts.

What I do not tolerate is the fattening of Executive checks at the expense the middle tier. That is actually harmful to the company and the investors. I wish there was some formula to limit Executive pay and tie it formulaicly to overall company revenues.

Doktor
21 Jan 14,, 20:29
I can get down with re-investment; after all, if the company does not do so, then it will no longer be in the running and wioll soon be overtaken by young upstarts.

What I do not tolerate is the fattening of Executive checks at the expense the middle tier. That is actually harmful to the company and the investors. I wish there was some formula to limit Executive pay and tie it formulaicly to overall company revenues.

There is a reason for the huge disproportion before medium and upper management. It's the incentive to work hard to one day become a top dog.

astralis
21 Jan 14,, 21:50
z,


Where once again a Democrat president used massive federal stimulus, currency manipulation and wrong headed thinking about how to stimulate an economy to prolong the pain and delay the recovery.....

do tell, then, how the US economy recovered from the Great Depression.

zraver
21 Jan 14,, 22:50
z,



do tell, then, how the US economy recovered from the Great Depression.

It recovered on the back of a massive upsurge in exports, not road and damn building. It was British, French and American factory orders not the CCC that ended the great Depression. Unemploymet was at 19% in 1938 and had dropped to 14% its lowest level since 1929 by 1940- after the war began in Europe but before the draft and the biggest of the US orders.

DOR
22 Jan 14,, 02:09
It recovered on the back of a massive upsurge in exports, not road and damn building. It was British, French and American factory orders not the CCC that ended the great Depression. Unemploymet was at 19% in 1938 and had dropped to 14% its lowest level since 1929 by 1940- after the war began in Europe but before the draft and the biggest of the US orders.

Exports, huh?

zraver
22 Jan 14,, 05:04
Exports, huh?

Yup... Exports jumped a billion dollars a year (once again you cut off data... odd that) In addition to that billion were billions more in orders that spurred domestic consumption as factories were built and re-tooled and they hired... One source- In 1938 the US GDP was about 95 billion. By 1941 it was pushing 120 billion a 25% expansion in 2.25 years ( late 39, 40 and 41). In another GDP (2009 dollars) 1938 1.08 trillion. By the end of 1941 1.49 trillion a 40% expansion of the economy. More economic expansion in 2 years of feeding and equipping the allies than in all previous FDR years of public works.

astralis
22 Jan 14,, 06:07
z,


It recovered on the back of a massive upsurge in exports, not road and damn building. It was British, French and American factory orders not the CCC that ended the great Depression. Unemploymet was at 19% in 1938 and had dropped to 14% its lowest level since 1929 by 1940- after the war began in Europe but before the draft and the biggest of the US orders.

interesting take. that leaves several questions:

- how did the US economy grow from 1932-1937? in fact, by 1937-- before the big war orders came in after the munich debacle-- the US GDP was already larger than pre-Depression level.
- what happened in mid-1937 that caused a collapse?
- how can -every- nation export their way out of a depression?

here's a more complete graph of what DOR wrote; no big surprises. US exports actually dipped after 1941, yet the economy continued to grow at a blistering pace. why? yet another question; if exports are so central to having gotten the US out of the Great Depression, how is it despite the historically unprecedented export boom of 1945-1946, there was a recession in 1945?

exports are important to a recovery, no doubt about it. even in the special example of the Great Depression, though, where almost by definition all international trade was cut off in a bunch of tariff wars only to be revised by the frantic war-gearing of the late 30s, it's important to put things in context. in the equation C + I + G + (X-M), you're trying to make (X-M) the main driver. that wasn't the case even in the 30s (look at the size of exports vs the overall size of the economy); that simply isn't the case today, when the national economy is so much bigger. moreover by definition not everyone can be an exporter.

snapper
22 Jan 14,, 17:47
There should be another driver in your aggregate demand calculation; credit expansion - also known as debt. Aren't we a little off topic though?

astralis
22 Jan 14,, 22:15
snapper,


There should be another driver in your aggregate demand calculation; credit expansion - also known as debt.

heh, in economic theory terms your focus on that makes you a post-keynesian. :) funny thing is that the austrian school which your beliefs are closest to doesn't even recognize there's a thing called aggregate demand.

but to not complicate things too much, debt is accounted for in the equation in either C, G, or I.

i'm glad you pointed that out. knowing that the US expanded her federal debt from 15% in 1929 to 106% by 1946, it's not too hard to tell what drove US GDP, G or (X-M).

and if it were true that public spending ALWAYS crowds out private spending, why was the US standard of living/GDP per capita far higher in 1946 than it was in 1929? and if the government spending can only act as an "artificial stimulant", why did US GDP/GDP per capita keep on growing without fail afterwards?

Julie
22 Jan 14,, 23:28
There should be another driver in your aggregate demand calculation; credit expansion - also known as debt. Aren't we a little off topic though?I don't think this is off topic because it is interesting how this long and dismal recovery is similar to the Great Depression. I do believe the markets have recovered, but the trickle down has not occurred due to many things each of you have touched upon.

I projected the housing market would take 8-10 years to get its footing, and that effects many trade jobs, builders, roofers, plumbers, electricians, etc., which were very hard-hit by the housing market crash, and even though new home building is beginning, it's not anywhere near where it should be to put these tradesmen back to work, not to mention the small businesses that completely went out of business. There were many of them here.

So, with that said, I don't feel this is off topic at all.

DOR
23 Jan 14,, 02:55
Yup... Exports jumped a billion dollars a year (once again you cut off data... odd that) In addition to that billion were billions more in orders that spurred domestic consumption as factories were built and re-tooled and they hired... One source- In 1938 the US GDP was about 95 billion. By 1941 it was pushing 120 billion a 25% expansion in 2.25 years ( late 39, 40 and 41). In another GDP (2009 dollars) 1938 1.08 trillion. By the end of 1941 1.49 trillion a 40% expansion of the economy. More economic expansion in 2 years of feeding and equipping the allies than in all previous FDR years of public works.

Zraver,

Sorry, I didn’t realize the Great Depression you were referring to started before 1929 . . . or, are you thinking of one that ended after 1940? Must be some other Great Depression, since the only one I can think of occurred within that time span.

I had to make this chart in PowerPoint, since the data are not in the Fed’s modern website. In fact, I had to punch in every number by going through pdf copies of Survey of Current Business (lovely collection back to 1922 can be found here: ArchivaL Federal Reserve Economic Data - ALFRED - St. Louis Fed (http://alfred.stlouisfed.org/) ). There’s an off-chance I’ve mistyped a number, but since there isn’t any obvious break in the pattern, I’ll call it good enough for the purposes of this discussion.

Note that exports didn’t reach the mid-1927 level even in mid-1941. Remember, we weren’t the only economy in depression so to expect others to buy what we couldn’t consume ourselves is a bit of a stretch. Remember, too, that exports don’t drive economies; NET exports do, and we ran some deficits in the period under question. That slows growth.

Still, it’s true that GDP reached $126.7 billion (nominal) in 1941. That’s up from $103.6 billion in 1929, and the first year in 13 that GDP topped the pre-Depression level. The bottom was $56.4 billion, in 1933.

It’s also true that the real growth rate from 1933 to 1941 was 88.2%, but that masks the important information: the economy was in a massive depression.

How did the economy grow in the 1932-37 period? It wasn’t private consumption, which shrank in real terms from 84.7% of GDP to 75.9%. Export expansion, from 2.8% to 3.1% isn’t enough to make a difference, and imports (from 4.3% to 4.7%) neutralized much of the benefit.

Nope, it was gross fixed capital formation, which increased from 1.8% to 9.9%. Now, we don’t have a break-down for public vs. private, but it isn’t hard to connect the dots.

What happened in 1937, and caused a 33% drop in capital investment in 1938, was an overly early effort to reduce the fiscal deficit (5.5% of GDP in 1936); and the Fed’s doubling of the bank reserve requirements.

DOR
23 Jan 14,, 04:18
This is the difference between a recession and a . . . something else.
Note the data are monthly, from 1919 to the end of 2013.

Total Borrowings by Depository Institutions from the FED (monthly averages)

Something broke.

snapper
23 Jan 14,, 12:52
I don't think this is off topic...

Indeed I was clearly deluded in believing that US (un)employment statistical interpretation was not the same as discussion of Keynesian aggregate demand else the wise administrator and legendary butter cookie maker astralis would clearly have temp banned himself and locked the thread as previously. I am grateful for your wise observation in this regard. It is a joy that I no longer need fear such delusion when replying and welcome the opportunity to discuss related issues without such strict definition. :hug:


heh, in economic theory terms your focus on that makes you a post-keynesian. :) funny thing is that the austrian school which your beliefs are closest to doesn't even recognize there's a thing called aggregate demand.

astralis,

I did not say that I believed aggregate demand to be important; please do not impute this from my previous reply. I was rather trying to show that Keynesian economists, to which both your and Davids views most closely conform, are reliant on credit/debt expansion to bolster their 'aggregate demand' to feed their mythical 'animal spirits'. In brief; Keynesian relies on debt to bolster demand. This you seems to be reflected in the data you offer;


i'm glad you pointed that out. knowing that the US expanded her federal debt from 15% in 1929 to 106% by 1946

Of course from 1939 onwards much of this debt may actually have been 'necessary' and offset by such programs as 'lend lease'. During WW2 the US was exporting more and as millions were enrolled in the services and in the arms export trade this may account for the growth in GDP/standard of living you note.


and if it were true that public spending ALWAYS crowds out private spending, why was the US standard of living/GDP per capita far higher in 1946 than it was in 1929?

When millions of soldiers are returned to the labour and domestic consumption market further demand is created. Same happened after WW1. The reason the US 'won' WW2 was because it's manufacturing base, being safe from destruction, was able to supply the allies with weapons. The manufacturing base was still in place when the soldiers came home. The US Balance of Payments only started to go wrong after Bretton Woods died in 1971; http://www.census.gov/foreign-trade/statistics/historical/gands.txt

The circumstances this time around I would suggest are very different. The main export of the US today is pieces of green fiat paper. The fiscal stimulus, as the graphs show, did not work as planned to put it mildly

35230

So the Fed stepped in with monetary stimulus and to suppress the bond yield without which interest on the growing debt may be exorbitant. More credit/debt was created in another attempt to boost the fabled 'aggregate demand' and more little pieces of green fiat currency were created and exported. Perhaps you would argue that this was the only answer (I largely reject this idea) but one 'unforeseen consequence' of this debt expansion is that the richest have become richer and the poorest become poorer. You have through the use of monetary stimulus permitted “the biggest transfer of wealth to the rich of any government policy in recent documented history” (QE (http://blogs.spectator.co.uk/coffeehouse/2012/08/qe-the-ultimate-subsidy-for-the-rich/)). Perhaps this does not matter or is a necessary evil?

My point is that in order to reverse this unforeseen 'transfer of wealth' future Administrations will be encouraged to take further arbitrary and misguided actions the unforeseen consequences of which will further harm the economy and may harm the trade in $ exporting which relies on it's 'reserve status'. When the Chairman of the PBOC speaks publicly about the $ status as world reserve currency you feel threatened; DOR even suggested it could be regarded as 'act of war'. Are you going to force those living outside the US to hold $s against their will so you can continue create credit to boost demand? I suggest this may be counter productive. It may be time to make the $ actually desirable to hold by paying down or even restructuring the debt and reforming the supply side to create greater competitiveness.

Doktor
23 Jan 14,, 13:29
Zraver,

Sorry, I didn’t realize the Great Depression you were referring to started before 1929 . . . or, are you thinking of one that ended after 1940? Must be some other Great Depression, since the only one I can think of occurred within that time span.

I had to make this chart in PowerPoint, since the data are not in the Fed’s modern website. In fact, I had to punch in every number by going through pdf copies of Survey of Current Business (lovely collection back to 1922 can be found here: ArchivaL Federal Reserve Economic Data - ALFRED - St. Louis Fed (http://alfred.stlouisfed.org/) ). There’s an off-chance I’ve mistyped a number, but since there isn’t any obvious break in the pattern, I’ll call it good enough for the purposes of this discussion.

Note that exports didn’t reach the mid-1927 level even in mid-1941. Remember, we weren’t the only economy in depression so to expect others to buy what we couldn’t consume ourselves is a bit of a stretch. Remember, too, that exports don’t drive economies; NET exports do, and we ran some deficits in the period under question. That slows growth.

Still, it’s true that GDP reached $126.7 billion (nominal) in 1941. That’s up from $103.6 billion in 1929, and the first year in 13 that GDP topped the pre-Depression level. The bottom was $56.4 billion, in 1933.

It’s also true that the real growth rate from 1933 to 1941 was 88.2%, but that masks the important information: the economy was in a massive depression.

How did the economy grow in the 1932-37 period? It wasn’t private consumption, which shrank in real terms from 84.7% of GDP to 75.9%. Export expansion, from 2.8% to 3.1% isn’t enough to make a difference, and imports (from 4.3% to 4.7%) neutralized much of the benefit.

Nope, it was gross fixed capital formation, which increased from 1.8% to 9.9%. Now, we don’t have a break-down for public vs. private, but it isn’t hard to connect the dots.

What happened in 1937, and caused a 33% drop in capital investment in 1938, was an overly early effort to reduce the fiscal deficit (5.5% of GDP in 1936); and the Fed’s doubling of the bank reserve requirements.

Nominal US$? The inflation/deflation back then was so minor it's not worth mentioning?

astralis
23 Jan 14,, 15:07
snapper,

to simplify:


I was rather trying to show that Keynesian economists, to which both your and Davids views most closely conform, are reliant on credit/debt expansion to bolster their 'aggregate demand' to feed their mythical 'animal spirits'. In brief; Keynesian relies on debt to bolster demand. This you seems to be reflected in the data you offer;



this description of keynesianism is ONLY true in LIMITED AREAS, such as the Great Depression and the Great Recession.

it's not true for your run of the mill recessions, such as the one we had back in the early 90s. beware of generalizing further.


Of course from 1939 onwards much of this debt may actually have been 'necessary' and offset by such programs as 'lend lease'. During WW2 the US was exporting more and as millions were enrolled in the services and in the arms export trade this may account for the growth in GDP/standard of living you note.


as i mentioned to z, "exporting more" was in reality the USG bankrolling such "exports" as they were going to nearly bankrupt partners such as the UK and the USSR.

millions of people were hired as government employees- millions in the armed forces; millions in the arms industry bankrolled by the US government. in short, an extraordinary amount of government stimulus, far exceeding that of 2009.

of course this was stimulus largely forced upon the nation as a result of war, but all the same, the austrian predicted economic backlash did not occur. why?


The main export of the US today is pieces of green fiat paper.

and again, this is where you're mistaken. the US is not greece, with piddling exports and imports. it is still the world's largest manufacturer, with the world's most innovative economy, and huge amounts of natural resources.

it's not for nothing that the US has outperformed most of her post-industrial peers, and with the expansion of shale oil is now deemed a better medium-term/long-term growth value than the BRICs. certainly better than the EU.


The fiscal stimulus, as the graphs show, did not work as planned to put it mildly


that it did not work to the wildest dreams of the politicals whom put up that graph in the first place is not surprising. (note that professional economists derided it as well.) did it WORK? yes, it reduced unemployment instead of raising it, as austrian theory would indicate.


Perhaps you would argue that this was the only answer (I largely reject this idea) but one 'unforeseen consequence' of this debt expansion is that the richest have become richer and the poorest become poorer.

please don't put words in my mouth. a far more effective method of dealing with the solution would be fiscal vice monetary action. monetary actions work via trickledown, which ironically is also something that conservatives favor anyway.


the Chairman of the PBOC speaks publicly about the $ status as world reserve currency you feel threatened; DOR even suggested it could be regarded as 'act of war'. Are you going to force those living outside the US to hold $s against their will so you can continue create credit to boost demand?

lol, still waiting for the dollar to become devalued and hyperinflation and a currency/trade war...i noticed you stopped giving predictions about such impending matters after that little Hindenberg Omen thing of yours didn't pan out...:)

Julie
23 Jan 14,, 20:39
Indeed I was clearly deluded in believing that US (un)employment statistical interpretation was not the same as discussion of Keynesian aggregate demand else the wise administrator and legendary butter cookie maker astralis would clearly have temp banned himself and locked the thread as previously. I am grateful for your wise observation in this regard. It is a joy that I no longer need fear such delusion when replying and welcome the opportunity to discuss related issues without such strict definition. :hug:

Thank you, that means alot. :hug:

My concern with this economy was if and when it was going to fully recover because I've been having serious doubts about it. However, this thread is answering those questions for me, and to be honest, I feel more positive about it. The housing market crash in 2007, in its severity, was comparable to the Great Depression, and these charts and graphs are comparable to the stages of the economic recovery. Not that they were caused by the same factors, or cured by the same factors, but the longetivity and stages of recovery seem parallel to each other. The markets seemed to recover well before "shovel-ready" jobs became more abundant.

On another note, I have come to conclude that no one person or political party is to blame, it is a group of circumstances that many different people contributed to over a long period of time that created a perfect storm and ignored the warning signs. Also, that it is going to take as long to recover as it did to create the damage. I have also learned that there are some things pointed out in this thread that can be done not hinder the recovery and maybe speed it up a little, but that is for our lawmakers to do. If they would take all of their time they spend blaming each other for things instead of learning from economic history that is posted right here, they would find the answers.

Great thread, please continue. :)

Stitch
24 Jan 14,, 01:44
Great thread, please continue. :)

Agreed; this is one of the few threads I've ever read in it's entirety, very informative. I don't know a lot about economic theory, but I feel smarter already!

DOR
24 Jan 14,, 02:46
snapper,

I’d like to know your source for that chart, because there might just be an up-to-date version that doesn’t stop in Q-1 2012 but includes the dramatic fall in unemployment that occurred last year.

Second, understanding that the projections in that graph were not promises, but only forecasts, might help you let go of the anger you seem to feel toward the Obama Administration for failing to treat the last six years as if it were a typical recession.

Finally, recognizing that the last six years could not have played out in ways that might be considered typical, and that therefore policymakers and economists were flying by the seat of their collective pants might suggest that the amazing real-time experiment of European austerity vs. American stimulus is going to be a major source of economic, social and political dissertations for decades to come.

= = = = =

Doktor,

I’d love to use inflation-adjusted monthly trade data, but there isn’t any. I had serious work to do just to find the nominal data. Have you got something a bit more “real” ?

As for the GDP numbers, I wasn’t the one who brought up “the economy reached $XX billion in 1941;” I just played along. Besides, that’s how we talk about economic size: nominal dollars. My figures on growth rates are all chained (or real) because that’s the way we talk about growth.

Yes, that was a REAL 33% drop in CAP in 1938.

zraver
24 Jan 14,, 03:33
z,



interesting take. that leaves several questions:

- how did the US economy grow from 1932-1937? in fact, by 1937-- before the big war orders came in after the munich debacle-- the US GDP was already larger than pre-Depression level.

Fueled by easy money that lead to a mini depression starting in mid-37 that would not see a full recovery until WWII broke out.


- what happened in mid-1937 that caused a collapse?

Too much fiat money


- how can -every- nation export their way out of a depression?

They can't, they didn't and not germane to the question about the US.


here's a more complete graph of what DOR wrote; no big surprises. US exports actually dipped after 1941, yet the economy continued to grow at a blistering pace.

US exports did not dip... They increased massively but your graph counts them either as domestic consumption because they were paid for via the US government and then sent out as lend lease or does not count armaments as exports.


why?

see above


yet another question; if exports are so central to having gotten the US out of the Great Depression, how is it despite the historically unprecedented export boom of 1945-1946, there was a recession in 1945?

Way too much banked money during the restricted consumerism of WWII combined with massive lay offs. Notice however that once the GI's made it home and housing boom picked up along with purchases of consumer goods once factories re-tooled the recession ended quickly.


exports are important to a recovery, no doubt about it. even in the special example of the Great Depression, though, where almost by definition all international trade was cut off in a bunch of tariff wars only to be revised by the frantic war-gearing of the late 30s, it's important to put things in context. in the equation C + I + G + (X-M), you're trying to make (X-M) the main driver. that wasn't the case even in the 30s (look at the size of exports vs the overall size of the economy); that simply isn't the case today, when the national economy is so much bigger. moreover by definition not everyone can be an exporter.

My premis that massive government spending on "infastructure" does not end recessions has not been defeated. Obama spent trillions and no matter how much you krug bots claim other wise the number of American's with jobs is approaching historic lows. He and you are abject failures when it comes to the economy.

zraver
24 Jan 14,, 03:36
Nominal US$? The inflation/deflation back then was so minor it's not worth mentioning?


He's tryign to fool you with a krugbot lie... the recession occurred before the fed tightened the money supply- too many, not too few dollars was the cause.

astralis
24 Jan 14,, 03:53
z,


Fueled by easy money that lead to a mini depression starting in mid-37 that would not see a full recovery until WWII broke out.

lol, what easy money?

http://www.sjsu.edu/faculty/watkins/depmon.htm

M1/M2 from 1932-1936 was significantly lower than pre-Depression levels, only increasing past it by 1939-1940 during the rearmament. are you going to tell me that we suffered from hyperinflation...during the Great Depression?


not germane to the question about the US.

it is germane, in that that exporting as the primary method of ending a depression has never happened and in any case could not be replicated as an economic "solution" to everyone.


US exports did not dip... They increased massively but your graph counts them either as domestic consumption because they were paid for via the US government and then sent out as lend lease or does not count armaments as exports.

when evidence contradicts one's theory...either provide countervailing evidence or edit the theory.

moreover, if the "exports" were paid via the USG and not by the other country...what is that but...stimulus?


Way too much banked money during the restricted consumerism of WWII

indeed, one wonders where this banked money and those jobs came from. and thus, which has more impact...the source of that banked money and those jobs...or the exports?


My premis that massive government spending on "infastructure" does not end recessions has not been defeated.

well, actually, your premise was dual parted, 1.) that massive government spending on infrastructure does not end recessions, 2.) exports ended the great depression.

yet you haven't addressed the point about the size of exports vis-a-vis the entire US economy of the time, nor the other big elephant in the room, simple government spending. which was greater?

IE why did the US economy continue to grow during the war, when her export partners were either bankrupt or fighting for their lives, with little money to spare for US consumer products? was the US economy harmed by the massive expansion of government debt and spending during the war?

bonehead
24 Jan 14,, 04:31
Agreed; this is one of the few threads I've ever read in it's entirety, very informative. I don't know a lot about economic theory, but I feel smarter already!

You should look up SHEKS posts on the subject. He puts everyone else here to shame.

zraver
24 Jan 14,, 04:55
z,



lol, what easy money?

Loose monetary policy by the fed


http://www.sjsu.edu/faculty/watkins/depmon.htm

M1/M2 from 1932-1936 was significantly lower than pre-Depression levels, only increasing past it by 1939-1940 during the rearmament. are you going to tell me that we suffered from hyperinflation...during the Great Depression? [/qupte]

Look at the rapid increase of the money supply before the 37 recession.

[quote]it is germane, in that that exporting as the primary method of ending a depression has never happened and in any case could not be replicated as an economic "solution" to everyone.

Wrong on count 1 though as usual you will never admit it.


when evidence contradicts one's theory...either provide countervailing evidence or edit the theory.

moreover, if the "exports" were paid via the USG and not by the other country...what is that but...stimulus?

It wasn't road building it was factory orders. Go back to what I actually claimed instead of attacking strawmen. Those orders were also financed with real money, not fiat money ie war bonds.


indeed, one wonders where this banked money and those jobs came from. and thus, which has more impact...the source of that banked money and those jobs...or the exports?

working in factories and trading pay checks in for war bonds... not building court houses and roads through the wilderness


well, actually, your premise was dual parted, 1.) that massive government spending on infrastructure does not end recessions, 2.) exports ended the great depression.

yet you haven't addressed the point about the size of exports vis-a-vis the entire US economy of the time, nor the other big elephant in the room, simple government spending. which was greater?

Really, I'm pretty sure i did showing a massive expansion in the export sector with the start of WWII.


IE why did the US economy continue to grow during the war, when her export partners were either bankrupt or fighting for their lives, with little money to spare for US consumer products? was the US economy harmed by the massive expansion of government debt and spending during the war?

consumer factories retooled to build war material- its still workers pay checks fueling the growth (via war bonds) not government fiat money or federal reserve QEish free money.

Doktor
24 Jan 14,, 09:27
I’d love to use inflation-adjusted monthly trade data, but there isn’t any. I had serious work to do just to find the nominal data. Have you got something a bit more “real” ?

As for the GDP numbers, I wasn’t the one who brought up “the economy reached $XX billion in 1941;” I just played along. Besides, that’s how we talk about economic size: nominal dollars. My figures on growth rates are all chained (or real) because that’s the way we talk about growth.

Yes, that was a REAL 33% drop in CAP in 1938.

I was looking at this data (http://www.usinflationcalculator.com/inflation/historical-inflation-rates/) and frankly the %s look like earthquake reading. Was hoping you have access to more adjusted data.

astralis
24 Jan 14,, 15:49
z,


Look at the rapid increase of the money supply before the 37 recession.


you mean rapid increase to...1930 level? that raises the question, why no depression between 1939-1941, when the increases each year were double or triple that of the increase between 1934-1935 or 1935-1936?

the 37 recession happened because FDR tried to balance the budget in 1936.


It wasn't road building it was factory orders. Go back to what I actually claimed instead of attacking strawmen. Those orders were also financed with real money, not fiat money ie war bonds.


you said:


US exports did not dip...

well, actually, they DID, because in the end the goods were financed by the government, from a combination of both higher taxes AND war bonds and monetary circulation. the other allies simply couldn't pay cash anymore, thus lend-lease. and in the end, government borrowing...and deficit spending...is still deficit spending.

thus for Y = C + I + G + (X-M), C went down, I went up somewhat, G went WAY up, X-M was largely stable until 1945-1946.

US public debt shot up to approximately 115% of GDP by 1945, from $39 billion in 1939 to $250+ billion by 1945. all this despite two massive tax increases in 1940 and 1942. war bonds totaled $185 billion (spread over approximately 4 years). M2 went up from $49.3 billion in 1939 to $71.2 billion by 1942.

every lever of government was used, monetary and fiscal. regulations up the wazoo, including of course rationing.

moreover, think about what that money was BUYING. we still use many WPA-era national park fixtures, and indeed many of our courthouses sprung from that era. much of the south began industrialization during this period. WWII money? an even more "wasteful" form of stimulus, because the money bought bullets/bombs that were expended, tanks/airplanes/ships that were used up or sold for cents on the dollar as scrap or given away wholesale. there was very little long-term value, purely economically speaking of course.

yet it was STILL effective in growing the US economy as a whole, because of the side benefit of massively increased salaries and employment from all that spending-- several magnitudes greater than the amount spent on the WPA and other Depression-era programs.

and that's the point. a depression, by its very definition, is characterized by highly inefficient private spending and economic use of resources-- millions of people out of work, with their productive powers going to waste. under these circumstances, the public sector, which is usually more inefficient than the private sector, suddenly has an advantage by being able to use these otherwise fallow resources. some efficiency is better than complete inefficiency.

zraver
25 Jan 14,, 01:40
z,



you mean rapid increase to...1930 level? that raises the question, why no depression between 1939-1941, when the increases each year were double or triple that of the increase between 1934-1935 or 1935-1936?

the 37 recession happened because FDR tried to balance the budget in 1936.

Of course to asty the increase in the money supply wasn't a factor... nope never


you said:

well, actually, they DID, because in the end the goods were financed by the government, from a combination of both higher taxes AND war bonds and monetary circulation. the other allies simply couldn't pay cash anymore, thus lend-lease. and in the end, government borrowing...and deficit spending...is still deficit spending.

thus for Y = C + I + G + (X-M), C went down, I went up somewhat, G went WAY up, X-M was largely stable until 1945-1946.

Probalby the greatest sustained export operation in history began in 1939 and didn't end until 1945. It doesn't matter who paid, it was factory orders not road building.


US public debt shot up to approximately 115% of GDP by 1945, from $39 billion in 1939 to $250+ billion by 1945. all this despite two massive tax increases in 1940 and 1942. war bonds totaled $185 billion (spread over approximately 4 years). M2 went up from $49.3 billion in 1939 to $71.2 billion by 1942.

So war bonds accounted for half of all war spending that exceeded revenues...



moreover, think about what that money was BUYING. we still use many WPA-era national park fixtures, and indeed many of our courthouses sprung from that era. much of the south began industrialization during this period.

Parks and courts are nice but they didn't end the depression.


WWII money? an even more "wasteful" form of stimulus, because the money bought bullets/bombs that were expended, tanks/airplanes/ships that were used up or sold for cents on the dollar as scrap or given away wholesale. there was very little long-term value, purely economically speaking of course.

Typical... the war spending bought jobs- full employment and once the war was over the ability for people to profit from their labors by buying STUFF.


yet it was STILL effective in growing the US economy as a whole, because of the side benefit of massively increased salaries and employment from all that spending-- several magnitudes greater than the amount spent on the WPA and other Depression-era programs.

So by inference, any stimulus less than total war footing is a waste of time and likely a drain on the recovery by misdirecting money into capitol intensive [projects that do not return on the investment by stimulating further consumption. That is the problem with the stimulus. Once the stimulus project is done the source of the spending leaves. Its lie trying to start a fire using wet grass. We saw that recently when stimulus money dried up all the public union sector jobs they were floating finally shriveled up and went away. The only thing Krugman, Krugbots and Democrats have left us is a mountain of crushing debt.


and that's the point. a depression, by its very definition, is characterized by highly inefficient private spending and economic use of resources-- millions of people out of work, with their productive powers going to waste. under these circumstances, the public sector, which is usually more inefficient than the private sector, suddenly has an advantage by being able to use these otherwise fallow resources. some efficiency is better than complete inefficiency.

Nice claim, not born out by the evidence. FDR made the Depression worse, Obama made the great Recession worse.

DOR
25 Jan 14,, 04:36
He's tryign to fool you with a krugbot lie... the recession occurred before the fed tightened the money supply- too many, not too few dollars was the cause.

zraver,

When you start posting real data, I'll start to take you seriously. In the meantime, it would be greatly appreciated if you would take your personal insults and arrange for them to be stored in a place without solar lighting.

snapper
25 Jan 14,, 06:22
snapper,

this description of keynesianism is ONLY true in LIMITED AREAS, such as the Great Depression and the Great Recession.

it's not true for your run of the mill recessions, such as the one we had back in the early 90s. beware of generalizing further.

I am not sure that is the case; the reaction to the dotcom bubble burst was to lower interest rates in order to encourage credit creation; it worked. It created a property bubble.


as i mentioned to z, "exporting more" was in reality the USG bankrolling such "exports" as they were going to nearly bankrupt partners such as the UK and the USSR.

millions of people were hired as government employees- millions in the armed forces; millions in the arms industry bankrolled by the US government. in short, an extraordinary amount of government stimulus, far exceeding that of 2009.

of course this was stimulus largely forced upon the nation as a result of war, but all the same, the austrian predicted economic backlash did not occur. why?

That's about what I said... as to the why no back lash I also answered that so I can only refer you what I said overleaf.


and again, this is where you're mistaken. the US is not greece, with piddling exports and imports. it is still the world's largest manufacturer, with the world's most innovative economy, and huge amounts of natural resources.

it's not for nothing that the US has outperformed most of her post-industrial peers, and with the expansion of shale oil is now deemed a better medium-term/long-term growth value than the BRICs. certainly better than the EU.

I wasn't aware that anyone had compared the US to Greece though some of it's statistical methodology is similar to the Goldman/Greek fraudulent accounting. You may be the world's largest manufacturer but you are not the most efficient which is why you run balance of exports deficit. That also indicates that the US is not the most innovative economy; if it were US companies would be catering to domestic demand.


that it did not work to the wildest dreams of the politicals whom put up that graph in the first place is not surprising. (note that professional economists derided it as well.) did it WORK? yes, it reduced unemployment instead of raising it, as austrian theory would indicate.

I don't recall you saying that these expectations were unrealistic... Nor Krugman for that matter. Of course the argument is that because the stimulus didn't work as well as they had hoped 'moar' stimulus is evidently needed. I think this qualifies for Einstein definition of insanity; "Insanity: doing the same thing over and over again and expecting different results."


please don't put words in my mouth. a far more effective method of dealing with the solution would be fiscal vice monetary action. monetary actions work via trickledown, which ironically is also something that conservatives favor anyway.

I in no way meant to put words in your mouth and I apologise if my words gave you that impression. I simply did not know how you would justify the result of the monetary stimulus. I see now that you would have preferred more fiscal stimulus and refer you to Einstein above. I would also thank you not to label me a 'conservative'; I am non partisan by and large. Regarding US politics I think the two parties are both as bad as each other. I was no fan of Bush jr's. I also think you are mistaken on the Austrian School view of employment. They would merely argue that the free market is the most efficient means of creating jobs in profitable companies. Instead you propose to borrow (or tax) more which has to be collected and for which interest has to be payed and then handed out by the central authority largely in a manner that suits lobbyists rather that to those companies which have real potential for growth. The extra interest payments alone make this system inefficient compared to allowing private capital to accumulate and be distributed as the people deem wisest; it is after all their money.


lol, still waiting for the dollar to become devalued and hyperinflation and a currency/trade war...i noticed you stopped giving predictions about such impending matters after that little Hindenberg Omen thing of yours didn't pan out...:)

Funny that the equities markets lost 2% probably as you were writing this. You seem like the sort of person who would have been happily selling sub prime mortgages in December 2006. I explained that Hindenburg omens do not always mean a market crash but that no crash has occurred without the Hindenburg first; it is a sign of increased risk. As for the argument that "it's not happened yet so chances are it won't" this is dependent on what phenomena you are speaking of. Just because there hasn't been a Richter Scale 9 earthquake in California for some time does not mean it is increasingly unlikely to happen. However the chances of finding unicorns on earth decrease; we have checked out most regions and not found any. In economics we know that bubbles always burst so to rely on the "it ain't happened yet" argument is unwise in the extreme. If/when the $ loses world reserve status - and that will inevitably happen one day - all the $s currently stored and used abroad will go running home. Essentially the US (and UK and even the EU/ECB to a lesser extent) have merely repeated the mistakes that caused 2007-8. Problem? Borrow more nationally and create more credit/debt. More bubble blowing that looks like 'recovery' but in reality leads only to another bust.

astralis
25 Jan 14,, 07:46
z,

can't really continue the debate as you're just repeating your points without bringing new data on the table.


the increase in the money supply wasn't a factor... nope never

i just asked you what the relative scale of the increase was. you didn't answer my question as to why an even larger monetary base increase didn't cause a similar recession just a few years later.


export operation in history began in 1939 and didn't end until 1945. It doesn't matter who paid

makes no sense at all. if USG paid for armaments and not another country, i fail to see how that is an "export". that would be the US government buying from the private sector (well, kinda private sector in this case) on a massive scale...somewhat akin to, dare i say it....stimulus.


Parks and courts are nice but they didn't end the depression.

had FDR not reversed course in 1936 the US would have gotten close to ending it. the upward trend on the economy is obvious from the data, with 37 as its interruption.


So by inference, any stimulus less than total war footing is a waste of time and likely a drain on the recovery by misdirecting money into capitol intensive [projects that do not return on the investment by stimulating further consumption.

that makes no sense either. as i wrote, total war mobilization is extremely economically destructive and wasteful. the US avoided the worst of bad effects because there was -so much slack- from the Depression. Great Britain, for instance, did not have that same level of slack and thus war mobilization beggared her for a generation.

there are more economically beneficial methods of stimulating an economy than making bullets and bombs.


Once the stimulus project is done the source of the spending leaves.

if that's the case...explain the economic boom after WWII. explain the economic boom following the creation of the interstate highway system. or when the US invested in microchips. was the hoover dam was a one-shot?

one time projects created vast sources of new wealth as new opportunities and economic efficiencies arose.


Nice claim, not born out by the evidence. FDR made the Depression worse, Obama made the great Recession worse.

you have an interesting definition of "worse".

FDR

3527335274

Obama

US GDP Dec 2008: 14.57 trillion
Sep 2013: 15.79 trillion

U6 data, 2009-2013

35275

astralis
25 Jan 14,, 08:10
snapper,


I am not sure that is the case; the reaction to the dotcom bubble burst was to lower interest rates in order to encourage credit creation; it worked. It created a property bubble.

it's hard to discuss economics with you when you are so determined to ignore economic theory.

keynesianism does not concern itself with monetary actions. to put it as simply as i can, keynesianism focuses on FISCAL actions.

you can criticism monetarism if you dislike monetary actions.

it's not this hard to understand.


You may be the world's largest manufacturer but you are not the most efficient which is why you run balance of exports deficit. That also indicates that the US is not the most innovative economy; if it were US companies would be catering to domestic demand.

again...ignorance of basic economic theory. come on, this is pure adam smith.

Comparative advantage - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Comparative_advantage)

the main reason for the US trade deficit is because of petroleum products, followed next by cheap consumer products. to simplify, the US imports raw materials and cheap goods and exports expensive goods/services. as the developing world catches up to the West technologically, there will be an increased demand for those expensive goods. this is why investors are so bullish on the US.


I don't recall you saying that these expectations were unrealistic...

-i've- said so quite a few times, including when it was happening.

as for krugman:

http://krugman.blogs.nytimes.com/2009/01/10/romer-and-bernstein-on-stimulus/


One more point: the estimate of what would happen to the economy in the absence of a stimulus plan seems kind of optimistic. The chart above has unemployment ex-stimulus peaking at 9 percent in the first quarter of 2010 and coming down through the year; the CBO estimates an average unemployment rate of 9 percent for 2010, so the Obama people are more optimistic than the CBO, and a lot more optimistic than I am.

This Is Brad DeLong's Grasping Reality...: Hoisted from Paul Krugman's Archives: Insufficient Obama Economic Stimulus Department (http://delong.typepad.com/sdj/2011/08/hoisted-from-paul-krugmans-archives-insufficient-obama-economic-stimulus-department.html)


. I would also thank you not to label me a 'conservative'; I am non partisan by and large.

i did not. i said monetarism is, or rather these days, WAS a conservative principle. friedman was the main intellectual enemy of keynes, not hayek, whom both sides derided.


Funny that the equities markets lost 2% probably as you were writing this.

it's a bad habit to use short term data to formulate your predictions. this is why invariably much of your predictions with any specificity attached to them come out to be a bust, and thus it seems all your predictions degrade into a "just you wait and see!" which ultimately means these "predictions" are worthless.

zraver
25 Jan 14,, 15:26
zraver,

When you start posting real data, I'll start to take you seriously. In the meantime, it would be greatly appreciated if you would take your personal insults and arrange for them to be stored in a place without solar lighting.

I'll answer you with real data when you post real data instead of krugbot cooked books for dummies inserts. Oh I do put my comments where there is no hope of solar reaching you, its the only place you'll see it.

Not convinced that gold was the cause of the recession but it puts to rest the idea that the Fed or drive for a balanced budget caused the Recession of 37-38.

What caused the recession of 1937-38? A new lesson for today (http://www.voxeu.org/article/what-caused-recession-1937-38-new-lesson-today-s-policymakers)

astralis
25 Jan 14,, 21:41
z,

uh...the very conclusion of your very article...


It suggests that, in a weak recovery, a pre-emptive monetary strike against inflation (which was very low at the time, as it is today) is capable of producing a devastating recession.

it's true this is not a keynesian argument; this is a monetarist one. but your earlier argument on the cause of the recession of 1937 was "too much fiat money"...

DOR
26 Jan 14,, 03:46
If anyone's interested in what we knew at the time, here's the data on the 1930s.

Survey of Current Business - FRASER (http://fraser.stlouisfed.org/publication/?pid=46)

snapper
27 Jan 14,, 05:35
snapper,
it's hard to discuss economics with you when you are so determined to ignore economic theory.
keynesianism does not concern itself with monetary actions. to put it as simply as i can, keynesianism focuses on FISCAL actions.
you can criticism monetarism if you dislike monetary actions. it's not this hard to understand.

I could equally well reply that you do don't see through my eyes; that stimulus is stimulus and just because you have to resort to the central bank to debase the currency instead of adding to your already $17trillion debt doesn't make not make it centrally generated stimulus that is inefficient; it makes imports more expense which in your position is unwise.


again...ignorance of basic economic theory. come on, this is pure adam smith.

Comparative advantage - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Comparative_advantage)

the main reason for the US trade deficit is because of petroleum products, followed next by cheap consumer products. to simplify, the US imports raw materials and cheap goods and exports expensive goods/services. as the developing world catches up to the West technologically, there will be an increased demand for those expensive goods. this is why investors are so bullish on the US.

Regarding economic theory and coming from you... Frankly in less gentile society I might be tempted to take that as an insult. I forgive you as I know you are all-wise and merely trying to educate lil ol me. Thank you! Regarding your "we'll catch up" theory you are surely having a laugh? The $ as world reserve is on the way out. But naturally for those in greenhouses there never was a currency war... There was and guess what? You lost all the gold that the $ as world reserve was based on. By creating more debt based 'recovery' through borrowing and debasing the currency you are merely repeating the same mistakes that lead to the 2007-8 crash. There's a football (soccer) team in East London called West Ham that you should visit. They sing a song called "forever blowing bubbles".


-i've- said so quite a few times, including when it was happening.
as for krugman:
http://krugman.blogs.nytimes.com/2009/01/10/romer-and-bernstein-on-stimulus/

As I noted previously the Austrian school would merely point out that the former means to the curve that Krugman shows is more efficient and sustainable long term. It at least does not involve paying extra interest on the debt as you and Krugman advise. Paying interest on ever larger debt is wasteful of money that otherwise could be invested. It should also be noted that in this graph employment increases anyway without stimulus borrowing; one might argue that jobs created by the market are more sustainable long term than those created by some central plan advised by 'special interests'.


This Is Brad DeLong's Grasping Reality...: Hoisted from Paul Krugman's Archives: Insufficient Obama Economic Stimulus Department (http://delong.typepad.com/sdj/2011/08/hoisted-from-paul-krugmans-archives-insufficient-obama-economic-stimulus-department.html)

Yea because more debt or currency devaluation after five years of 'exceptional circumstances' and on the evidence of 'over expectation' of the previous stimulus would really help the interest payments? What would growth have to be to balance the books?


i did not. i said monetarism is, or rather these days, WAS a conservative principle. friedman was the main intellectual enemy of keynes, not hayek, whom both sides derided.

You implied it;
which ironically is also something that conservatives favor anyway. Why would it be ironic if I am not a 'conservative'? We are the liberals it seems to me.You want nothing but debt slaves through 'moar' credit creation. We want financial and actual liberty (ty z). The wise men have sat in ivory towers and they scr*wed it up. The Fed was supposed to stop busts like 2007-8 when it was created but has overseen two. When do you people learn?


it's a bad habit to use short term data to formulate your predictions. this is why invariably much of your predictions with any specificity attached to them come out to be a bust, and thus it seems all your predictions degrade into a "just you wait and see!" which ultimately means these "predictions" are worthless.

Which naturally avoids any of the points I made. The equities markets are a bubble created by central bank stimulus and credit creation. The US housing marking in some areas shows signs of bubbling. The bond markets and gold markets are artificially surpressed and the value of the whole system of corruption and greed is rapidly become widely known by people who never understood these things before. We have repeated the same mistakes and the same results will ensue. Living in your world is akin to living in Pompei a year or so before Vesuvius blew up; everything's absolutely spiffingly super. Until you're dead. We rebuilding the same bomb that went off in 2007-8 because 'wise' people such as yourself have a partisan alleigance and refuse to question the premises on which your thinking is based. If I thought I could help you I would plead with you to think in a non partisan manner but I fear it would not avail. Everything is neatly labelled in astralis-land.

Back in statistical la la land others have noticed how well the US has been able misrepresent the truth of it's bubble recovery and are now following suit. Evidently the Eurozone needs a pile of this 'good news statistical manipulation' so roll on European System of Accounts (ESA 2010). In Greece;


The new method, for example, would have seen recession in 2013 shrink from 4 percent to just 0.3 percent, including the impact of the deflation, and turn the small GDP increase of 0.6 percent projected for this year to a robust 3.6 percent expansion.

ekathimerini.com | GDP boost via new method of calculation (http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_26/01/2014_536821)

Recession? What recession? They will almost certainly have to adopt 'US methodology' to 'prove' that in the unemployment in southern Europe is grossly exaggerated. If revisions of this nature continue we shall soon be talking of the great boom of the 1930's and since 2008. There are lies, damn lies and statistics.

DOR
28 Jan 14,, 03:51
For all you statistical deniers, here’s something to chew on:
According to the ”Survey of Current Business,”

The 1954 edition set US nominal GDP in 1950 at $285.1 billion;
The 1965 edition set US nominal GDP in 1950 at $284.8 billion;
The 1976 edition set US nominal GDP in 1950 at $286.2 billion;
The 1985 edition set US nominal GDP in 1950 at $288.3 billion;
The 1998 edition set US nominal GDP in 1950 at $294.6 billion;
Today we think it was $300.2 billion.

snapper
29 Jan 14,, 16:15
So David, if the prediction for Greek GDP growth this bears out (which granted is unlikely given the troika's record) would you accept that the Greek economy will have expanded more than the US and with a 'balanced budget' this year? Or would you suggest that much of this seeming expansion is due to their new calculation methodology? At least the EU is not proposing to impute the new methodology retrospectively as the US did last year.

DOR
30 Jan 14,, 04:19
snapper,
If the revisions and new methodology now say "we're growing faster," then the first thought that would enter my mind would be "man, that contraction must have been worse than we first thought."

snapper
30 Jan 14,, 06:26
So new statistical methodology is nothing to do with it? I mean did the Greek economy shrink 4% in 2013 as the statistics say or only 0.3% as the new statistics would say if they were applied retrospectively? I presume both cannot be right or perhaps all these statistics like 97m US citizens not working but only 6.7% 'unemployed' be viewed in the glass is half full/empty light?

On a different subject - forgive if I should not discuss it here - seeing that the 'taper' is causing increasing chaos in the emerging markets currency trades how do you see the prospects of further taper?

DOR
31 Jan 14,, 05:02
Q-4 and Full Year GDP !

The US economy grew 2.7% in the fourth quarter, as compared to the same 2012 period. That’s up a full percentage point from the average rate of the previous four quarters. Private consumption expanded 2.3% (from a 1.9% four-quarter average) and capital investment 8.5% (from 4.1%).

Both exports and imports picked up speed, the former much faster than the latter thereby reducing net exports’ drag on the economy. The attack on government spending continued unabated, with spending down year-on-year for the 13th out of the last 14 quarters. GVT fell 2.3% from Q-4 2012, faster than the 1.9% Q-3 2011 to Q-3 2012 pace. But, after 15 quarters of collapse, state and local spending picked up by 0.3%. Perhaps there’s no more room to fall: the last time state and local expanded, it was 13% of GDP; now, it’s barely 10%.

For the full year, GDP expanded 1.9% vs. 2.8% for 2012. Consumption fell slightly, but enough to offset the surge in investment.

snapper
31 Jan 14,, 06:35
For the full year, GDP expanded 1.9% vs. 2.8% for 2012. Consumption fell slightly, but enough to offset the surge in investment.

The rate of growth fell 0.9% in 2013 from 2012 and you think this is good news?

DOR
31 Jan 14,, 10:15
Have you looked at Europe lately?

Doktor
31 Jan 14,, 11:19
Have you looked at Europe lately?

Why this argument always pops up when someone mentions US economy? Why not look at China? Why look elsewhere for that matter?

astralis
31 Jan 14,, 14:59
doktor,


Why this argument always pops up when someone mentions US economy? Why not look at China? Why look elsewhere for that matter?

the comparison is rightly between fully developed economies. with economics (and especially investment!), it's all relative.

Doktor
31 Jan 14,, 16:51
doktor,

the comparison is rightly between fully developed economies. with economics (and especially investment!), it's all relative.

Asty,

US is a leading market, not a follower. Why comparing it to anyone. That market alone creates trends elsewhere.

astralis
31 Jan 14,, 19:57
doktor,


Asty,

US is a leading market, not a follower. Why comparing it to anyone. That market alone creates trends elsewhere.

that doesn't really have any meaning. why not compare similarly sized polities with roughly equivalent economic efficiency, technology, and education? there may be valuable policy lessons to be learned.

for that matter any economy of a certain size will create trends, ie china and india, for instance, despite having rather smaller economies than the US.

Doktor
01 Feb 14,, 00:01
doktor,



that doesn't really have any meaning. why not compare similarly sized polities with roughly equivalent economic efficiency, technology, and education? there may be valuable policy lessons to be learned.

OK then, please define me European economical policy. Something that would fit equally for UK, Germany and Greece.

snapper
01 Feb 14,, 02:06
Have you looked at Europe lately?

You missed your calling David; you should have been a politician! But my IMF/troika predictions Greek GDP will grow 3.6% and they will not a have budgetary deficit. The eurozone has has used less Keynesian methods and less monetary expansion but similar statistical methods to fool their own people as surely as you have done.

Crocodylus
01 Feb 14,, 02:25
GDP and GNP only indicate how much money changed hands in a year. Guessing where the money went requires a different set of rubrics.

As well, most of the time it is a small segment of the national population that conducts the lion's share of economic activity and so gains the benefits thereof. The rest of the population either benefits modestly or not at all.

I am hoping that the participants in this tread have taken into account recent structural changes in the US economy, namely the slow decline of large corporations and the rise of small corporations that, thanks to the rise of online commerce and improved global logistics networks, have the flexibility to move a lot of goods and services with a minimum of staff. It's one more example of today's entrepreneurs being in the relentless pursuit of perfection. "Perfection" being all profit and no overhead.

DOR
01 Feb 14,, 03:27
You missed your calling David; you should have been a politician! But my IMF/troika predictions Greek GDP will grow 3.6% and they will not a have budgetary deficit. The eurozone has has used less Keynesian methods and less monetary expansion but similar statistical methods to fool their own people as surely as you have done.

And, when does the overall size, and standard of living of the Greek economy return to pre-crisis levels?

zraver
01 Feb 14,, 07:04
doktor,



the comparison is rightly between fully developed economies. with economics (and especially investment!), it's all relative.

So compare to Germany....

snapper
01 Feb 14,, 09:44
And, when does the overall size, and standard of living of the Greek economy return to pre-crisis levels?

Sooner than the US balances it's budget. ;) By your logic with the 'recovery' stalling 0.9% last year (despite the new statistical methodology of double accounting) you need moar stimulus this year.

Doktor
01 Feb 14,, 09:58
And, when does the overall size, and standard of living of the Greek economy return to pre-crisis levels?

Depends on how you are going to measure the standard of living. ;)

astralis
01 Feb 14,, 16:54
doktor,


OK then, please define me European economical policy. Something that would fit equally for UK, Germany and Greece.

you CAN compare -aspects- of the EU to the US which are roughly alike. for instance, monetary policies of the ECB to the Fed.

of course when it comes to fiscal matters you need to break down the comparison to the national level.

astralis
01 Feb 14,, 17:01
z,


So compare to Germany....

sure.

GDP growth (annual %) | Data | Table (http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG)

GDP growth (annual %), Annual percentage growth rate of GDP at market prices based on constant local currency. Aggregates are based on constant 2005 U.S. dollars.

2009-2013:

Germany
2009: -5.1
2010: 4.0
2011: 3.3
2012: 0.7

US
2009: -2.8
2010: 2.5
2011: 1.8
2012: 2.8

Doktor
01 Feb 14,, 20:40
astrlis,


you CAN compare -aspects- of the EU to the US which are roughly alike. for instance, monetary policies of the ECB to the Fed.
You can compare many things, but what you will get as a final result might be very confusing results. One thing is your Fed is controlled by one entity, while ECB is controlled by at least 4 countries with their own very different interests. Also, ECB doesn't even have a say in ALL EU countries, but in only 18 IIRC.

EU zone comparison to US is difficult to be done, yet every time someone says US economy is not performing as promised this argument pops.

This is like asking while Apple shares dropped and getting an answer that WalMart's dropped as well.


of course when it comes to fiscal matters you need to break down the comparison to the national level.
Yet, ECB's primal function is coordinating fiscal matters and prices within EU zone.

DOR
02 Feb 14,, 04:06
Sooner than the US balances it's budget. ;) By your logic with the 'recovery' stalling 0.9% last year (despite the new statistical methodology of double accounting) you need moar stimulus this year.


snapper,

Very slick change of subject there, from collapsing economies struggling to hang onto their standards of living to the fiscal balance of a country that is rapidly backpedaling from the brink. Since actually balancing the US federal budget would be incredibly contracting, and by that I mean incredibly stupid, and since the deficit pretty much fell by half recently, maybe we could stick to one subject at a time?

Doktor,


Depends on how you are going to measure the standard of living.

Caloric intake?

snapper
02 Feb 14,, 04:52
snapper,

Very slick change of subject there, from collapsing economies struggling to hang onto their standards of living to the fiscal balance of a country that is rapidly backpedaling from the brink. Since actually balancing the US federal budget would be incredibly contracting, and by that I mean incredibly stupid, and since the deficit pretty much fell by half recently, maybe we could stick to one subject at a time?

Are having a laugh? I asked you to confirm that US GDP expansion was 0.9% down last year to that of 2012 and when you refused to confirm it as this might suggest that not all is as absolutely rosy with US economy as you like to make out you brought up the subject of European GDP... and now it's me that is accused of changing the subject???


The rate of growth fell 0.9% in 2013 from 2012 and you think this is good news?


Have you looked at Europe lately?

I am gobsmacked... It was you that introduced the latest US GDP data but seemingly you were happy with it and hadn't noticed that growth had slowed 0.9%. Which topic do you wish us to stick to? I am happy to do so on the sole condition that you do so also! :slap:

astralis,

Going back to your post WW2 thinking it was in fact Keynesian theory that suggested the post war economy would suffer high unemployment etc as spending was reduced. By Austrian theory the economy should become more efficient as massive centralised distributions of capital are replaced by billions of individual investments by participants in the market. Post war Keynesian predictions were spectacularly wrong.

astralis
02 Feb 14,, 17:09
doktor,


You can compare many things, but what you will get as a final result might be very confusing results. One thing is your Fed is controlled by one entity, while ECB is controlled by at least 4 countries with their own very different interests. Also, ECB doesn't even have a say in ALL EU countries, but in only 18 IIRC.

EU zone comparison to US is difficult to be done, yet every time someone says US economy is not performing as promised this argument pops.

This is like asking while Apple shares dropped and getting an answer that WalMart's dropped as well.

not quite, because as i said, when it comes to international economics, it's more of a zero-sum game. IE, "healthy" is relative. ie, the US domestic market has structural problems but less so than, say, china's-- which is why china invests so heavily in the US.

Doktor
02 Feb 14,, 17:15
Caloric intake?

It's not even used to measure inflation.

Doktor
02 Feb 14,, 17:18
not quite, because as i said, when it comes to international economics, it's more of a zero-sum game. IE, "healthy" is relative. ie, the US domestic market has structural problems but less so than, say, china's-- which is why china invests so heavily in the US.

All of this exhibition with words still doesn't answer my original question - Why it is always 'look at Europe, we ain't that bad'?

US market is (still) big enough to shape it's own fortune and other markets as well. What happened with 'When US sneezes the world catches cold'?

astralis
02 Feb 14,, 17:44
snapper,


Going back to your post WW2 thinking it was in fact Keynesian theory that suggested the post war economy would suffer high unemployment etc as spending was reduced. By Austrian theory the economy should become more efficient as massive centralised distributions of capital are replaced by billions of individual investments by participants in the market. Post war Keynesian predictions were spectacularly wrong.

uh...no. this shows your ignorance of what Keynesian theory is, and history.

Keynesianism states that government spending is expansionary when private demand is down and there is high unemployment. those are key conditions. there was an expectation that there would be a short, sharp decline when the USG cut back on spending, but it would be more than made up with by the suppressed, pent up demand of the war years...plus millions of GIs with their government salaries saved up after years of being out in theater. moreover, the US economy was already at full employment at the time, with extremely high levels of public spending. this was even more true in Keynes' UK.

here's what Alvin Hansen (http://en.wikipedia.org/wiki/Alvin_Hansen), known as the "American Keynes", stated at the time:


“The fact is that many people dread to think of what is coming. Businessmen, wage earners, white-collar employees, professional people, farmers—all alike expect and fear a postwar collapse: demobilization of armies, shutdowns in defense industries, unemployment, deflation, bankruptcy, hard times. Some are hoping for a postwar boom. We got that after the First World War. Not improbably we may get it again. If the war lasts several years, we may have at the end of the war sufficient accumulated shortages in residential housing, in durable consumers’ good such as automobiles, and in the plant and equipment required to supply peacetime consumption demands, to give us a vigorous private investment boom. Indeed, we need to be on the alert to prevent a possible postwar inflation. If in fact we do experience a strong postwar boom, there is, however, the gravest danger that it will lull us to sleep. Sooner or later such a boom will end in a depression unless we are prepared. If appropriate action is taken, there is no necessity for a postwar collapse.”

as for Keynes himself, he argued with the socialist Abba P Lerner (http://en.wikipedia.org/wiki/Abba_P._Lerner) in 1943-1944:


Lerner: "I asked why we should have to worry about that: if you give people enough money they will spend
more and then there will be enough spending; there’s no need for any depression if you’re prepared to
give them more money. So he [Keynes] asked where would you get the extra money and I didn’t say, ‘the
printing press’. I said you could borrow it. He said, you mean the national debt will keep on growing,
and I said yes. ‘What would happen?’ I said – nothing. So we talked for a moment and he said: ‘No,
that’s humbug … the national debt can’t keep on growing’. ... [T]hat was the end of his discussion."

Hansen then wrote:


Keynes harshly rejected the risk of post-war stagnation, holding that because of Social Security there
would be a large reduction in private saving and so that would be no problem. And then he practically
said no sensible person would still be a Keynesian in such a period. I remember feeling sorry for Abba’s
being left in the cold.


bolding and italics mine.

snapper
03 Feb 14,, 05:08
So Keynes agreed that printing money was unwise and thought the debts could continue forever? "‘No, that’s humbug … the national debt can’t keep on growing’. ..." Why has any business ever gone bankrupt in the Government or the central bank can continually bail out unprofitable and inefficient business's? The very meaning of making a profit or competition becomes redundant.

As for the post war unexpected Keynesian miracle it was explicitly stated by Keynes that after the aggregate demand picks up - which is bound to happen you when lay off 1 million odd me previously under arms, that demand should be expected to pick up. He also said investment would need to increase.

As for today's monetary theory of Keynesian stimulus it is stealing the money from ordinary peoples pockets. Now if you wish to suggest that my money is not mine wtf is it? Does all your fiat paper belong to the Fed? It certainly seems so and you accomplished more divides between the 'wealthy' and the 'impoverished' than ever before in the name 'progressive liberalism'. You have deluded yourself Eric or will you finally agree that monetary expansion has been inequitable?

The most hilarious example of this 'monetary Keynesianism I have seen... so far is the 'Italian job'. The Parliament or whatever they have there voted a law that said the value of the central bank was X times greater than it had been previous to the law being passed. All private banks (which are broke) could only have 3% stake in the central bank which means some banks have to sell their shares - to the central bank - and receive a windfall injection of money because of the new value of the central bank. No doubt these fraudulent means of accounting will be picked up across the Atlantic to the detriment of those 60% odd citizens in debt and to the benefit of the small few who 'own' the most debt.

Keynes = debt and it is unsustainable long term but as he said "in the long run we all die" and ergo nmp (not my problem). What about our children?

astralis
03 Feb 14,, 14:49
snapper,


So Keynes agreed that printing money was unwise and thought the debts could continue forever? "‘No, that’s humbug … the national debt can’t keep on growing’. ..." Why has any business ever gone bankrupt in the Government or the central bank can continually bail out unprofitable and inefficient business's? The very meaning of making a profit or competition becomes redundant.


you're changing subjects again.

first, it'd be good for you to acknowledge that you were incorrect in your assumption that "Keynesian theory that suggested the post war economy would suffer high unemployment etc".

second,


You have deluded yourself Eric or will you finally agree that monetary expansion has been inequitable?



i think i've said this before, but monetary expansion is a lame second-best compared to fiscal action. however, as you may have noticed, there's a certain bloc in Congress that opposes fiscal action in any way.


'monetary Keynesianism I have seen

you keep on using this term, when it makes no sense whatsoever, and just highlights your ignorance of what Keynesianism stands for. monetarism is monetarism, and Keynesianism is Keynesianism. old Keynesians don't believe monetary actions will help, or are agnostic at best; new Keynesians believe it -may- help in certain conditions. neither of this represents Keynesians equating fiscal with monetary actions.


Keynes = debt and it is unsustainable long term but as he said "in the long run we all die" and ergo nmp (not my problem).

again, more ignorance. not surprising as niall ferguson made the same mistake. the context of that statement was a response to economists stating that no actions are needed in a recession or a depression because in the long-run the economy will recover by itself...in short, a push back against the neo-classicalists of his day, and the austrians of today.

here is the quote:



But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.

DOR
04 Feb 14,, 02:49

Doktor,


Depends on how you are going to measure the standard of living.

Caloric intake?


It's not even used to measure inflation.

Correctamundo! Did you want to measure inflation, or were we talking about standards of living?

. . . . .

Why, oh why do we compare the US to Europe?

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ USA _ _ _ EuroZone
Percent share of GDP in 2007 _ _ _ 25.7 _ _ _ _ _ _ 21.9
Estimated % share in 2013_ _ _ _ _ 22.9_ _ _ _ _ _ 17.3
Average real growth, 2008-13 _ _ +1.0% p.a. _ _ -0.3% p.a.

That’s why: highly similar economies, different results.


= = = = =

Snapper,



I asked you to confirm that US GDP expansion was 0.9% down last year


Yes, the latest (preliminary) data indicate that US real GDP growth in 2013 was +1.92%, down by 0.86% from the previous year’s 2.78%.

As compared to the previous year, that might just qualify as “not all is absolutely rosy with the US economy,” a point with which I would certainly not disagree. And, I would hope you might agree that if Europe were to record two such figures in succession, the fireworks would be blazing brighter than Chinese New Year over Victoria Harbour in dear old Hong Kong.

gunnut
04 Feb 14,, 03:18
All of this exhibition with words still doesn't answer my original question - Why it is always 'look at Europe, we ain't that bad'?

US market is (still) big enough to shape it's own fortune and other markets as well. What happened with 'When US sneezes the world catches cold'?

In the simplest form, both the dollar and the euro are fiat money. The economies are based on paper. People have more faith in American paper than European paper. Therefore dollar is strong.

Put yourself in the shoes of some 3rd world country businessmen. Do you have more faith in your own currency? The euro? Or the dollar?

Doktor
04 Feb 14,, 06:32
Correctamundo! Did you want to measure inflation, or were we talking about standards of living?
You wanted to measure standard of living and I asked how.

Caloric intake can be one of the measures, but you can intake as many calories and still have a crappy quality of life. It's one of those hard to quantify categories, for which even me and my wife will have different criteria, let alone 2 people on the opposite sides of the world.


Why, oh why do we compare the US to Europe?

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ USA _ _ _ EuroZone
Percent share of GDP in 2007 _ _ _ 25.7 _ _ _ _ _ _ 21.9
Estimated % share in 2013_ _ _ _ _ 22.9_ _ _ _ _ _ 17.3
Average real growth, 2008-13 _ _ +1.0% p.a. _ _ -0.3% p.a.

That’s why: highly similar economies, different results.

Is there something I can't formulate quite right?

Why the US is not doing well? -> Look at Europe.
"Son, why you got B in math?" -> "Mom, John got D"

That's not an answer.

astralis
04 Feb 14,, 15:02
Why the US is not doing well? -> Look at Europe.
"Son, why you got B in math?" -> "Mom, John got D"



as i said before, economics cannot always be anthromorphized like this. if the US has 10 problems and the EU has 12, then investors will invest more in the US. nor can we ignore the relative situation: as david said, if the EU were to have the US's growth figures, they'd be ecstatic.

it doesn't mean that we can't look at ways at improving US policy or we're merely using this assertion to slide all the issues under the rug.

Doktor
04 Feb 14,, 15:47
as i said before, economics cannot always be anthromorphized like this. if the US has 10 problems and the EU has 12, then investors will invest more in the US. nor can we ignore the relative situation: as david said, if the EU were to have the US's growth figures, they'd be ecstatic.
Which year? ;)


it doesn't mean that we can't look at ways at improving US policy or we're merely using this assertion to slide all the issues under the rug.
It surely sometimes looks like that. It's all fine to look around and see how things are done, and if they work and can be replicated.
However, that's not the answer when someone asks "Why the results are not as expected/projected/promised?". That's all I was saying.

snapper
04 Feb 14,, 21:41
snapper,

you're changing subjects again.

first, it'd be good for you to acknowledge that you were incorrect in your assumption that "Keynesian theory that suggested the post war economy would suffer high unemployment etc".

No. You are being selective in your acknowlegements of Keynisan thought at the time.

"It is probable, although less certain, that, in addition, the Federal government will initiate employment maintenance measures such as large scale public works, etc. But even these will not be adequate to maintain full employment or any approach to it." Paul Samuelson in 1943. Elsewhere he writes " The final conclusion to be drawn from our experience at the end of the last war is inescapable--were the war to end suddenly within the next 6 months, were we again planning to wind up our war effort in the greatest haste, to demobilize our armed forces, to liquidate price controls, to shift from astronomical deficits to even the large deficits of the thirties--then there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced." By Keynsian theory the sudden withdrawal of such massive 'war stimulus' ($98.4 billion in 1945 to $33 billion in 1948) should have created massive unemployment; that why they were panicking and why Bretton Woods was organised.


second,
i think i've said this before, but monetary expansion is a lame second-best compared to fiscal action. however, as you may have noticed, there's a certain bloc in Congress that opposes fiscal action in any way.

you keep on using this term, when it makes no sense whatsoever, and just highlights your ignorance of what Keynesianism stands for. monetarism is monetarism, and Keynesianism is Keynesianism. old Keynesians don't believe monetary actions will help, or are agnostic at best; new Keynesians believe it -may- help in certain conditions. neither of this represents Keynesians equating fiscal with monetary actions.

I acknowledge that you would prefer to borrow more and increase fiscal spending instead of using monetary expansion. That this is inefficient as it requires more interest be payed on debt long term seems to not bother you. As to your point about monetary Keynesianism, well you are just insisting that I use your language based on your definitions but as I reject this entire paradigm and all it's dogma I do not feel constrained to obey it's terminological platitudes.


again, more ignorance. not surprising as niall ferguson made the same mistake. the context of that statement was a response to economists stating that no actions are needed in a recession or a depression because in the long-run the economy will recover by itself...in short, a push back against the neo-classicalists of his day, and the austrians of today.

How on earth you can say this when you have just said that you would prefer to borrow more and use fiscal stimulus is quite beyond me. Even if you use monetary methods you are merely expanding personal credit/debt and devaluing the currency which as we have seen has left most normal people worse off and created asset bubbles.



Snapper,
Yes, the latest (preliminary) data indicate that US real GDP growth in 2013 was +1.92%, down by 0.86% from the previous year’s 2.78%.

Thank you! Did that hurt?

astralis
04 Feb 14,, 22:31
snapper,


No. You are being selective in your acknowlegements of Keynisan thought at the time.



lol, i quoted keynes on a question on Keynesianism and this is "being selective".

in any case, Samuelson is not as off as you claim; there was a recession for eight months in 1945 due to the massive industrial dislocation. and this was after war planners already began slowly reducing war orders by 1944 to minimize disruption at the end of the war.

either way, this is different from your blanket statement that "Post war Keynesian predictions were spectacularly wrong". one post-war prediction that was studded with qualifiers by a Keynesian guy was wrong.


By Keynsian theory the sudden withdrawal of such massive 'war stimulus' ($98.4 billion in 1945 to $33 billion in 1948) should have created massive unemployment

and i keep on telling you that you do not understand Keynesian theory. the reason why Keynes wasn't very concerned about the end of the war was because of an extreme amount of pent-up demand due to a decade+ of enforced savings, with full employment, with a significant transfer of government spending into the private sector (GI salaries, for one).

we are not at full employment now, savings never reached a high level, and demand remains low with the increasing amount of income inequality.


That this is inefficient as it requires more interest be payed on debt long term seems to not bother you.

and a depressed economy leading to lower tax receipts today leading to higher debt is efficient to you? we can go around and around in circles.


As to your point about monetary Keynesianism, well you are just insisting that I use your language based on your definitions but as I reject this entire paradigm and all it's dogma I do not feel constrained to obey it's terminological platitudes.



ah, the "making sh*t up" strategy. these are economic definitions used by the entire world, INCLUDING the austrians. they're not "my" definitions; feel free to study the precepts of Keynesian thought yourself by taking a basic econ 101 class. or, you know, actually reading Keynes' General Theory of Employment, Interest, and Money.


How on earth you can say this when you have just said that you would prefer to borrow more and use fiscal stimulus is quite beyond me. Even if you use monetary methods you are merely expanding personal credit/debt and devaluing the currency which as we have seen has left most normal people worse off and created asset bubbles.



you're changing arguments again. this was a direct response to your incorrect interpretation of Keynes' quote.

DOR
05 Feb 14,, 03:52
Doktor,

Yes, measuring standards of living is hard; deal with it. Calories count, especially when someone doesn’t get enough of them. Since we seemed to be having a problem agreeing on measurement units, I offered an alternative. If you don't like it, offer your own.

. . . . .

US vs. Europe. What part of +1.0% per annum in the 2007-13 period vs. -0.3% p.a. . . . over that many years . . . did you have trouble with? Was it the expectation that everything was going to go back to normal in just a few quarters, as if that was a recession?

It wasn’t. Deal with it.

. . . . .

The EuroZone economy has contracted in each of the past two years, whereas the US economy expanded. Final Consumption Expenditure in the EZ has fallen for eight straight quarters, vs. zero contraction in the US and +1.2% expansion in each of the past two years.

More?

US domestic demand grew 2.2% in the last two years; the EuroZone fell 1.8%. In the same period (and these are real numbers), and US gross fixed capital investment expanded 7.5% p.a., the EZ fell 3.8% p.a.

snapper
05 Feb 14,, 04:37
snapper,

lol, i quoted keynes on a question on Keynesianism and this is "being selective".

in any case, Samuelson is not as off as you claim; there was a recession for eight months in 1945 due to the massive industrial dislocation. and this was after war planners already began slowly reducing war orders by 1944 to minimize disruption at the end of the war.

either way, this is different from your blanket statement that "Post war Keynesian predictions were spectacularly wrong". one post-war prediction that was studded with qualifiers by a Keynesian guy was wrong.

It seems to me that there are so many qualifications for everything you claim about Keynesian thought that it is barely possible to say anything categorically true about it. You must at least conceed that not ALL Keynesians were so optimistic regarding post WW2 economic prosperity.


ah, the "making sh*t up" strategy. these are economic definitions used by the entire world, INCLUDING the austrians. they're not "my" definitions; feel free to study the precepts of Keynesian thought yourself by taking a basic econ 101 class. or, you know, actually reading Keynes' General Theory of Employment, Interest, and Money.

Try "all those Keynesians in the world use this terminology" and you may be correct. If you were a Marxist doubtless you would I insist that I refer to 'prolertariats' etc but if I categorically reject the Marxist interpretation of economic history clearly I also reject the existence of a proletariat. When criticising Marxism I would not use the category terms it defines as I reject the category distinction it claims to exist. Likewise with Keynesian where you will argue that only fiscal stimulus is Keynesian. I say this category definition is entirely abstract and artificial; stimulus whether fiscal or monetary when used for the purposes of trying to produce economic growth is the same thing and leads to the same results; unsustainable bubbles. These category definitions are for the Orthodox of the Keynesian faith and you are welcome to keep them if they please you. I reject your faith though because among other things I specifically reject this trivial and arbitrary distinction. Do not therefore expect me to use 'orthodox terminology' when criticising what I regard as a false distinction.

Far from '"making sh*t up" strategy' you seem unable to grasp the logical distictions inherent in your own arguments. Being unable to see them you cannot understand why someone who does not share your opinion rejects the arbitrary distinctions you are assuming and why they therefore must reject the very terminology you would like to impose on all. Get off your high horse astralis; "all the world accepts this distinction" is the fallacy of argumentum ad populem. Even if were true that all the world accepted your distinction, which certainly it is not, it would not make the distinction necessarily correct. Clearly reading too much Keynes has dimmed your logical faculties.


and a depressed economy leading to lower tax receipts today leading to higher debt is efficient to you? we can go around and around in circles.

Ok let's use the employment predictions of the Obama stimulus; even without the stimulus the predictions showed that employment would end roughly the same. With the stimulus and because of extra interest payments future growth will be worse as people have to pay more tax. I would also argue that centralised method of deciding where to make investment is also inefficient. The Government borrows large sums of money and spends it according to the dictates of it's favourite lobbyists and 'special interests'; those who election funds etc... The money is not the Governments but the peoples. They are better placed and have more right to spend it as they wish. Good companies that make products the people want or require will prosper and companies making bad products or offering unwanted services will be forced to change and this is how it should be. Centralised distribution can never get investments 100% correct; people spending their own money can never be 100% wrong.


you're changing arguments again. this was a direct response to your incorrect interpretation of Keynes' quote.

So does Keynesian theory rely on ever increasing debt? I argue that it does whether it be done through fiscal borrowing or monetary - one extends the national debt and the other individual debt. That is why this 'recovery' of yours is false. Yes you have stimulated demand as your Keynesian theory demands however all but the top 5% have become poorer and more in debt; great news to 'progressives' no doubt. It's a damn funny kind of recovery when 95% of people are getting poorer to feed demand... This is nothing new, it's exactly what happened post 2000 and that didn't end too well. It might be time to throw out all your old Keynesian mantra's; you have concentrated too much on stimulating demand by credit creation and neglected real wealth or savings creation. People who cannot afford to buy new cars or whatever should not be encouraged to do so but as saving is nigh on impossible you are forcing people to take credit that ordinarily they could not afford. Forcing people to run before they can walk doesn't end well.

astralis
05 Feb 14,, 05:06
snapper,


It seems to me that there are so many qualifications for everything you claim about Keynesian thought that it is barely possible to say anything categorically true about it. You must at least conceed that not ALL Keynesians were so optimistic regarding post WW2 economic prosperity.

it's not that hard.

fiscal action is justified when:

1. unemployment is high,
2. private demand is down.

post-WWII, neither was the case. today, both are.


You must at least conceed that not ALL Keynesians were so optimistic regarding post WW2 economic prosperity.

that's a far cry from stating that keynesians were uniformly pessimistic. "not so optimistic", sure, just because no one can accurately predict geopolitical events years out.


Try "all those Keynesians in the world use this terminology" and you may be correct.

and this is incorrect.

for instance, monetarists don't agree that monetary and fiscal actions are the same. for different reasons, keynesians don't agree that monetary and fiscal actions are the same. ONLY austrians argue that way.

there are fairly set definitions of what goes into each economic theory, and economic theorists debate each other using these set definitions. you are arbitrarily creating your own definitions.

so i have no problem with you stating that you think monetary and fiscal actions don't work. i'll happily debate you there until the cows come home (and i think i have).

i DO have a problem with you describing monetarism and keynesianism as the same thing. it's as if i told you that austrians and monetarists are the same thing because both schools believe that money supply play a role in inflation.

ultimately hayek and the austrians had different arguments he used with Keynesians and different arguments he used with monetarists.


It might be time to throw out all your old Keynesian mantra's; you have concentrated too much on stimulating demand by credit creation and neglected real wealth or savings creation. People who cannot afford to buy new cars or whatever should not be encouraged to do so but as saving is nigh on impossible you are forcing people to take credit that ordinarily they could not afford.

this makes no sense.

my spending is your income. your spending is my income. if everyone saves and no one spends, pray tell-- where does demand come from? how is "wealth created" if no one, private or public, is spending money?

GVChamp
05 Feb 14,, 05:21
Basic simple Keynes assumes that the economy uses savings and investment as supply-demand. To put it simply. There is no "stable" unemployment level. The "stability" is when investment meets savings and that unemployment could be 10% or 20% or 50%.
Basic monetary economics would be considering the monetary mechanism as the DECISIVE factor in determining a recession. To put it simply. If there is a recession, it's because money is scarce.

They have some different ways of looking at the world. A popular monetary blogger would be Scott Sumner at the Money Illusion. There would be some broad agreement between them though, certainly more so than with mainstream Austrians. To most Austrians, though, it'd be like arguing if Hitler or Stalin is more totalitarian or whether coral or teal is the lamer color.

snapper
05 Feb 14,, 08:02
snapper,

and this is incorrect.

for instance, monetarists don't agree that monetary and fiscal actions are the same. for different reasons, keynesians don't agree that monetary and fiscal actions are the same. ONLY austrians argue that way.

there are fairly set definitions of what goes into each economic theory, and economic theorists debate each other using these set definitions. you are arbitrarily creating your own definitions.

You really are a strange creature... I argue that when monetary policy is used for to achieve Keynesian ends ie. it stops being used to target inflation which you would no doubt like to pigeon hole as a 'monetarist' ambition and is specifically used to create credit to boost demand and through that employment - what both the Fed and the BoE are now doing - it has ceased to be used for monetarist purposes and is being used to achieve Keynesian ends; hence I call it monetary Keynesianism. Now I am glad you no longer dispute my right to use whatever terminology I think best and I apologise if I do not fit into one of defined 'isms' or 'ologies' but it's pretty clear that this is no longer monetarism in the normal sense. If what they are doing not comply to your orthodox terminology that is not my fault. If you wish to label my observation as Austrian fine - call it snapperism if you want; bothers me not.


ultimately hayek and the austrians had different arguments he used with Keynesians and different arguments he used with monetarists.

I do not entirely agree with monetarism even in the classical form but when it is used for Keynesian ends I call it a dog-duck as it were; it walks like a dog but makes quacking noises and claims it's going to lay eggs.


my spending is your income. your spending is my income. if everyone saves and no one spends, pray tell-- where does demand come from? how is "wealth created" if no one, private or public, is spending money?

What about when nobody saves? I welcome GVChamp's observation;


Basic simple Keynes assumes that the economy uses savings and investment as supply-demand. To put it simply. There is no "stable" unemployment level. The "stability" is when investment meets savings and that unemployment could be 10% or 20% or 50%.

Savings and investment have not met. There are virtually no savings! More credit has been created to stimulate demand so people are now more in debt than they were as is the country. Essentially what the west and probably the world needs is a massive debt write off all around but the same errors would only be repeated almost certainly as the fiat currency system is so clearly open to abuse. Yet by all these tired old paradigms we are forcing more debt on those already over burdened with debt and devaluing their currency simultaneously... and this we are told is wisdom! It is insane. You claim to be promoting equality and have enriched the richest while making debt slaves of the poorest... More madness. Get the Government out of the money business and abolish the central banks might not be a bad start.

astralis
05 Feb 14,, 14:46
snapper,


You really are a strange creature... I argue that when monetary policy is used for to achieve Keynesian ends ie. it stops being used to target inflation which you would no doubt like to pigeon hole as a 'monetarist' ambition and is specifically used to create credit to boost demand and through that employment - what both the Fed and the BoE are now doing - it has ceased to be used for monetarist purposes and is being used to achieve Keynesian ends; hence I call it monetary Keynesianism. Now I am glad you no longer dispute my right to use whatever terminology I think best and I apologise if I do not fit into one of defined 'isms' or 'ologies' but it's pretty clear that this is no longer monetarism in the normal sense

sigh. this shows you don't understand monetarism, either, because you're confusing the theory with the day-to-day actions/mandates of the Fed.

monetarism arose as a reaction to keynesianism. monetarism, in effect, said that recessions can be dealt with as long as you give the Fed free reign to control the money supply, and that as a result fiscal actions would not be needed.

the main focus of monetarism is not "target inflation". that's one of the two mandates of the Fed.


More credit has been created to stimulate demand so people are now more in debt than they were as is the country.

care to back that up with data?

35420

35421

GVChamp
05 Feb 14,, 18:58
Snapper,

I would take a look at the figures Astralis provided. There seems to be a strong trend towards somewhat higher private savings rate, and higher corporate savings rates as well. There's definitely someone saving money somewhere. Also, just to add, savings=investment is an accounting identity in national income accounting, so it's "always" true. Like, if 1+1=2, then 2-1=1, it's always true that savings=investment.

However, if "investment" is undesired, IE businesses are accumulating inventories they do not want, they fire workers until they are no longer accumulating inventories. This is how the savings-investment equilibrium is reached. A monetarist would say, the issue is that people want to hold more money. Whatever the reason, that's the effect. This has the effect of draining money out of the economy and creating the recession.

This more or less appears to be what happened in 2008. The sub-prime bubble bursting created a flight to quality and a huge increase in risk premiums. People hoarded cash, and businesses ended up laying off workers and GDP fell to the floor. While I do not agree with all the responses to the recession, and think we have a big problem with long-term unemployment benefits, SSDI, etc. it's hard to say that the model has failed or failed to prescribe some "good" policies (issue more debt, print more money).

I would say that the recovery has been meager but the US has defintiely recovered a bit, while Europe continues to flounder. Japan is just SOL.

DOR
06 Feb 14,, 04:39
[/SIZE]snapper,


when monetary policy is used for to achieve Keynesian ends ie. it stops being used to target inflation...

I’m not sure what you mean by “Keynesian ends,” or why seeking to reduce unemployment by increasing the money supply – or, seeking to reduce inflation by tightening – would negate inflation targeting. In the first case, the objective is to raise inflation so as to stimulate hiring (see this week’s excellent article in The Economist on sticky nominal wages and the difference between the US and UK inflation rates in recent years); in the second, it is to reduce inflation by curtailing the money supply.

As for savings v. investment, remember that an economy can use savings – or investment – than isn’t sourced internally. US T-bills sold to the UK, for example, tap into UK savings.

And, no, posting data never hurts. But, what was the point of saying US growth slowed, when it was still miles ahead of the EuroZone economies?

snapper
06 Feb 14,, 06:24
35425

35426

35427

astralis
06 Feb 14,, 15:24
snapper,

i'm not sure how these three graphs support your case.

your assertion is that Fed meddling has resulted in greater income inequality, decreases household income, and leads to greater household debt.

yet the Fed has been around since 1913 and the modern Fed has been around since the 1950s. how do you explain why US household income has grown since then? did the Fed stop operations from 1992-1998, or from 2004-2008?

moreover, your household debt to GDP ratio is not complete. here's the latest data.

35429

how do you explain the decline of the debt ratio if your assertion is that Fed actions increase household debt? according to your theory, we should see a huge increase in the debt ratio in the last few years given the extraordinary Fed actions, not a 20% decline.

by the way, guess which credit mechanism was introduced in the 60s-70s and became popular throughout the 1980s-1990s.

Doktor
06 Feb 14,, 15:41
Few questions:

1. Why no comment on Median Income?
2. Can someone explain to me how Americans reduced the debt with lower median incomes?
3. How is household debt measured?

astralis
06 Feb 14,, 16:29
doktor,


1. Why no comment on Median Income?


i did mention it. there's clearly factors other than Fed operations that explain why median income has increased or fallen.


2. Can someone explain to me how Americans reduced the debt with lower median incomes?


by vastly reducing consumption, thus lowering demand.


3. How is household debt measured?

Household debt - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Household_debt)

GVChamp
06 Feb 14,, 17:38
Median household income (and declines there-in) does not necessarily reflect business cycle fluctutations. Or, to consider it another way, how about just median real hourly earnings? Those have not risen for white men since the 1970s. That does not mean we have been in a recession since 1972.
Households can afford to pay down their debts if they increase their savings rate, which they have done substantially. At the height of the bubble, personal savings rate were zero and negative. They aren't "high" right now, but ANY savings is substantially higher than what we were at before the bubble burst.

astralis
06 Feb 14,, 18:16
median income and the savings rate is closely related to inequality. the stagnation of middle-class income in the 1980s was in parallel to the rise of the credit card.

because wealth is to a great extent a positional good, people "kept up with the Joneses" despite this stagnating income by borrowing more on credit cards and later, against the value of their homes. it's no accident that the term "mass market luxury" began springing up in the 1990s as well.

Doktor
06 Feb 14,, 18:53
I am a skeptic (or an idiot if one prefers ;) ), but if my income is lower now, I lower the demand and save more? On top of that I reduce my debt?

Somehow, somewhere in what's left of my gray matter I am sure this sharp decline in debt vs GDP is some perfect storm of several factors.
Otherwise, I'd have to question if the books are cooked and I am (still) not that kind of a person.

GVChamp
06 Feb 14,, 19:11
IIRC, the savings rate took a dive after the Long Recession of the early 1980s and never really recovered. After that it just kept trending downwards. Only relatively recently has the savings rate staged any kind of come-back (and GOK how permanent it will be). My thought is that people thought they were richer than they actually were with the stock market bubble and subsequent home price bubble and people are starting to get a little more realistic about what they can actually afford.
I do not think this explanation REQUIRES income inequality or positional goods...because then it would be continuing now. Instead we're seeing a lot more savings. I'd say you would have seen the same thing even if Gini decreased, because the critical factors were 401k values and housing equity.

Either way, it's not directly related to business cycle fluctations. You can have an economy that is "recovering" towards full employment while still experincing declining median incomes. The decline of the middle class is a long-term trend strecthing all the way back to the 1970s.

It is not at all clear that we should even be looking at inflation for counter-cyclical policy. Your more modern monetarists want to target NGDP futures. Inflation is an interesting theoretical concept, not a measurable variable that should guide policy-making.
TheMoneyIllusion » More reasons to ignore inflation (http://www.themoneyillusion.com/?p=24477)
The summary is here:

Macroeconomists need to start ignoring inflation (unless they are trying to compare living standards across time–a pretty hopeless enterprise.) And they need to start focusing on the nominal aggregates that really matter, NGDP and nominal hourly wages. It’s the W/NGDP ratio, stupid. (And always has been.)

astralis
06 Feb 14,, 20:28
GVChamp,


I do not think this explanation REQUIRES income inequality or positional goods...because then it would be continuing now. Instead we're seeing a lot more savings. I'd say you would have seen the same thing even if Gini decreased, because the critical factors were 401k values and housing equity.


well, i'd say part of the reason why it's not continuing is because the people lending credit were burned very badly (sometimes completely through fault of their own: see bank lending standards, robo-signing, etc).

and of course, there's parts of this that are not entirely virtuous: debt is "eliminated" via bankruptcy or defaulting on the mortgage, or the people whom run out vice paying for their underwater house.

note, too, that the savings rate is still fairly low despite all of this. the main driver of this, however, is not fed policy, but income stagnation as a result of technology and globalization. the world labor pool became exponentially bigger throughout the 90s and 2000s.


Your more modern monetarists want to target NGDP futures. Inflation is an interesting theoretical concept, not a measurable variable that should guide policy-making.
TheMoneyIllusion » More reasons to ignore inflation
The summary is here:


damn, didn't know monetarists were even around anymore. i mean bernanke took monetarist solutions and just went with it. it's pretty clear now that the monetarist solution might work for recessions but it's too puny a gun for depressions. i wonder what Friedman would think were he alive.

snapper
06 Feb 14,, 23:24
Few questions:

1. Why no comment on Median Income?
2. Can someone explain to me how Americans reduced the debt with lower median incomes?
3. How is household debt measured?

Statistical anomalies like the 97m US citizens who aren't 'unemployed' but who aren't working. Great world innit when all statistics are slanted for political ends? 'Tis entirely the same within the EU - if not worse.



snapper,

i'm not sure how these three graphs support your case.

your assertion is that Fed meddling has resulted in greater income inequality, decreases household income, and leads to greater household debt.

The increase in any household income has largely been credit in either national debt or the Fed's "assets" of which those purchased before May last year now show a loss so perhaps we can quit the 'QE' BS and call it what it is; debt monetisation.

35439

35440

Just pluses and minus's on who holds the debt.



Median household income (and declines there-in) does not necessarily reflect business cycle fluctutations.

GV,

Please define a 'business cycle'.

DOR
07 Feb 14,, 04:17
Since shadowstats isn't using recognized data, here's the real stuff.

DOR
07 Feb 14,, 10:35
The US goods and services trade deficit fell by 11.8% in 2013, to $471.5 billion. That represents 2.8% of GDP, down from 3.3% in 2012. The merchandise trade deficit, 4.1% of GDP, was the lowest since 2001.

The surge in exports was very broad based, with near equal contributions from foodstuffs, industrial and capital equipment, autos and consumer goods. On the imports side, it was mostly down to oil: $45.4 billion less spent on foreign crude last year, as compared to a $7.8 billion reduction in total merchandise imports.

By market, exports to China made the biggest difference, rising 11.4% and accounting for 37.7% of the total (2.1%) increase in US sales abroad. Shipments to Canada and Mexico, up 2.3%, were the next largest contributor at 35.3% of the total rise. Sales to Europe fell 0.5% and those to Japan by 7.1%. Imports from Germany (+5.6%), Korea (+5.4%) and Canada (+2.1%) were among the few bright spots in a dismal year.

Source: http://content.govdelivery.com/attachments/USESAEI/2014/02/06/file_attachments/268470/International%2BTrade%2B%2528December%2B2013%2529. pdf

snapper
08 Feb 14,, 09:23
Since shadowstats isn't using recognized data, here's the real stuff.

Actually shadowstats merely uses old methodology - used by Fed etc before they started playing with statistics to make them appear better. I notice though that you do not mention the January jobs report which came out yesterday... It was expected that 180,000 new jobs would would be filled in December but this was missed. Only 113,000 jobs were added. Funny you don't mention the latest news.

Doktor
08 Feb 14,, 09:32
Actually shadowstats merely uses old methodology - used by Fed etc before they started playing with statistics to make them appear better. I notice though that you do not mention the January jobs report which came out yesterday... It was expected that 180,000 new jobs would would be filled in December but this was missed. Only 113,000 jobs were added. Funny you don't mention the latest news.

If only the three graphs you initially posted were using same methods and sources.

GVChamp
09 Feb 14,, 14:08
GV,

Please define a 'business cycle'.

"Business cycle" refers to the observed tendency of market economies to experience periods of rapidly fluctuating economic activity without apparent regard to underlying fundamentals. There has been a great deal of literature written about the topic and remains a source of contentious debate among economists. Some popular ideas include the "periodic crisis" model favored by communists, the "mis-matched interest to discount rate" model of Austrians, the "bulls and bears" model of Keynesians, the "money shortage" model of monetarists, and the "rent is too damn high" model of the internet.

So....not sure where you are going with this? That since the CPI is going up the Keynesian model of business cycles is wrong?

DOR
10 Feb 14,, 02:33
Actually shadowstats merely uses old methodology - used by Fed etc before they started playing with statistics to make them appear better. I notice though that you do not mention the January jobs report which came out yesterday... It was expected that 180,000 new jobs would would be filled in December but this was missed. Only 113,000 jobs were added. Funny you don't mention the latest news.

Isn't that what I said? OK, it isn't. What I said is that they are not using recognized sources. What I should have said is they haven't updated their methodology. Same difference.

The January jobs report? No, I didn't mention it. I generally don't like to gloat about how bad the forecasters are who generate the media-favored "expectations" that are constantly missed. Professional courtesy, I suppose.

But, since you asked, January was the 42nd straight month of year-on-year job growth, and at +1.3% considerably faster than the previous four months. Perhaps too early to tell if this is a turning point, but highly positive nonetheless. Unless, of course, one was betting on "expectations."

At 6.58%, the unemployment rate has fallen (or, held steady) for 13 months in a row and is now at about where it was in November 2008. On a six-month rolling average, it is below 7% for the first time in five years. Full-time employment is at its highest in 62 months.

Manufacturing employment grew for the 40th month in a row, but remains less than 6.5% of non-farm employment (it was 6.2%) for the 58th month in a row. The number of people making things is now at the level it was at in the Fall of 1939.

cyppok
10 Feb 14,, 08:43
Mish's Global Economic Trend Analysis: Gallup vs. BLS Unemployment Differs by Nearly 3 Million Workers (http://globaleconomicanalysis.blogspot.com/2014/02/gallup-vs-bls-unemployment-differs-by.html)

Unemployment Rate Comparison

BLS: 7.0%
Gallup: 8.9%


The non-seasonally adjusted Civilian Labor Force is 154.381 million. Thus, the 1.9 percentage point difference in the unemployment rate equates to about 2.93 million employees.

Something is wrong with at least one of the above data series.


Gallup Daily: U.S. Employment (http://www.gallup.com/poll/125639/Gallup-Daily-Workforce.aspx)

DOR
10 Feb 14,, 10:55
Let's think about what might be the differences between the Gallup and BLS results.

1. Different sample methodology.
2. Different sample size.
3. Different sample geographic coverage.
4. Different sample period.
5. Different seasonal adjustment (i.e., none in Gallup's case).

Or, it might be that one's the agency charged with calculating the data and the other is an opinion pollster.

I'm going to stick with the not-for-profit on this one.

Bigfella
10 Feb 14,, 11:20
Gallup figures based on 30,000 people surveyed, BLS on 60,000.

GVChamp
11 Feb 14,, 19:03
At this size, I am not confident the sample size makes a huge difference.

DOR
12 Feb 14,, 03:02
At this size, I am not confident the sample size makes a huge difference.

So, what might explain it?

Doktor
12 Feb 14,, 06:58
So, what might explain it?

The usual suspect. Methodology.

GVChamp
12 Feb 14,, 16:26
I am not sure. I do not see any clear explanations. However, this is something that's been around for a while...not exactly new:
Why is Gallup's unemployment number so high? | WashingtonExaminer.com (http://washingtonexaminer.com/why-is-gallups-unemployment-number-so-high/article/1170266)

Julie
12 Feb 14,, 18:11
U.S. Economic Indicators Improve in 2013 (http://www.gallup.com/poll/166784/economic-indicators-improve-2013.aspx)


While the unemployment rate as reported by the Bureau of Labor Statistics has declined since 2010, the U.S. still has a ways to go before getting back to pre-recession levels of around 4.5% to 5%. Gallup found that unemployment was lower in 2013 compared with recent years but its Payroll to Population rate -- the percentage of adults employed full time by an employer -- showed no improvement in 2013. This may be attributable to more Americans dropping out of the workforce or more becoming self-employed.

That last sentence is what methodology does. It fails to mention that just MAYBE there was no improvement in full time employment due to the ACA? I can't believe anyone would not consider that having an effect on full-time employment. Am I wrong?

astralis
12 Feb 14,, 19:16
julie,


It fails to mention that just MAYBE there was no improvement in full time employment due to the ACA? I can't believe anyone would not consider that having an effect on full-time employment.

why would it have a major effect for 2013 when major provisions of the ACA didn't come into effect until 1 Jan 2014? and the employer mandate, not until 2015?

moreover most businesses (85%) don't seem to think it'll affect their hiring practices anyway:

Economists See Little Effect on Hiring From U.S. Health-Care Law - Businessweek (http://www.businessweek.com/news/2014-01-27/economists-see-little-effect-on-hiring-from-u-dot-s-dot-health-care-law)

cyppok
13 Feb 14,, 02:12
julie,



why would it have a major effect for 2013 when major provisions of the ACA didn't come into effect until 1 Jan 2014? and the employer mandate, not until 2015?

moreover most businesses (85%) don't seem to think it'll affect their hiring practices anyway:

Economists See Little Effect on Hiring From U.S. Health-Care Law - Businessweek (http://www.businessweek.com/news/2014-01-27/economists-see-little-effect-on-hiring-from-u-dot-s-dot-health-care-law)

CBO: Obamacare Creates (http://www.investorsinsight.com/blogs/gary-d-halbert-between-the-lines/archive/2014/02/06/cbo-obamacare-creates-disincentive-to-work.aspx)

On Tuesday, the Congressional Budget Office reported that the Affordable Care Act (aka Obamacare) is causing Americans to work less or not at all. This was a surprising turnabout for the non-partisan budget agency that Democrats cited repeatedly when selling Obamacare. Now the CBO says the economy will lose the equivalent of two million full-time workers by 2017and 2.5 million over the next decade, a threefold increase over its prior estimate.

The CBO disagrees, most small businesses also disagree they don't want to hire anyone because the impact already apparent in their premium/deductible 'robbery' hike simply annihilates any margins they have for the sake of fattening the profits of insurance companies.

Small Business Health-Care Premiums Have Nearly Doubled Since 2009 - Businessweek (http://nybw.businessweek.com/articles/2014-02-06/small-business-health-care-premiums-nearly-double-since-2009)

Julie
13 Feb 14,, 03:30
julie,

why would it have a major effect for 2013 when major provisions of the ACA didn't come into effect until 1 Jan 2014? and the employer mandate, not until 2015?

moreover most businesses (85%) don't seem to think it'll affect their hiring practices anyway:

Economists See Little Effect on Hiring From U.S. Health-Care Law - Businessweek (http://www.businessweek.com/news/2014-01-27/economists-see-little-effect-on-hiring-from-u-dot-s-dot-health-care-law)The same reasons everyone was getting health insurance cancellations in the mail last year I guess. I dunno, but here ya go:

Poll: 41% Of Small Businesses Froze Hiring Due To Obamacare, 19% Have Laid Off Employees | Mediaite (http://www.mediaite.com/online/poll-41-of-small-businesses-froze-hiring-due-to-obamacare-19-have-laid-off-employees/)

7 Companies That Have to Lay Off Employees to Deal With Obamacare - PolicyMic (http://www.policymic.com/articles/60661/7-companies-that-have-to-lay-off-employees-to-deal-with-obamacare)

PICKET: Companies plan massive layoffs as Obamacare becomes reality - Washington Times (http://www.washingtontimes.com/blog/watercooler/2012/nov/8/picket-companies-plan-massive-layoffs-obamacare-be/)

This one is my favorite to answer your question -- the Thought Police:

Thought Police: Firms must swear ObamaCare not a factor in firings | Fox News (http://www.foxnews.com/politics/2014/02/11/thought-police-firms-must-swear-obamacare-not-factor-in-firings/)

Now I have a question for you Astralis. IF there is no issue as to the ACA affecting job lay-offs and work hour cut backs, why the heck would our government come up with the Though Police and make businesses SWEAR that their lay-offs and firings aren't due to the ACA?

DOR
13 Feb 14,, 10:45
Congressional Budget Office data taken out of context as ‘job’ losses tied to health-care law

The Congressional Budget Office report on the impact of the Affordable Care Act was released on Tuesday, and already we have the first attack ads.
The Fact Checker devoted one column to explaining what the CBO’s report actually meant. But we have long learned that all the fact checks in the world won’t stop politicians if they think an attack line moves voters. So how do these first attacks fare?

The Facts
In its report, the CBO said the Affordable Care Act, a.k.a. Obamacare, would reduce the number of hours worked by the equivalent of 2.5 million full-time workers by 2025. That means that workers will decide to reduce their hours, not that employers are reducing the number of jobs.
A fierce dispute has erupted between liberal and conservative economists about what this figure means, and depending on your political perspective, both sides make compelling cases. (Conservatives decry the smaller economy that will result; liberals celebrate that workers will not be bound to their jobs because of health insurance.) But that’s not The Fact Checker’s business. Our concern is whether the CBO’s report is being described correctly by politicians.
The Thom Tillis ad flashes this language when the voiceover asks, “How many workers will have to lose their jobs?” because of Hagan’s support for the health-care law: “Congressional Budget Office estimates 2 million lost jobs due to Obamacare.”
But that’s not what the report says. Don’t take our word for it. Here’s what CBO Director Douglas W. Elmendorf said in congressional testimony when he was asked about claims that jobs are being lost because of the law:
“The reason that we don’t use the term ‘lost jobs’ is there’s a critical difference between people who like to work and can’t find a job or have a job that was lost for reasons beyond their control and people who choose not to work,” he said, giving the example of someone who was laid off versus someone who decided to spend more time with their family or retire early.
The Tillis ad gets in trouble by using language that asserts that the CBO says there will be “2 million lost jobs” because of the law. First of all, it’s not jobs but workers. Second, it is lacking context, because that is off a base of more than 160 million workers (i.e., less than 2 percent.)
Now, all things being equal, a reduction of 2 million full-time workers eventually would mean 2 million fewer jobs. But the CBO estimate mixed full-time and part-time workers, and then the total number of hours expected to be lost was converted to a full-time equivalent. Some workers might reduce their weekly hours by only an hour or two, so the impact on overall jobs would be muted.
“Whether faulty government policies drive people to quit work, or if a person is fired, or if a person is not hired in a job they’d otherwise get because companies can’t expand, that is a job that is lost,” said Jordan Shaw, campaign manager for Tillis.
The National Republican Senatorial Committee news release is also an interesting example. The headline actually tries hard to be restrained and relatively accurate. It says that the law will “reduce employment” and then carefully notes this is the “equivalent” of a number of jobs. The release further says “fewer people will be employed and fewer hours worked because of the unpopular law.” That’s phrased correctly.
Brad Dayspring, a spokesman for the committee, said the release purposely avoided saying the law would “cost” jobs. “We did that with cognizance because we want to be factual while pointing out the potential harm of what we believe to be a terrible policy,” he said.
The problem is the number of jobs, 74,469, which is derived from an analysis by the Americans for Tax Reform titled “How Many Jobs Might Obamacare Cost Your State?” The anti-tax group did a simple calculation based on how many jobs each state currently has.
But that is inherently misleading. Not every state expanded Medicaid, so the effects are different. Indeed, North Carolina is one of those states that did not expand Medicaid, so right away, that means the impact on worker participation will be lower than in other states. Moreover, every state has a different distribution of income, so there can be vast differences in the percentage of people who will be affected by the subsidies for low-income workers and the law’s taxes on the wealthy. That could also significantly change the result, state by state.
Finally, the emphasis on “jobs” once again takes the claim further from the CBO’s initial emphasis on workers. As we noted, because the estimate of hours is a mix of full-time and part-time work, there is no 1-1 relationship between the reduction in full-time equivalent workers and the decrease in jobs that will exist in the economy.
“The table does not make any firm claims that a state will lose x or y number of jobs,” said Ryan Ellis, the tax reform group’s tax policy director, describing the study as a “starting point for research.”
He defended the “cost jobs” language, saying: “We would say that if a person chooses not to work because Obamacare has made their working a prohibitive financial choice for them, then that’s a job killed by Obamacare.”

The Pinocchio Test
We are going to excuse the National Republican Senatorial Committee from the Pinocchio Test, because it is clear they tried hard, within the confines of a news release, to accurately describe the CBO report. The poison root was the tax reform group’s analysis, with its misleading headline.
Both the Tillis campaign and that organization fall into the trap of saying a specific number of jobs will be lost. This is not what CBO said, as made clear by Elmendorf’s testimony. For non-economists, the use of the phrase “jobs” is especially confusing because it sounds like a decision made by employers rather than workers.
There is certainly damaging material in the CBO report, ripe for plucking. Keith Hennessey, a former Bush administration official, has offered some variations of possible attack lines, such as “Obamacare will shrink our economy by driving millions of moderate income people to work less, and discouraging some of them from working at all.” That’s a negative interpretation — liberals would emphasize the benefits—but it also is a statement that accurately reflects what the CBO said.
But in the meantime, “costs jobs” attacks are going to keep earning Three Pinocchios.

The Washington Post, February 9, 2014
Congressional Budget Office data taken out of context as ‘job’ losses tied to health-care law - The Washington Post (http://www.washingtonpost.com/politics/congressional-budget-office-data-taken-out-of-context-as-job-losses-tied-to-health-care-law/2014/02/08/1e475be6-9001-11e3-b46a-5a3d0d2130da_story.html)

Triple C
13 Feb 14,, 11:58
The CBO report is actually good news. The CBO maintains that demand for labor has not decreased; rather, 2.5 workers are leaving the workforce or reduce their participation because they no longer fear losing their insurance upon retirement or additional part time jobs would disqualify them from subsidies. This means positions are now vacated for people who need them more.

cyppok
13 Feb 14,, 15:16
The CBO report is actually good news. The CBO maintains that demand for labor has not decreased; rather, 2.5 workers are leaving the workforce or reduce their participation because they no longer fear losing their insurance upon retirement or additional part time jobs would disqualify them from subsidies. This means positions are now vacated for people who need them more.

You should work for theOnion network (http://www.theonion.com/video/i-would-be-absolutely-perfect-for-this-report-1400,32982/).

The CBO is generally the muppet of the government its' critique is so benign and soft that it is almost huggable propaganda, for it to go into benign criticism we must really be on our way to 'improvement'.

There are no plans to replace those leaving workers until the horizon is clear with the healthcare mandate situation. That is kind of the crux of the matter. They may leave but they won't come back unless its' part time less than 25 hours or whatever the new threshold is.

Julie
13 Feb 14,, 18:17
That is why I did not link to the CBO -- they are definitely the administration's spin machine. I linked individual companies situations, which is what WE NEED TO LOOK AT being they are the critical ones being affected by this huge law and the impact on employment.

bonehead
14 Feb 14,, 01:17
That is why I did not link to the CBO -- they are definitely the administration's spin machine. I linked individual companies situations, which is what WE NEED TO LOOK AT being they are the critical ones being affected by this huge law and the impact on employment.

You also need to look at the fact that the job market is not universal. Some places geographically are doing really well while other parts of the country hasn't gotten a sniff.

DOR
14 Feb 14,, 02:21
The same reasons everyone was getting health insurance cancellations in the mail last year I guess. I dunno, but here ya go:

Poll: 41% Of Small Businesses Froze Hiring Due To Obamacare, 19% Have Laid Off Employees | Mediaite (http://www.mediaite.com/online/poll-41-of-small-businesses-froze-hiring-due-to-obamacare-19-have-laid-off-employees/)

7 Companies That Have to Lay Off Employees to Deal With Obamacare - PolicyMic (http://www.policymic.com/articles/60661/7-companies-that-have-to-lay-off-employees-to-deal-with-obamacare)

PICKET: Companies plan massive layoffs as Obamacare becomes reality - Washington Times (http://www.washingtontimes.com/blog/watercooler/2012/nov/8/picket-companies-plan-massive-layoffs-obamacare-be/)

This one is my favorite to answer your question -- the Thought Police:

Thought Police: Firms must swear ObamaCare not a factor in firings | Fox News (http://www.foxnews.com/politics/2014/02/11/thought-police-firms-must-swear-obamacare-not-factor-in-firings/)

Now I have a question for you Astralis. IF there is no issue as to the ACA affecting job lay-offs and work hour cut backs, why the heck would our government come up with the Though Police and make businesses SWEAR that their lay-offs and firings aren't due to the ACA?

Julie,

I’ll start by admitting I’d never heard of “Mediaite.com,” and can’t find an “about us” or other self-identifier page. Still, the stories that pop up are from the WSJ, Fox, Fox again (OK, Jon Stewart making fun of President Obama), a “we had enough troops in Benghazi but she wouldn't authorize their use” attack piece and another anti-Obama piece saying the GOP has a nut-job who doesn’t think Mr Obama really believes in religious freedom. That’s the best I can do on this site’s street cred.

The survey cited is of 603 small businesses with less than $20 mn in annual sales. However, the law only applies to companies with more than 50 full-time employees, so the sample group isn’t necessarily representative.

Down one.

The second source (PolicyMic) has quite a number of what I would call “progressive” perspectives, including defense of Russian LGBTs and a tape about guests on Fox News destroying the interviewers with facts. The story, however, is about 7 (that’s seven) companies that had “to lay off employees to deal with Obamacare” . . . in August 2013 . . . before Obamacare cost them a dime.

Down two.

Then we come to those well known “fair and balanced” sources, the Washington Times and Fox News.

Down three and down four.
Time to punt.

= = = = =

cyppok,

The Congressional Budget Office is the single most bipartisan source of professional expertise on all matters related to the US federal budget. The fact that you disagree with it says much, much more about you than about the CBO.

Julie
14 Feb 14,, 02:55
DOR:

You did not comment about the "Thought Police" that "Firms must swear ObamaCare is not a factor in firings." Why would this be created if not a factor directly related to the impact of the ACA?

Triple C
14 Feb 14,, 06:07
You should work for theOnion network (http://www.theonion.com/video/i-would-be-absolutely-perfect-for-this-report-1400,32982/).

The CBO is generally the muppet of the government its' critique is so benign and soft that it is almost huggable propaganda, for it to go into benign criticism we must really be on our way to 'improvement'.

There are no plans to replace those leaving workers until the horizon is clear with the healthcare mandate situation. That is kind of the crux of the matter. They may leave but they won't come back unless its' part time less than 25 hours or whatever the new threshold is.

The ad hominen is kind of lame, dude.

You are going at it, shredding evidence that doesn't support your view--again--without ever proving the body of evidence is false, or present an alternative set of data that has better credibility. Hey, if the scales say you're fat and getting fatter, it might be true that it nurses a grudge against you--or maybe you really have been a pig. If CBO is so obviously a liberal propaganda machine, why had Mitt, Ryan, Rubio et al been yearning so eagerly to get words of approval from the agency? The credibility of the CBO is, in any event, solid enough that the GOP has been quicker at citing its reports than they can read it.

snapper
14 Feb 14,, 16:58
cyppok,

The Congressional Budget Office is the single most bipartisan source of professional expertise on all matters related to the US federal budget. The fact that you disagree with it says much, much more about you than about the CBO.

If that is the case then by the same token your acceptance of the data says nothing about the data itself but alot about you... just saying.

astralis
14 Feb 14,, 18:19
julie,


Now I have a question for you Astralis. IF there is no issue as to the ACA affecting job lay-offs and work hour cut backs, why the heck would our government come up with the Though Police and make businesses SWEAR that their lay-offs and firings aren't due to the ACA?

a toothless "self-attestation" that companies aren't deliberately trying to game the law now = "swearing their layoffs and firings aren't due to the ACA".

it's sort of like saying that your signature at the bottom of your 1040 verifying that you didn't lie on your tax reporting is an example of a dictatorial police state.

but now you're changing the subject. where is the evidence that the ACA had a major effect on employment in 2013? you're not presenting evidence-- you're presenting insuinations.

Triple C
14 Feb 14,, 19:54
If that is the case then by the same token your acceptance of the data says nothing about the data itself but alot about you... just saying.

It's not a very good line of attack, if you pause to think about it. Replay: The Congressional Budget Office is the single most bipartisan source of professional expertise on all matters related to the US federal budget. The fact that you disagree with it says much, much more about you than about the CBO.(DOR) Premise 1: The CBO is a authoritative source of data. Premise 2: Serious guys try use authoritative sources of date. 3. DOR uses the CBO, and therefore...?

Doktor
14 Feb 14,, 20:04
DOR is one serious authoritative guy?

Now, he has good sense of humor and never was authoritative around here.

Where is this going?

Triple C
14 Feb 14,, 20:19
No where in particular except by suggesting that using CBO stats is hardly a negative.

Parihaka
14 Feb 14,, 22:38
Wow. George Orwell and Samuel Beckett collaborating in one thread. Fabulous

Doktor
14 Feb 14,, 22:48
where is the evidence that the ACA had a major effect on employment in 2013? you're not presenting evidence-- you're presenting insuinations.

What would be the evidence?

Can you present the evidence of the contrary? Yes, I do realize that one is not guilty until proven, but we are not in court.

astralis
15 Feb 14,, 00:25
doktor,


What would be the evidence?

that would be fairly evident-- an increase in the unemployment rate which would actually worsen over time as implementation grew more extensive. seeing as how the unemployment rate went from 7.9% in jan 2013 to 6.6% in jan 2014...


Can you present the evidence of the contrary? Yes, I do realize that one is not guilty until proven, but we are not in court.

see post #150.

Doktor
15 Feb 14,, 01:48
astralis,


that would be fairly evident-- an increase in the unemployment rate which would actually worsen over time as implementation grew more extensive. seeing as how the unemployment rate went from 7.9% in jan 2013 to 6.6% in jan 2014...



You have gone in depth with Snapper about the rate and what I got from there is that labor force shrank and yes the the number of unemployed people is lower.
It's a good tide when you work with percentages which in turn multiplies the effects, which are OK and personally, even as a Non-American I am happy because of them.

Not much sense in arguing that announcement of a new tax/fee doesn't affect employment rate. If I need 10 workers and have a 10% increase of the cost of the salaries on the horizon, I will try to reorganize and will actually hire 8.


see post #150.

From the same BI article:

Twenty-one percent of 64 respondents said that the law would have a negative impact on business conditions and 5 percent said it will be positive.
So, those who actually had an opinion polled 21:5 that it will have negative impact. Sorry, I take only Yes and No for answers, must be something about how binary I am wired.

Furthermore, 64 companies doesn't sound like a solid sample to draw such a big conclusions.

BTW, if it has any relevance, according to Eurostat, the unemployment rate in Germany fell from 5.4% to 5.1% trough 2013.

Julie
15 Feb 14,, 01:59
julie,

a toothless "self-attestation" that companies aren't deliberately trying to game the law now = "swearing their layoffs and firings aren't due to the ACA".

it's sort of like saying that your signature at the bottom of your 1040 verifying that you didn't lie on your tax reporting is an example of a dictatorial police state.

but now you're changing the subject. where is the evidence that the ACA had a major effect on employment in 2013? you're not presenting evidence-- you're presenting insuinations.The point is, Obama would not be "punting" this law down the road if it were not going to negatively effect the workforce. There would not be a "truth police" if companies were not being negatively effected by this law. The less than anticipated job creation in 2013, which is almost a flat line, is due to this law.


...Louisiana State University announced in October it would cut 1,495 positions and various programs across its seven hospitals to trim more than $150 million from its budget.

Hospitals will see massive layoffs, decline in 2013 (http://www.onenewsnow.com/business/2012/11/30/hospitals-will-see-massive-layoffs-decline-in-2013#.Uv66pmJdVNo)

DOR
15 Feb 14,, 06:05
DOR:

You did not comment about the "Thought Police" that "Firms must swear ObamaCare is not a factor in firings." Why would this be created if not a factor directly related to the impact of the ACA?

Correct, and for two reasons:
First, I have no idea what that means; an
Second, I have no idea how to respond.

snapper
15 Feb 14,, 10:17
No where in particular except by suggesting that using CBO stats is hardly a negative.

I merely remark that by DOR's argument your view that "using CBO stats is hardly a negative" says alot more about you than the stats themselves. It is merely your opinion but this does not makes cyppoks opinion less valid than yours or DOR's.

Triple C
15 Feb 14,, 15:45
I merely remark that by DOR's argument your view that "using CBO stats is hardly a negative" says alot more about you than the stats themselves. It is merely your opinion but this does not makes cyppoks opinion less valid than yours or DOR's.

The quality of the data CBO provides is an integral part of the argument. No less valid, yes. Equally strong, no.

astralis
15 Feb 14,, 22:26
julie,


The point is, Obama would not be "punting" this law down the road if it were not going to negatively effect the workforce. There would not be a "truth police" if companies were not being negatively effected by this law. The less than anticipated job creation in 2013, which is almost a flat line, is due to this law.

repeatedly asserting something without proof doesn't make things true. i asked for evidence, you gave me one anecdote from a christian right-wing website.

Julie
15 Feb 14,, 22:52
julie,



repeatedly asserting something without proof doesn't make things true. i asked for evidence, you gave me one anecdote from a christian right-wing website.Repeatedly, I have given you links to lay-offs and decreased working hours due to the cause of the ACA. I have also given you adjustments made by Obama to delay this law for businesses because he KNOWS this. Unless you want to admit Obama made these delays due to political purposes and the upcoming midterms, which I do not think you will, we should just agree to disagree.

astralis
16 Feb 14,, 07:39
julie,


I have also given you adjustments made by Obama to delay this law for businesses because he KNOWS this.

this is an assertion, not evidence.



Repeatedly, I have given you links to lay-offs and decreased working hours due to the cause of the ACA.

you've given me five links.

of these five links, the "thought police" article is an editorial with no evidence, just assertions. the Washington Times article...and the Washington Times has a very poor reputation due to its founding/funding by a cultlike Christian church...is an anecdotal article. same with the policymic article. same with the christian right-wing website article.

finally, the mediaite article CITES kinda-sorta evidence, which is a Gallup poll from 2013.

and looking at this more closely, it states:


and almost one-fifth—19 percent— answered "yes" when asked if they had "reduced the number of employees you have in your business as a specific result of the Affordable Care Act."

The poll was taken by 603 owners whose businesses have under $20 million in annual sales.

how big a pie does this cover in the $16 trillion US economy? and of this, only 19% actually said they reduced the number of employees. moreover this is a POLL and not economic data, so it's very subjective in nature. for instance, 74% of americans think we're still in a recession, although our current state doesn't fit the economic definition of a recession.

and on the strength of this one poll you assert that the ACA was a major factor in the 2013 unemployment rate. OK.

astralis
16 Feb 14,, 07:48
doktor,


Not much sense in arguing that announcement of a new tax/fee doesn't affect employment rate. If I need 10 workers and have a 10% increase of the cost of the salaries on the horizon, I will try to reorganize and will actually hire 8.

it's a wash. the law exerts a relatively slight downward pressure, but that's subsumed within the greater positive macroeconomic context. IE, the economy is recovering and demand is up.

moreover the medium-term/long-term effects such as greater movement of labor and of course, the flattening (and hopefully lowering!) of health care costs per GDP will be beneficial.

what i've asked for is evidence that the healthcare law has decreased employment significantly. obviously it hasn't, or else US GDP wouldn't be going up, neither would unemployment be going down. unless you wish to make an argument that absent the ACA US unemployment would have gone WAY down and this was the one factor that only made it go moderately down.


So, those who actually had an opinion polled 21:5 that it will have negative impact. Sorry, I take only Yes and No for answers, must be something about how binary I am wired.

Furthermore, 64 companies doesn't sound like a solid sample to draw such a big conclusions

hey, i do agree that using polls as the basis for economic analysis is not ideal, as i noted to julie. simply put, though, there is very little economic evidence either way, which is my point-- the majority of the ACA's provisions went into effect this year, with another set of provisions set to go into effect next year. not only has there not been enough time for there to be an economic impact, there's not been enough time for studies to be done on the economic impact. so trying to spin anecdotal pieces into a grand assertion that the ACA is responsible for our current day employment woes seems to be rather excessive.

snapper
16 Feb 14,, 12:49
The quality of the data CBO provides is an integral part of the argument. No less valid, yes. Equally strong, no.

Validity is 'strength' in a difference of opinions. DOR stopped talking about whether the data should/should not be considered authoritative (by comparing it to other data over a number of years for instance) when he said cyppok's view said more about cyppok; as you noted the implication of this was that DOR believed his view to be authoritative - it ceased to actually have any reference to the CBO data and became an argument about who's opinions were more valid. DOR says "I hold this authoritative data to be authoritative therefore my view carries authority" but this is a tautology - it is like me saying "all authorities agree that unicorns have the body of a horse with a horn on the forehead. I agree with these authorities"; my view is correct or incorrect depending on whether unicorns exist in that form or perhaps some other form - but when I add "thus my view carries the same authority as those I mentioned" - my conclusion - I have ceased actually debating the existence of unicorns or strength/weakness of CBO data and am really using a tautology to say "my view carries more authority than yours"; it does not. In a difference of opinion only both have equal validity and therefore strength.

Doktor
16 Feb 14,, 17:11
it's a wash. the law exerts a relatively slight downward pressure, but that's subsumed within the greater positive macroeconomic context. IE, the economy is recovering and demand is up.
I am not denying that the economy is improving. More labor is coming back from overseas to USA and that's the sole factor you need to cheer. Everything else will fall in place based on that.


moreover the medium-term/long-term effects such as greater movement of labor and of course, the flattening (and hopefully lowering!) of health care costs per GDP will be beneficial.
I am not following, will ACA provide greater labor mobility?


what i've asked for is evidence that the healthcare law has decreased employment significantly. obviously it hasn't, or else US GDP wouldn't be going up, neither would unemployment be going down. unless you wish to make an argument that absent the ACA US unemployment would have gone WAY down and this was the one factor that only made it go moderately down.
I am only stating that it is naive to totally ignore the new fee on salaries as a factor in employment, so in your perspective, yes, I am arguing that absent ACA the unemployment would have been lower.


hey, i do agree that using polls as the basis for economic analysis is not ideal, as i noted to julie. simply put, though, there is very little economic evidence either way, which is my point-- the majority of the ACA's provisions went into effect this year, with another set of provisions set to go into effect next year. not only has there not been enough time for there to be an economic impact, there's not been enough time for studies to be done on the economic impact. so trying to spin anecdotal pieces into a grand assertion that the ACA is responsible for our current day employment woes seems to be rather excessive.
Not much evidence on both sides then.

astralis
16 Feb 14,, 17:42
doktor,


More labor is coming back from overseas to USA and that's the sole factor you need to cheer

well, not just that but a reduction of private debt, a recovering housing market, etc.


I am not following, will ACA provide greater labor mobility?

yes, that was the main gist of the CBO data. fewer people are tied to their jobs because of an over-riding need for health care insurance, which lessens the work-insurance coupling (something which conservatives liked to complain about, but are curiously silent on this matter).


I am only stating that it is naive to totally ignore the new fee on salaries as a factor in employment, so in your perspective, yes, I am arguing that absent ACA the unemployment would have been lower.

well, certainly. just as the slight rise in the tax rates for the wealthy will surely cause some small job loss. note i said that the law exerts a relatively slight downward pressure in the short-term.

however, it's a big jump from "we don't have much evidence either way, but it may cause some small job loss" to "the ACA was the reason why employment didn't improve in 2013". the latter part of which is not true, and the first part is an enormous conjecture not borne out by existing data.

zraver
16 Feb 14,, 17:44
doktor,

it's a wash. the law exerts a relatively slight downward pressure, but that's subsumed within the greater positive macroeconomic context. IE, the economy is recovering and demand is up.

More people are leavign the work force unable to find jobs than are finding jobs... That is a negative economic fact. The US economy stalled in the 4Q of 13 and so far is showing no signed of picking back up in 1Q 14. Demand is not up except in weather related area like propane and heating oil.


moreover the medium-term/long-term effects such as greater movement of labor and of course, the flattening (and hopefully lowering!) of health care costs per GDP will be beneficial.

Not even the CBO supports that claim anymore. ACA is driving health care costs and premiums up while reducing access. Movement of labor? Sorry, when 1500 people show up for 6 medium paying jobs and the government is actively trying to tank entire industries and introducing rampant uncertainty that blocks hiring there is no labor mobility except from the roles of the employed to the roles of the unemployed.


what i've asked for is evidence that the healthcare law has decreased employment significantly. obviously it hasn't, or else US GDP wouldn't be going up, neither would unemployment be going down. unless you wish to make an argument that absent the ACA US unemployment would have gone WAY down and this was the one factor that only made it go moderately down.

US GDP minus the energy sector is flat compared to population growth. Even the CBO nows says that because of the ACA we will have the same number of uninsured and will lose work hours equivalent to 2.5 million full time jobs. Fewer work hours but population still going up (and aging). Germany is laughing at us. They recorded somewhat less growth (if the US numbers are accurate) but have proportionally fewer people to deal with. Plus the EU zone is growing again.


hey, i do agree that using polls as the basis for economic analysis is not ideal, as i noted to julie. simply put, though, there is very little economic evidence either way, which is my point-- the majority of the ACA's provisions went into effect this year, with another set of provisions set to go into effect next year. not only has there not been enough time for there to be an economic impact, there's not been enough time for studies to be done on the economic impact. so trying to spin anecdotal pieces into a grand assertion that the ACA is responsible for our current day employment woes seems to be rather excessive.


The endless stream of waivers and blatant lawlessness by Obama means businesses can't afford to hire because the regulatory framework is in absolute shambles. Add in the actions by the DoJ, EPA, NLRB and Obama's fascist like favoring of giant corporations over small/medium sized businesses and the business environment is decidedly hostile.

astralis
17 Feb 14,, 00:03
z,

so, let's look at the data.


More people are leavign the work force unable to find jobs than are finding jobs... That is a negative economic fact. The US economy stalled in the 4Q of 13 and so far is showing no signed of picking back up in 1Q 14. Demand is not up except in weather related area like propane and heating oil.

Table A-15. Alternative measures of labor underutilization (http://www.bls.gov/news.release/empsit.t15.htm)

using your favorite stat, U6 and NOT U3.

Jan 13: 14.4
Sep 13: 13.6
Oct 13: 13.7
Nov 13: 13.1
Jan 14: 12.7


Not even the CBO supports that claim anymore. ACA is driving health care costs and premiums up while reducing access.

glad you mention the CBO. here is the latest report, show me where it states that.

CBO | The Budget and Economic Outlook: 2014 to 2024 (http://www.cbo.gov/publication/45010)

from the report:


Second, most people who are eligible for and enroll in subsidized coverage through an exchange will face lower costs for that coverage than for unsubsidized coverage in a noncompliant plan.


CBO and JCT lowered their estimate of average premiums for insurance coverage through exchanges in 2014 by about 15 percent on the basis of a preliminary analysis of plans offered through exchanges.

going on.


Even the CBO nows says that because of the ACA we will have the same number of uninsured

again, from the report:


CBO and JCT estimate that the insurance coverage provisions of the ACA will markedly increase the number of nonelderly people who have health insurance—by about 13 million in 2014, 20 million in 2015, and 25 million in each of the subsequent years through 2024 (see Table B-2).



CBO and JCT project that the number of people enrolled in Medicaid and CHIP will be substantially higher—by 8 million in 2014 and by 12 million to 13 million people every year between 2015 and 2024

now:


and will lose work hours equivalent to 2.5 million full time jobs.

again, from the report:


“The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor,

which is different from "will lose work hours"; it's a choice.


In addition, reduced incentives to work attributable to the Affordable Care Act (ACA) — with most of the impact arising from new subsidies for health insurance purchased through exchanges — will have a larger negative effect on participation toward the end of that period. On the other hand, the improvement in employment prospects will draw some people who have left the labor force back into it.

IE, as i said, largely a wash, with slightly negative downward pressure.


They recorded somewhat less growth (if the US numbers are accurate) but have proportionally fewer people to deal with. Plus the EU zone is growing again.

BBC News - Eurozone GDP growth gathers speed (http://www.bbc.co.uk/news/business-26185159)

let's compare.

US:


As measured by the change from the fourth quarter of the previous year, real (inflation-adjusted) gross domestic product (GDP) is projected to increase by 3.1 percent this year and by 3.4 percent per year in
2015 and 2016; by comparison, real GDP increased by 2.7 percent in 2013.

Germany:


According to preliminary figures, Germany's economy grew by 1.3% in 2013, the statistics office said.

In general, the German figures were better than analysts had been expecting. "Germany remains the economic stronghold of the eurozone," said economist Carsten Brzeski of ING.

tell me again why Germany is laughing at the US?

EU as a whole:


The figures from Eurostat, the EU's statistics office, also showed that during 2013, GDP contracted by 0.4% in the eurozone, but increased by 0.1% in the EU as a whole.

either way, i'm still waiting for you or julie to show me stats or data on how US unemployment in 2013 was caused by the ACA.

Gun Grape
17 Feb 14,, 00:21
But it was on Fox News, Rush said it and there was an article on WND. How could they be wrong?

snapper
17 Feb 14,, 01:40
"As measured by the change from the fourth quarter of the previous year, real (inflation-adjusted) gross domestic product (GDP) is projected to increase by 3.1 percent this year and by 3.4 percent per year in
2015 and 2016; by comparison, real GDP increased by 2.7 percent in 2013. "

Says who astralis? US GDP growth was 1.9% for all 2013 - down from 2.8% in 2012. See previous discussions in this thread and stop trying deceive yourself.

DOR
17 Feb 14,, 02:16
snapper,


Validity is 'strength' in a difference of opinions. DOR stopped talking about whether the data should/should not be considered authoritative (by comparing it to other data over a number of years for instance) when he said cyppok's view said more about cyppok; as you noted the implication of this was that DOR believed his view to be authoritative - it ceased to actually have any reference to the CBO data and became an argument about who's opinions were more valid. DOR says "I hold this authoritative data to be authoritative therefore my view carries authority" but this is a tautology - it is like me saying "all authorities agree that unicorns have the body of a horse with a horn on the forehead. I agree with these authorities"; my view is correct or incorrect depending on whether unicorns exist in that form or perhaps some other form - but when I add "thus my view carries the same authority as those I mentioned" - my conclusion - I have ceased actually debating the existence of unicorns or strength/weakness of CBO data and am really using a tautology to say "my view carries more authority than yours"; it does not. In a difference of opinion only both have equal validity and therefore strength.

By the numbers . . .
.*. I did not stop talking about the quality of the data, merely provided a set of the most reliable, widely used and comprehensive data available.

.*. My comment about cyppok’s views were directly to the point: if one won’t accept the most reliable, widely used and comprehensive data available, and offers nothing even remotely comparable, that says more about one’s inherent bias than about the data itself.

.*. DOR says "I hold this authoritative data to be authoritative therefore my view carries authority." Agreed. In the absence of sensible alternative data-based views, those based on the best available data carry more weight. That’s why I use that type of data: it’s authoritative.

= = = = =

Doktor,

Yes, Obamacare will enhance labor mobility. If you can’t leave your job for a better one because your healthcare is tied to the employer, you won’t move. If one spouse has the family’s healthcare covered and the other one is offered a better opportunity on the other side of the country, the issue of healthcare portability is crucial.

Yes, it would certainly be naïve to totally ignore healthcare costs as a factor in employment. I don’t think anyone here was suggesting that. Rather, the argument is that there is no noticeable difference because of a law that has yet to be fully implemented. To argue that such a law is the driving force in employment changes, which seems to be the case in some arguments here, is just as illogical as saying these costs-to-be can be ignored.

= = = = =

Zraver,



More people are leavign the work force unable to find jobs than are finding jobs...
Source, please.



The US economy stalled in the 4Q of 13 and so far is showing no signed of picking back up in 1Q 14.

Source, please, because the Bureau of Economic Analysis says real GDP grew 1.32% year-on-year in Q-1 2013, 1.63% in Q-2, 1.97% in Q-3 and 2.74% in Q-4 . . . more than double the pace in Q-4 as compared to Q-1. See: http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=310

35580


Demand is not up except in weather related area like propane and heating oil.
Source, please.



ACA is driving health care costs and premiums up
Source, please.



the government is actively trying to tank entire industries and introducing rampant uncertainty that blocks hiring
Source, please.



US GDP minus the energy sector is flat compared to population growth.
If you are still referring to Q-4 2013, or even the entire year, exactly how would you know that? The latest industry GDP data is 2012. In that year, real GDP rose 2.8%, and subtracting oil and gas give a 2.6% rise. What dragged on the economy that year was farming (-1.13%), nonmetallic mineral products (-0.26%), electrical equipment, appliances, and components (-1.15%), food and beverage and tobacco products (-3.12%), Printing and related support activities, and a whole slew of others that indicate you have no idea what really happened.
Oh, and one of your superstars: petroleum and coal products (-4.52%)

bonehead
17 Feb 14,, 03:47
After years of plotting and begging for jobs I am now picking and choosing which jobs I want to work at. That tells me things are picking up…at least in my area and sector.

JAD_333
17 Feb 14,, 10:28
FrancheskaB:

Your post originally appeared in the comment section on another site (http://www.dailyyonder.com/recession-hikes-poverty-rates-rural-america/2011/12/17/3648) in 2013. Judging by your other post here, this is not your writing style. Plagiarism is a serious infraction of WAB rules and is not tolerated.

Doktor
17 Feb 14,, 10:47
:eek: I thought posting links comes after higher post count.

snapper
17 Feb 14,, 12:32
snapper,

By the numbers . . .
.*. I did not stop talking about the quality of the data, merely provided a set of the most reliable, widely used and comprehensive data available.

.*. My comment about cyppok’s views were directly to the point: if one won’t accept the most reliable, widely used and comprehensive data available, and offers nothing even remotely comparable, that says more about one’s inherent bias than about the data itself.

.*. DOR says "I hold this authoritative data to be authoritative therefore my view carries authority." Agreed. In the absence of sensible alternative data-based views, those based on the best available data carry more weight. That’s why I use that type of data: it’s authoritative.

DOR,

Hilarious! An economist wants to call a logicians bluff on logic now? Thankyou God!


.*. I did not stop talking about the quality of the data, merely provided a set of the most reliable, widely used and comprehensive data available.

You say they are the highest quality/reliable data available but when someone questions their quality you have merely restated that they ARE the best when evidently your opion of the data has been called into question. The 'widely used and comprehensive' blurb is ad hominen fallacy; it may be that they are the most used and comprehensive figures but that in itself does not make them correct. If most people believe the earth to be flat is it therefore flat?


.*. My comment about cyppok’s views were directly to the point: if one won’t accept the most reliable, widely used and comprehensive data available, and offers nothing even remotely comparable, that says more about one’s inherent bias than about the data itself.


DOR says "I hold this authoritative data to be authoritative therefore my view carries authority." Agreed. In the absence of sensible alternative data-based views, those based on the best available data carry more weight. That’s why I use that type of data: it’s authoritative.

Cyppok did actually offer a counter opinion to that of yours; that the CBO data wasn't as reliable as you continue to claim it is. He refuted your opinion of the data and you merely replied with words to the effect; "I hold this authoritative data to be authoritative therefore my view carries authority." Now follow me carefully as this is clearly a circular argument: You assert that the data is authoritative and so by agreeing with it your view gains authority which reinforces the authority of the data... but it all started from your assertion/opinion that the data was authoritative, which is precisely what is questioned by cyppok.

It is as if you told me that all reliable sources attest to unicorns having horns; they may indeed do so but that doesn't mean the sources the correct (the ab hominen) nor if I say "I don't believe the sources" does your advocacy of all known sources give your view authority contrary to mine. Your view is that the CBO is 'authoritative, quality, most reliable, widely used and comprehensive'; all praise CBO data! You view may be correct but cyppok doesn't think so and he may be right in believing the data not to be authoritative etc as you claim. Now amount of circular argument on you behalf makes your opinion more authorititative than his and as your view is challenged the onus is on you and not the 'sceptic' to further substantiate your thesis that the CBO data is authoritative, quality etc... is correct. This you could only do by using other sources other than that which you claim is authoritative to support your argument without indulging us in further circular arguments.

Thankyou for the fun and please come back soon. I love economist for breakfast, lunch or supper.

Doktor
17 Feb 14,, 13:18
S

Instead of going on a beef, and smart-assery (sic), why don't you lay down data from a source that haven't been proved wrong and with it beat DOR's assertion?

cyppok
17 Feb 14,, 13:41
S

Instead of going on a beef, and smart-assery (sic), why don't you lay down data from a source that haven't been proved wrong and with it beat DOR's assertion?

No point when data is posted it is warped and said it is meaningless.
Source is lacking, or the poster is personally attacked.
So I simply ignore whatever DOR says because I assume its' wrong I don't even read what he says no point.

Part-Time Workers And BLS Data Confusion - Floating Path (http://www.floatingpath.com/2013/09/09/part-time-workers-bls-data-confusion/)
35581

There are two things if a person works 1 hour they are considered employed.
If aggregate hours worked decline along with aggregate wages while "employment" goes up but participation rate collapses.
Does that sound like improvement? *rhetorical*

Participation rate shows relationship to population growth and general level of employment, while the unemployment rate simply counts those whom are and those whom were(up to a roll off or no longer counted periods).

This video explains why data is not that great

http://www.youtube.com/watch?feature=player_embedded&v=y9JnUXmUzyc
from last year but he makes the point about BLS data

astralis
17 Feb 14,, 15:15
i'm noticing a common trend where after one poster uses data from a non-partisan source like the BLS or the CBO, a hue and cry is raised about "government conspiracy" and "government lies"; followed by a graph or posting from some gold bug/permabear website and of course a youtube video.

i'll leave it to the other posters which source they believe is more accurate.

Bigfella
17 Feb 14,, 21:01
i'm noticing a common trend where after one poster uses data from a non-partisan source like the BLS or the CBO, a hue and cry is raised about "government conspiracy" and "government lies"; followed by a graph or posting from some gold bug/permabear website and of course a youtube video.

i'll leave it to the other posters which source they believe is more accurate.

ZeroHedge is the WND of finance sites.

snapper
17 Feb 14,, 22:27
S

Instead of going on a beef, and smart-assery (sic), why don't you lay down data from a source that haven't been proved wrong and with it beat DOR's assertion?

I was not disputing whether or not the CBO data was authoritative - it may or may not be but that's not my point. I was pointing out the invalidity of DOR's logic in his argument that his opinion that his view carries authority because he agrees with data that he himself claims to have authority. As for being 'smart-assy' I do apologise to you if you are offended and did apologise to DOR immediately after having posted my refutation of his logic. Compared to the 'smart-assery' displayed by some others in such discussions previously I hope I may may be forgiven for a moment of smugness.

Doktor
17 Feb 14,, 23:28
I was not disputing whether or not the CBO data was authoritative - it may or may not be but that's not my point. I was pointing out the invalidity of DOR's logic in his argument that his opinion that his view carries authority because he agrees with data that he himself claims to have authority.
Then beat his sources with better ones who carry more authority, ie that haven't been proved wrong in the past or that missed fewer times. Until then his assertion that him quoting authoritative source gives him more valid argument stays.

Look no further, I can say (and did say) how easy is to track an object the size of a football stadium in open waters. I can even show you how easy it is to track a one single person with todays' tech, but OoE comes (too many Cols around here now) slaps the reality to me and I go silent. He didn't need some links to prove he is right.


As for being 'smart-assy' I do apologise to you if you are offended and did apologise to DOR immediately after having posted my refutation of his logic. Compared to the 'smart-assery' displayed by some others in such discussions previously I hope I may may be forgiven for a moment of smugness.
Myself being a smart-a$$ many time I am not offended nor ever will be by someone else playing among those lines.

However, blaming someone for ad hominem while ending the post with "Thankyou for the fun and please come back soon. I love economist for breakfast, lunch or supper." is what I found too much.
Is he biased? I think some of the time he is. Do I agree with everything he says? Of course not.

But. there are two things:
1. He openly states his bias (look at his avatar), and
2. That's the beauty of being here, we have all these wonderful people with different views, otherwise I'd sit elsewhere and think how I am the smartest fella in the Universe.

cyppok
18 Feb 14,, 01:55
i'm noticing a common trend where after one poster uses data from a non-partisan source like the BLS or the CBO, a hue and cry is raised about "government conspiracy" and "government lies"; followed by a graph or posting from some gold bug/permabear website and of course a youtube video.

i'll leave it to the other posters which source they believe is more accurate.

Notice what he said in the video. They are taking surveys when real data is available. He pays for real data from payment processors and wage processors and it does not conform to what the government says is happening. The gov't could receive this data for free but it does not want to do so. Furthermore they don't need to do surveys because they receive witholding taxes every three months which are more accurate than the surveys they do as it pertains to employment and wage data, but you get a survey number instead.

The government data is accurate after 2 years because it gets adjusted to reality after that time but in present time it is not, and the variance they give is very very wide +/- 100k jobs is akin to me giving you a jobs number with +/-200k out of the blue I will also be right 90% of the time with an error rate that wide given to me.

There is no conspiracy. There is simply protection of ones place of work in putting forth methodology and surveys which help save jobs in both those bureaucratic systems and keep the status quo.

again... video to make my point.

www.youtube.com/watch?v=y9JnUXmUzyc

DOR
18 Feb 14,, 02:08
snapper,

No offense taken, and hopefully none offered.

Notwithstanding your expertise in logic, exactly what is the problem with examining two arguments, determining which has the better statistical support, and considering that one to be superior? This is a matter of data quality, reliability, acceptance and utility.

This is an economic discussion, and while logic is important so is data. If I construct a logically valid argument that is void of useful data, my argument is weak to the point of useless. As for questioning the quality of the data, I have repeatedly asked for something better and have yet to see it. 1970s CPI weightings don’t cut it.

cyppok claimed the CBO data weren’t reliable, and offered none other. In what logical universe does that work out better?

“Everyone knows” unicorns have a single horn. Does it matter if there are no unicorns? No, because the topic is the description of a unicorn, not its position in reality or fantasy.

= = = = =

cyppok,


Thanks for verifying your position on data, sources and your fellow members.


To quote the good Doktor, “why don’t you lay down data from a source that haven’t been proved wrong and with it beat DOR’s assertion?”


= = = = =
= = = = =

Umm, breakfast. Let's see . . .I'll have a heaping portion of ideologues, a side dish of innumeracy, and a steaming hot cup of conspiracy theory, if you please. And, may I have the bias, on the side? I like to add just enough to know it is there, but not enough to really change the flavor.

JAD_333
18 Feb 14,, 07:48
Notice what he said in the video. They are taking surveys when real data is available. He pays for real data from payment processors and wage processors and it does not conform to what the government says is happening. The gov't could receive this data for free but it does not want to do so. Furthermore they don't need to do surveys because they receive witholding taxes every three months which are more accurate than the surveys they do as it pertains to employment and wage data, but you get a survey number instead.

As is often the case, people who bash government stats have something 'better' to sell you. That's the case with the gentleman in the video. There is no way to verify that his method is more accurate than the monthly BLS survey of selected households. You could buy his monthly newsletter and find out. Alternate surveys haven't proved to be consistently accurate. For example, the closely watched ADP forecast is almost always wrong and yet it is based on payrolls ADP processes for customers all over the country. Who would have a better insight? Tracking credit card usage for projecting GDP is better than surveying 25% of the businesses and organizations in the country responsible for hiring and firing workers? Give me a break.

The BLS unemloyment and jobs creation report is based on direct interviews (no emails) with randomly selected households all over the country. Respondents are separated into sample groups, and no group is sampled for more than four consecutive months in a year. Historical surveys show a high degree of accuracy in adjusted, final reports.



On the whole, the BLS 1996 2006 employment projections outperformed alternative naïve models...

http://www.bls.gov/opub/mlr/2010/09/art3full.pdf

cyppok
18 Feb 14,, 16:02
For example, the closely watched ADP forecast is almost always wrong and yet it is based on payrolls ADP processes for customers all over the country. Who would have a better insight? Tracking credit card usage for projecting GDP is better than surveying 25% of the businesses and organizations in the country responsible for hiring and firing workers? Give me a break.

100% of the businesses file withholding taxes every 3 months. USE that instead of Surveys that target mostly large enterprises from a select sample pool.

that is the point. All businesses file taxes not everyone uses ADP.

They could simply also report amount of employees net/net and we would get changes if not real time than at least 3 month accuracy at a time.

He is not explaining his newsletter he is saying why the data could be better.
The select pool of people that are polled for unemployment surveys are also skewed in their selection, it is possible.
YOU DO NOT NEED A NAIVE MODEL YOU HAVE REAL TIME DATA!!! or at least Quarterly data that is REAL!!!

snapper
19 Feb 14,, 11:08
Then beat his sources with better ones who carry more authority, ie that haven't been proved wrong in the past or that missed fewer times. Until then his assertion that him quoting authoritative source gives him more valid argument stays.

I wasn't questioning whether or not CBO data was 'authoritative'; indeed I genuinely don't have sufficient experience of it or it's methodology to form a view. I was refuting the logic of his argument.

I am pleased that the 'progressives' hold this data in such high regard. I wonder how they view some proposals of an increased Federal Minimum Wage?

35612

"Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly."

As for the deficit;

"CBO concludes that the net effect on the federal budget of raising the minimum wage would probably be a small decrease in budget deficits for several years but a small increase in budget deficits thereafter. It is unclear whether the effect for the coming decade as a whole would be a small increase or a small decrease in budget deficits."

No, no not shadowstats or zerohedge.... CBO | The Effects of a Minimum-Wage Increase on Employment and Family Income (http://www.cbo.gov/publication/44995)

Doktor
19 Feb 14,, 13:06
I wasn't questioning whether or not CBO data was 'authoritative'; indeed I genuinely don't have sufficient experience of it or it's methodology to form a view.
Then I misread you.


I was refuting the logic of his argument.
What logic? He was stating the data from a source he thinks is spot on. Looking at the numbers, he concluded that US created more jobs then they lost and that's good news. Have I missed something?


I am pleased that the 'progressives' hold this data in such high regard. I wonder how they view some proposals of an increased Federal Minimum Wage?

35612

"Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly."
On the other hand the consumption and inflation should increase, is it taken into consideration?


As for the deficit;

"CBO concludes that the net effect on the federal budget of raising the minimum wage would probably be a small decrease in budget deficits for several years but a small increase in budget deficits thereafter. It is unclear whether the effect for the coming decade as a whole would be a small increase or a small decrease in budget deficits."
So what is the conclusion here?

Triple C
19 Feb 14,, 17:29
Snapper,

I think many progressives believe that while a more unambiguously positive forecast would have made us happier, moving 900,000 over the poverty line and improving the income of 16.5 mil families stand on its own. Additionally, while some dispute CBO findings, no one questions their motives or basic competence.

JAD_333
20 Feb 14,, 01:29
100% of the businesses file withholding taxes every 3 months. USE that instead of Surveys that target mostly large enterprises from a select sample pool.

You may be mixed up between filing a return and making payments. Employers make withholding deposits in a lump sum to the gov't either monthly or bi-monthly depending on size of their payroll, and then every 3 months they file a 941 return reconciling their payments to their records and say how many employees it covers.


that is the point. All businesses file taxes not everyone uses ADP.

True, but ADP knows bodies, whereas gov't knows dollars, and not until all the 941s are in every quarter does the gov't know exactly how many people are behind those dollars. ADP is a form of sampling.



They could simply also report amount of employees net/net and we would get changes if not real time than at least 3 month accuracy at a time.

Yes, they could, but that would lead to a jerky trend line and fail to reflect factors like seasonal shifts in employment, the impact of new laws, and so on.



He is not explaining his newsletter he is saying why the data could be better.

No. He's pumping for business. He referenced his newsletter several times and once he even said he had an important number he couldn't divulge because it's for his paying clients. Now if that doesn't alert your BS radar, nothing will, and he was wrong on the sampling numbers the gov't uses to project GDP.

DOR
20 Feb 14,, 02:25
Snapper,

I think many progressives believe that while a more unambiguously positive forecast would have made us happier, moving 900,000 over the poverty line and improving the income of 16.5 mil families stand on its own. Additionally, while some dispute CBO findings, no one questions their motives or basic competence.

Sigh.
If only it were true.

Sadly, many people -- including some WABBITS -- prefer to trash the data when it doesn't fit their preconceived notions of how the world works.

JAD_333
20 Feb 14,, 02:44
Sigh.
If only it were true.

Sadly, many people -- including some WABBITS -- prefer to trash the data when it doesn't fit their preconceived notions of how the world works.


Do you mean to say that the data should end any doubts or that the data is indisputable?

I think it's probably accurate based on historical experience with previous increases in the minimum wage, but I would question the timing of the increase, because it will lead to some unemployment.

In contrast, Obama's decree on raising min wage for employees of government contractors will have absolutely no affect on job numbers. Contractors will simply roll the increase into their bids, raising the cost of the contract to the gov't. But since contractors don't have many min wage employees, this will amount to nothing more than a political show.

DOR
20 Feb 14,, 09:58
Do you mean to say that the data should end any doubts or that the data is indisputable?

Neither. But, when the automatic response is "I don't believe it, the data must be [______], " I can only shake my head and sigh.


I think it's probably accurate based on historical experience with previous increases in the minimum wage, but I would question the timing of the increase, because it will lead to some unemployment.

We passed and implemented a minimum wage law in Hong Kong a few years back, and I had to go through bucket loads of academic literature to try and understand what the implications might be. All but a tiny handful of the analyses are about changes (increases, almost always) to the rate, not original implementation. And, the conclusions as to what changes mean for unemployment are certainly not uniform. The jury is out.


In contrast, Obama's decree on raising min wage for employees of government contractors will have absolutely no affect on job numbers. Contractors will simply roll the increase into their bids, raising the cost of the contract to the gov't. But since contractors don't have many min wage employees, this will amount to nothing more than a political show.

We call it "government leading by example," and I think he mentioned that (to state governors) in the SOTU speech.

zraver
22 Feb 14,, 03:20
In contrast, Obama's decree on raising min wage for employees of government contractors will have absolutely no affect on job numbers.

But it did give all government workers who belong to a union a free pay non-negotiated pay raise since wages are tied to min-wage levels.

Richard Berman: Why Unions Want a Higher Minimum Wage - WSJ.com (http://online.wsj.com/news/articles/SB10001424127887324048904578318541000422454)

JAD_333
22 Feb 14,, 10:13
But it did give all government workers who belong to a union a free pay non-negotiated pay raise since wages are tied to min-wage levels.

Richard Berman: Why Unions Want a Higher Minimum Wage - WSJ.com (http://online.wsj.com/news/articles/SB10001424127887324048904578318541000422454)

Did you look into that a little further? Government unions don't negotiate gov't worker pay. Gov't pay scale is not negotiable. Requires Cong action. Something is not right here.

DOR
19 Mar 14,, 05:10
First monthly numbers of the year:

In February, US consumer prices were up 0.5% year-on-year, the slowest pace in 52 months. The January-February rise was a hair over 1%, confirming the Fed's anti-deflation bias.

Fourth quarter household debt:service payments as a percent of disposable personal income remained below 10% for the fourth quarter in the last five, the only sub-10% period since records began in Q-1 1980.

Household financial obligations hit their lowest ratio in 33 years, and mortgage debt service payments as a percent of disposable personal income just missed matching the 34-year low set when the data were first collected.

Civilian employment grew 1.3% in the first two months of the year, with full-timers (up 1.7%) off-setting part-time workers (-0.4%), a trend that has continued for more than half a year.

New unemployment claims fell 4.6% in the first ten weeks of the year, and 6.6% on a 4-week moving average of the same period.

SteveDaPirate
03 Jul 14,, 15:42
The US economy appears to have rallied after a nasty winter, and in June added 288,000 jobs. The unemployment rate dropped to 6.1% and the drop appears to be mostly a result of people finding work rather than giving up on employment.

Lets hope the long-term unemployed are encouraged to go job hunting!

BBC News - US economy adds 288,000 jobs in June (http://www.bbc.com/news/business-28148264)

DOR
04 Jul 14,, 03:46
In the first 26 weeks of this year, the number of new unemployment claims fell by 6.9%. From January 2009 to June 2014, the decrease was 43.5%, from over 500,000 to barely 300,000.

The unemployment rate fell from 7.8% to less than 6.1% in the same period.

snapper
04 Jul 14,, 05:17
Yea makes sense with Q1 -2.9% contraction right?

DOR
08 Aug 14,, 07:59
Presidents and growth: Timing is everything | The Economist (http://www.economist.com/news/united-states/21611143-why-economy-has-grown-faster-under-democratic-presidents-timing-everything)

Timing is everything
Why the economy has grown faster under Democratic presidents

zraver
08 Aug 14,, 14:10
The only good policy mentioned in the article are the Republican Congress budget cuts under Clinton. In addition the article blame Bush for the housing crisis when it was Clinton's repeal of Glass-Steagall.

GVChamp
08 Aug 14,, 15:58
Yea makes sense with Q1 -2.9% contraction right?

You don't necessarily need GDP Growth to return to full employment. You just need flexible labor markets. The reason why GDP Growth is usually needed, in keynesian terms, is that wages are sticky and markets are not flexible enough to clear if GDP is below a certain level.
If wages aren't sticky, who cares? You won't get unemployment.

I can't open up that economist link. However, if this pertains to the new Blinder paper (which is I believe a NBER working paper and not exactly peer-reviewed gold), the explainable variances so far are more a matter of luck than they are a matter of deliberate policy. And it certainly doesn't mean buying into the full Democratic policy platform.

DOR
09 Aug 14,, 12:28
The only good policy mentioned in the article are the Republican Congress budget cuts under Clinton. In addition the article blame Bush for the housing crisis when it was Clinton's repeal of Glass-Steagall.

Very nice to dodge the study's point that control of congress and / or the senate makes no difference.

zraver
09 Aug 14,, 13:02
Very nice to dodge the study's point that control of congress and / or the senate makes no difference.

Which is asinine since Congress controls the purse strings ad thus directly influences government spending.

Blademaster
09 Aug 14,, 20:12
Very nice to dodge the study's point that control of congress and / or the senate makes no difference.

Not to mention the double standards espoused by some of the Republicans. For instance, the republicans like to give all the credit for the 80s boom to Reagan but conveniently left out that the House and Senate were Democrat majority held and then when Clinton was in office and the boom occurred under him, the Republicans would take credit saying it was their majority led House that made it possible. Zraver blames Clinton for repeal of Glass-Steagall but it was the republican led house that made it possible. So why are not the House republicans not to be blamed and not to mention the fact that some of those Republicans that voted for the repeal of Glass - Steagall are in prominent Republican leadership roles.

Classic case of having one cake and eating it.

zraver
11 Aug 14,, 22:53
Not to mention the double standards espoused by some of the Republicans. For instance, the republicans like to give all the credit for the 80s boom to Reagan but conveniently left out that the House and Senate were Democrat majority held and then when Clinton was in office and the boom occurred under him, the Republicans would take credit saying it was their majority led House that made it possible. Zraver blames Clinton for repeal of Glass-Steagall but it was the republican led house that made it possible. So why are not the House republicans not to be blamed and not to mention the fact that some of those Republicans that voted for the repeal of Glass - Steagall are in prominent Republican leadership roles.

Classic case of having one cake and eating it.

The president is supposed to be a backstop against bad legislation hence the veto. Clinton failed independently of what anyone else did. Not only that but the bill that repealed Glass-Steagall was introduced in the Senate (since it was a regulatory change) by Phil Gramm (R-Tex) but the senate republicans did not have enough votes to defeat a filibuster, the final version of the bill passed the Senate 90-8. As for Reagan, a lot of the boom occurred as a result of increased defense spending and lowered energy prices. What part of that besides authorizing the spending did the Congress have a part in?

Blademaster
12 Aug 14,, 01:56
The president is supposed to be a backstop against bad legislation hence the veto. Clinton failed independently of what anyone else did. Not only that but the bill that repealed Glass-Steagall was introduced in the Senate (since it was a regulatory change) by Phil Gramm (R-Tex) but the senate republicans did not have enough votes to defeat a filibuster, the final version of the bill passed the Senate 90-8. As for Reagan, a lot of the boom occurred as a result of increased defense spending and lowered energy prices. What part of that besides authorizing the spending did the Congress have a part in?

Oh come on. that's a huge stretch of logic right there. President Clinton could not repeal the Glass Steagall without the aid and consent of Congress. Neither could President Reagan could increase defense spending and lower energy price without the aid and consent of Congress. They could not do it on their own. Congress had to originate the bill that allowed those things in the first place.

zraver
12 Aug 14,, 02:01
Oh come on. that's a huge stretch of logic right there. President Clinton could not repeal the Glass Steagall without the aid and consent of Congress. Neither could President Reagan could increase defense spending and lower energy price without the aid and consent of Congress. They could not do it on their own. Congress had to originate the bill that allowed those things in the first place.

Why does the president have the veto then? He didn't use it, he didn't even threaten to use it not even symbolically. Reagan did lower the energy prices without Congress by working out a deal with Saudi Arabia who wanted US protection after the fall of the Shah in Iran. Oil production skyrocketed and prices plummeted.

Blademaster
12 Aug 14,, 02:16
Why does the president have the veto then? He didn't use it, he didn't even threaten to use it not even symbolically. Reagan did lower the energy prices without Congress by working out a deal with Saudi Arabia who wanted US protection after the fall of the Shah in Iran. Oil production skyrocketed and prices plummeted.

Ok then by your (il)logic, I would completely give Clinton total credit for balancing the budget when he forced the government shutdowns and forced Congress to play ball by his rules. By your logic I would completely blame Bush for the skyrocketing of gas prices in 2007 and 2008.

zraver
12 Aug 14,, 02:55
Ok then by your (il)logic, I would completely give Clinton total credit for balancing the budget when he forced the government shutdowns and forced Congress to play ball by his rules. By your logic I would completely blame Bush for the skyrocketing of gas prices in 2007 and 2008.

You love non sequiturs don't ya.

1. Clinton kind of balanced the budget because Congress forced him to, not because he wanted to, or because it was in any way his idea. Truth is there was no balance and no surplus. it was cooked books counting SSA taxes as revenue.

2. I do blame bush for skyrocketing energy prices in 07/08. His inability to win in Iraq and the win the peace, or normalize relations with Iran in 2002 when he had the chance destabilized the region. To this he added dollar devauling on a massive scale to pay for the wars. The recipe meant oil prices shot upwards.

DOR
12 Aug 14,, 02:58
What’s missing is Congress.

They’re not part of the solution, and haven’t been throughout the last five years.

When Congress goes on strike, the Executive branch and the Federal Reserve are left to manage the economy without legislative support.

Here’s the crux, in a short and very direct phrase:

“The single most important thing we want to achieve is for President Obama to be a one-term president.”

Senator Mitch McConnell, National Journal, Oct. 23, 2010 (later confirmed and repeated on Fox News [sic])

Blademaster
12 Aug 14,, 03:23
You love non sequiturs don't ya.
Look who's talking. Just going by your example. I didn't start the ball rolling. You did.



1. Clinton kind of balanced the budget because Congress forced him to, not because he wanted to, or because it was in any way his idea. Truth is there was no balance and no surplus. it was cooked books counting SSA taxes as revenue.
No it wasn't balanced because the Congress forced him to. It was balanced according to the way that Clinton wanted He made sure that the balancing budget would not come at the sacrifice of economic prosperity in which the Republicans would have done in pursing their Contract with America.



2. I do blame bush for skyrocketing energy prices in 07/08. His inability to win in Iraq and the win the peace, or normalize relations with Iran in 2002 when he had the chance destabilized the region. To this he added dollar devauling on a massive scale to pay for the wars. The recipe meant oil prices shot upwards.

TopHatter
12 Aug 14,, 05:03
What’s missing is Congress.

They’re not part of the solution, and haven’t been throughout the last five years.

When Congress goes on strike, the Executive branch and the Federal Reserve are left to manage the economy without legislative support.

Here’s the crux, in a short and very direct phrase:

“The single most important thing we want to achieve is for President Obama to be a one-term president.”

Senator Mitch McConnell, National Journal, Oct. 23, 2010 (later confirmed and repeated on Fox News [sic])

A little context would be appropriate:


McConnell said he had been studying the history of presidents who suffered big defeats in midterm elections in Congress, but then won re-election in two years anyway. McConnelll said he doesn't want Republicans to repeat the same mistakes that allowed that to happen.

"After 1994, the public had the impression we Republicans overpromised and underdelivered," McConnell said. "We suffered from some degree of hubris and acted as if the president was irrelevant and we would roll over him. By the summer of 1995, he was already on the way to being re-elected, and we were hanging on for our lives."

McConnell said Republicans need to treat the midterm elections as "the first step in retaking the government."

It was in that context that McConnell said, "The single most important thing we want to achieve is for President Obama to be a one-term president."

Garrett asked if that meant "endless, or at least frequent, confrontation with the president?"

Said McConnell, "If President Obama does a Clintonian backflip, if he’s willing to meet us halfway on some of the biggest issues, it’s not inappropriate for us to do business with him."

In other words, in the very same interview, McConnell said that he'd be willing to work with Obama if Obama is "willing to meet us halfway." That's called compromise. And that sounds very much in the spirit of Obama's call to "seek out common ground." Link (http://www.politifact.com/truth-o-meter/statements/2010/oct/30/barack-obama/president-barack-obama-claims-mitch-mcconnell-says/)

Blademaster
12 Aug 14,, 08:36
A little context would be appropriate:

Only if that context was true. Everytime Obama moved to halfway, the tea partiers and Republicans would demand more concessions and refuse to meet halfway, thinking that they could get away with the whole thing. After a while, Obama finally wised up to their tactics and started demanding that the Republicans move halfway first. So far, the Republicans haven't, instead is now playing the obstructionist card.

DOR
12 Aug 14,, 11:12
"Said McConnell, "If President Obama does a Clintonian backflip, if he’s willing to meet us halfway on some of the biggest issues, it’s not inappropriate for us to do business with him."

In other words, in the very same interview, McConnell said that he'd be willing to work with Obama if Obama is "willing to meet us halfway." That's called compromise. And that sounds very much in the spirit of Obama's call to "seek out common ground."

So, what happened?

Here's what happened: During the worst economic and financial crisis in 80 years, the GOPers decided that threatening to vote against paying the bills that they had run up during W's administration -- $5.4 trillion in new debt, the largest increase of any 8-year period -- was the smart way to help the recovery. Exactly how engineering an unnecessary down-grading of the US' credit rating (thereby unnecessarily adding billions to the cost of servicing the debt) was supposed to do that they decided not to share.

Note that this was done only in off-years, 2011 and 2013, since it would be pretty stupid to pull that kind of a dead-beat stunt when the voters are about to tell you exactly what they think of your policies and actions.

I probably was too generous with Congress by saying it was on strike. That implies inaction, but I have to remember that the GOPers weren't just inactive -- that would have been bad enough -- but were actively working against US national interests by seeking to worsen the economy.

How's that for context, Gents?

Doktor
12 Aug 14,, 11:25
...during W's administration -- $5.4 trillion in new debt, the largest increase of any 8-year period --

Geez Louise...

$7,060,259,674,497.51--Federal Debt Up $7 Trillion Under Obama | CNS News (http://www.cnsnews.com/news/article/terence-p-jeffrey/706025967449751-federal-debt-7t-under-obama)

astralis
12 Aug 14,, 14:25
z,


1. Clinton kind of balanced the budget because Congress forced him to, not because he wanted to, or because it was in any way his idea. Truth is there was no balance and no surplus. it was cooked books counting SSA taxes as revenue.


actually, that was part of his platform the first time, which caused a major sh*tstorm within the Democratic Party.

i agree that Clinton's budget was not his accomplishment alone, but it's definitely a jump from that to "Congress forced him to."

as for Glass-Steagall, this was an example of his triangulation gone wrong. it had bipartisan support during fat times, with deregulation traditionally being a conservative priority pretty much at all times. note how even now Republicans want to weaken Dodd-Frank and the other regulations put in place after the worst financial crisis since the Great Depression.

i'm more than willing to lambast Clinton for his role in Glass-Steagall, but i'm also willing to credit him partly for the '90s economic growth.

astralis
12 Aug 14,, 14:34
as for the debt issue: it's not useful to look at debt in the absence of other factors.

debt is NOT an uniformly bad thing. it's bad if it accumulates during periods of high economic growth; it's normal, or even good, if it accumulates during a severe recession/depression. also as important, -how- the money is spent as well.

bush spent large sums of money -needlessly- in an economic boom. moreover, he spent it in, shall we say, suboptimal ways. even if you are not a Keynesian, it doesn't take a lot of consideration to assess the value of a dollar spent in Afghanistan/Iraq against the value of a dollar spent at home.

Doktor
12 Aug 14,, 14:46
I was merely replying to the part where it was represented as that.

Or it is a bad thing under Bush when it is $5.4tn, but it is somehow good under Obama when it is $7tn. Some really good project must have been done with those NEW 7tn, like new infrastructure maybe?

BTW, arguing Bush spent all those trillions IN Afghanistan is like arguing FDR spent all those billions in Germany and Japan.

astralis
12 Aug 14,, 15:08
doktor,


Some really good project must have been done with those NEW 7tn, like new infrastructure maybe?

well, yes, not least of which is that the worst financial crisis since the Great Depression didn't have near the societal effects of the Great Depression.

moreover the actual stimulus worked out quite well:

TIME - Breaking News, Analysis, Politics, Blogs, News Photos, Video, Tech Reviews (http://time.com/#8362/economic-stimulus-recovery-act-anniversary-obama/)


BTW, arguing Bush spent all those trillions IN Afghanistan is like arguing FDR spent all those billions in Germany and Japan.

not really. Bush talked about a Marshall Plan for Iraq and Afghanistan and we all saw how well that went. moreover the original idea was for a grandiose transformation of the Middle East, where US monies were to be spent as an -investment- in turning the places into veritable democratic-capitalist US allies.

somewhere along the line, execution of such faltered whereas the money spigot did not. as i said, the money was spent poorly (not to mention the lives).

Doktor
12 Aug 14,, 15:12
Marshall Plan was after FDR, IIRC. I was talking 1941-1945 period.

astralis
12 Aug 14,, 15:30
doktor,


Marshall Plan was after FDR, IIRC. I was talking 1941-1945 period.

the issue being that Saddam's Iraq folded after 21 days and that the Taliban were ruined as a military force by Nov 2001. had that remained the case, george bush would now be hailed as a strategic genius and our debt would be considerably smaller. and you would not hear a peep from me about Bush's foreign policy.

of course then we all wake up. :)

Doktor
12 Aug 14,, 15:39
doktor,

the issue being that Saddam's Iraq folded after 21 days and that the Taliban were ruined as a military force by Nov 2001. had that remained the case, george bush would now be hailed as a strategic genius and our debt would be considerably smaller. and you would not hear a peep from me about Bush's foreign policy.

of course then we all wake up. :)

:biggrin:

The conversation was about the debts of the Presidents. You made it sound like GWB poured $5tn into A-stan and Iraq, totally neglecting USA, while Obama poured $7tn all at home and now you guys somehow all have new roads, new pipelines, all brand new. Or I misread?

astralis
12 Aug 14,, 16:18
doktor,


You made it sound like GWB poured $5tn into A-stan and Iraq, totally neglecting USA

no, let's not exaggerate-- certainly not all.

however, significant sums of money WERE spent in those places:

The $5 Trillion War on Terror | TIME.com (http://nation.time.com/2011/06/29/the-5-trillion-war-on-terror/)


while Obama poured $7tn all at home and now you guys somehow all have new roads, new pipelines, all brand new

again, not the case.

in terms of domestic policy, Presidents are limited in what they can spend, of course.

existing mandatory spending is the main driver of the budget. that's all the more so during the financial crisis given the existing safety net programs.

basically obama's biggest cost is the ACA, which actually lowers the deficit in the medium-long term. even given the short-term costs, however, i'd wager the ACA + stimulus had less of a fiscal impact than that of the wars.

Doktor
12 Aug 14,, 16:36
doktor,



no, let's not exaggerate-- certainly not all.

however, significant sums of money WERE spent in those places:

The $5 Trillion War on Terror | TIME.com (http://nation.time.com/2011/06/29/the-5-trillion-war-on-terror/)
So, how much is it? Yes, I've read the article, thanks for asking.



again, not the case.

in terms of domestic policy, Presidents are limited in what they can spend, of course.

existing mandatory spending is the main driver of the budget. that's all the more so during the financial crisis given the existing safety net programs.

basically obama's biggest cost is the ACA, which actually lowers the deficit in the medium-long term. even given the short-term costs, however, i'd wager the ACA + stimulus had less of a fiscal impact than that of the wars.

Presidents have restrictions, yet Obama managed to pass a law to spend a lot of money which some now refuse to call Obamacare ;)

Sorry for my layman comment, but 7 vs 5 = 40% more. Wonder the timeframe till it pays off.

astralis
12 Aug 14,, 17:56
doktor,


So, how much is it? Yes, I've read the article, thanks for asking.

depends on the factors you want to calculate. the Congressional Research Service calculated some $941 billion in the years that Bush was in office.

http://assets.opencrs.com/rpts/RL33110_20090515.pdf


Sorry for my layman comment, but 7 vs 5 = 40% more. Wonder the timeframe till it pays off.

this is a poor comparison. Bush didn't have a global financial crisis and mini-Depression to fend off. thus -mandatory spending- would have shot up under -any- President.

finally, as for the ACA:

CBO (http://www.cbo.gov/publication/44176)


When estimates are compared on a year-by-year basis, CBO and JCT’s estimate of the net budgetary impact of the ACA’s insurance coverage provisions has changed little since February 2013 and, indeed, has changed little since the legislation was being considered in March 2010. In March 2010, CBO and JCT projected that the provisions of the ACA related to health insurance coverage would cost the federal government $759 billion during fiscal years 2014 through 2019 (which was the last year in the 10-year budget window being used at that time). The newest projections indicate that those provisions will cost $710 billion over that same period. As shown in the figure below, the intervening projections of the cost of the ACA’s coverage provisions for those years have all been close to those figures on a year-by-year basis; of course, the 10-year totals have changed as the time frame for the estimates has shifted.

Those amounts do not reflect the total budgetary impact of the ACA. That legislation includes many other provisions that, on net, will reduce budget deficits. Taking the coverage provisions and other provisions together, CBO and JCT have estimated that the ACA will reduce deficits over the next 10 years and in the subsequent decade.

Blademaster
12 Aug 14,, 18:41
Most of the $7 T increase in debt during Obama's time in office came immediately after he inherited the office. For the first 3 years we basically saw a total of $5T increase in debt and that was when the economy was freefalling in recession and massive layoffs. Now the economy has rebounded back and Obama's deficit is drastically less than the deficits saw during Bush's time. For comparison's sakes, the size of the debt was doubled during Bush's years. During Obama's years, it has increased but has not doubled in size.

zraver
12 Aug 14,, 23:04
z,



actually, that was part of his platform the first time, which caused a major sh*tstorm within the Democratic Party.

i agree that Clinton's budget was not his accomplishment alone, but it's definitely a jump from that to "Congress forced him to."

as for Glass-Steagall, this was an example of his triangulation gone wrong. it had bipartisan support during fat times, with deregulation traditionally being a conservative priority pretty much at all times. note how even now Republicans want to weaken Dodd-Frank and the other regulations put in place after the worst financial crisis since the Great Depression.

i'm more than willing to lambast Clinton for his role in Glass-Steagall, but i'm also willing to credit him partly for the '90s economic growth.

No real defense of Republican addiction to deregulation as the be all and end all. Regulatory regimes need to be tweaked forward and backwards to maintain balance between competing interests.

As for Clinton, he is likely the luckiest man alive. The boom in the 90's was caused by two main events. First was President Reagan breaking up Ma Bell/AT&T coupled with significant investing in fiber optic communications. This laid the foundation for Bush 41 and cough cough Al Gore to fundamentally transform the world with the passage of the High Performance Computing and Communication Act of 1991. President Clinton rode the internet to prosperity. of course that bubble popped, but the world created by the internet gold rush of the 90's is why we are conversing today.

Oh, info out yesterday says cash for clunkers caused the auto industry to lose 3 billion dollars...

Texas A&M Study: “Cash For Clunkers” Cost Auto Industry $3 Billion | DrivingSales News (http://drivingsalesnews.com/texas-am-study-cash-for-clunkers-cost-auto-industry-3-billion/)

DOR
13 Aug 14,, 04:13
There are some major misconceptions here about debt and deficits. The most obvious one is to think debt is all about spending, with the underlying tone of “waste, fraud, welfare, wars and other unnecessary stuff.”

That ignores revenue. Which, in turn, is dependent on both the economy and the level of tax rates. The first one is dealt with by looking at revenue (and spending) as a percent of GDP.

Under Reagan, revenues were stable and spending rose by an average of 1.7 percentage points of GDP. As a result, the budget deficit rose from 2.3% to 4% of GDP. GWH Bush also had stable revenues, and reduced spending by 0.5% of GDP, so the deficit fell to -3.8%.

Clinton benefited from an extra 1.1% of GDP revenue and but also presided over a 2.0% drop in spending, which brought the deficit down to an average of just -0.7%. GW Bush’s revenue fell a further 1.3% of GDP, but spending was flat. Result: -1.9% deficits.

Over 5 years, Obama’s revenues have been down 0.7%, to 16.2% of GDP (lowest since the 1970s) while spending increased by 3.4 points. The deficit was -5.9% of GDP.

If -- and only if -- one believes all that extra spending to ensure the banking system didn’t fail and the worst economic slump in 80 years didn’t become another Great Depression was a mistake, then -- and only then -- the deficit over the past five years would have been -2.6% of GDP.

But, that assumes that revenues are unaffected by anything that happens on the spending side of the equation, which is utter nonsense.

Monash
13 Aug 14,, 11:53
Reuters: Jobs growth in the U.S. since the 2008 recession has been undermined by lower wages, with workers earning an average 23 percent less than earnings from jobs which were lost, a report by an organization representing U.S. cities said on Monday.

The average annual salary in sectors where jobs were lost - particularly manufacturing and construction - during the 2008-9 financial crisis was $61,637, according to the report by the United States Conference of Mayors (USCM), which represents cities with populations of more than 30,000.

Job gains through the second quarter of 2014 in comparative sectors showed average wages of $47,171, implying $93 billion in lower wage income, the report said.

The report also showed that the majority of metro areas - 73 percent - had households earning salaries of less than $35,000 a year.

The latest monthly employment data from the Labor Department showed that more than 200,000 jobs were created for the sixth straight month in July, but that wages were about flat in the private sector.

American workers, on average, earned $24.45 an hour in July, up only a penny from June. Over the last year, wages have grown just 2 percent, in keeping with where they have been stuck since late 2009.

DOR
14 Aug 14,, 10:09
Real pay isn't as bad as you think.\

(Sorry about the size of the graph.)

GVChamp
14 Aug 14,, 16:34
Is that total compensation or cash wage? I can't FRED on my work computer (yes, FRED is a verb, in my book).

Blademaster
14 Aug 14,, 22:36
Reuters: Jobs growth in the U.S. since the 2008 recession has been undermined by lower wages, with workers earning an average 23 percent less than earnings from jobs which were lost, a report by an organization representing U.S. cities said on Monday.

The average annual salary in sectors where jobs were lost - particularly manufacturing and construction - during the 2008-9 financial crisis was $61,637, according to the report by the United States Conference of Mayors (USCM), which represents cities with populations of more than 30,000.

Job gains through the second quarter of 2014 in comparative sectors showed average wages of $47,171, implying $93 billion in lower wage income, the report said.

The report also showed that the majority of metro areas - 73 percent - had households earning salaries of less than $35,000 a year.

The latest monthly employment data from the Labor Department showed that more than 200,000 jobs were created for the sixth straight month in July, but that wages were about flat in the private sector.

American workers, on average, earned $24.45 an hour in July, up only a penny from June. Over the last year, wages have grown just 2 percent, in keeping with where they have been stuck since late 2009.

Monash,

I will take that anytime any day any week over the prospect of seeing long lines at unemployment centers and soup kitchens and huge catastrophic economic migrations as US saw during the Great Depression.

Monash
15 Aug 14,, 00:46
Monash,

I will take that anytime any day any week over the prospect of seeing long lines at unemployment centers and soup kitchens and huge catastrophic economic migrations as US saw during the Great Depression.

I found the article interesting only because it seems to indicate that the 08 financial crisis may have resulted in deeper structural changes to (non banking) sectors of the US Economy than has been anticipated up till now. The report itself may take some of the immediate gloss of what is an ongoing and (probably) accelerating recovery but only in the short term. Its the longer term implications that interest me.

If the lower wages indicated in the statistics are slanted more heavily towards the building and construction sector which hasn't recovered to pre-GFC activity levels yet its not so much of an issue. On the other hand if it reflective of a more broadly based trend then that means manufacturing wages are being hit quite significantly as well. This in turn would be indicative of a deeper, ongoing restructuring of US manufacturing capacity. One with potentially serious impacts further out.

DOR
15 Aug 14,, 03:18
Is that total compensation or cash wage? I can't FRED on my work computer (yes, FRED is a verb, in my book).

Hourly pay, deflated by the consumer price index.

zraver
15 Aug 14,, 03:28
Hourly pay, deflated by the consumer price index.

So wages over the last 5 years have gone up 1%. Combined Inflation since 2009 is up 12.5% even using the cooked books CPI. Go Obama.

Monash
15 Aug 14,, 04:26
So wages over the last 5 years have gone up 1%. Combined Inflation since 2009 is up 12.5% even using the cooked books CPI. Go Obama.

It's pretty much a pointless exercise blaming this President or that President for downturns in the US economy when your entire political system is more or less designed to limit the ability of one person to initiate significant change (especially economic reforms) in peace time without the support of a co-operative Congress and Senate. The Fed sets interest rates and money supply, the two houses have to approve the budget and the States have their own separate economic decision making processes re: their budgets - which collectively have a significant impact on the economy. It also has to be remembered that steering an economy is a lot like steering an ocean liner, signals form the bridge take a considerable time to produce the desired outcome. Mostly incoming presidents seem to (in part at least) inherit the economic settings handed to them by the outgoing predecessor and after 4 years any measure they take will only be starting to have an impact.

Say what you want about the Obama administration it hasn't actually had what could be called a compliant congress or senate. Which I guess is one thing for the parliamentary system. Most of the time the incumbent PM can't say he doesn't have the support of the majority of sitting members - at least on paper. (Mind you that's not saying much, none of our elected officials have exactly been covering themselves with glory lately. :mad:)