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China overtakes Japan as No.2 economy, US next by 2025.

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  • So China and Japan are better to form some economic union, I wonder why it still doesn't exist. And US must organize home production correctly and learn how to make everything really good!

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    • Originally posted by xsqsx View Post
      So China and Japan are better to form some economic union, I wonder why it still doesn't exist.

      Japan is still China's go to enemy to guide the public to hate instead of looking inwards.

      Comment


      • 2014 East Asian economic wrap-up

        Japan’s economy failed to grow in 2014 due to weak (-1.2%) consumer spending. Q-4’s -0.5% year-on-year performance was the third consecutive decline. Private consumption fell 2.5% in the latest period, also the third drop in a row. Capital investment (-1.7%) fell for the second straight quarter.

        Korea expanded 2.4%, up slightly from 2013 on the basis of capital investment (+5.9%) and sluggish imports. Taiwan managed a 3.7% expansion during the course of the year, up from 2.2% in 2013 thanks to a revival in consumer demand.

        Singapore
        ’s economy expanded 2.9% in 2014, despite sluggish (-1.9%) capital investment and exports (+2.1%). Private consumption rose 2.5%, but domestic demand fell by 3.3%, the second consecutive decline. Hong Kong reports in next week.

        Malaysia, Indonesia and the Philippines continue to out-perform the rest of South-east Asia. Malaysia turned it its 6th straight quarter of better-than 5% real growth (5.8% in Q-4), and topped 6% for the entire year. Indonesia was down a notch, at 5% in Q-4 and for the full year. The Philippines topped the ranks with 6.9% real growth based on solid (+5.4%) private consumption and strong export numbers.

        The Thai economy grew just 0.7% in 2014, down from nearly 3% the year before. Private consumption expenditure grew just 0.3% in real terms last year, the same as in 2013. Contractions in capital investment and imports drove domestic demand down by 7.3%, the worst performance since 2009.


        NB: there are plenty of other threads on the Chinese economy.
        Trust me?
        I'm an economist!

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        • David, please dumb it down for this dumb soldier. What does it mean for those needing work?
          Chimo

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          • The Philippines topped the ranks. I guess strong consumer spending equals strong foreign remittances. As for strong exports what exactly are those? With over 50 trips there about all I can see is coconuts, pineapple, durian and balut as I don't see much major manufacturing.

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            • Col,

              Well, you’re probably aware that (at least in the US) the unemployment rate is falling farther, faster and for longer than anyone predicted. In fact, it’s one of the best improvements on record, given the particular part of the cesspit from which we began the long climb out.

              We’ve got data, on a weekly basis, for new unemployment claims that goes back to 1967. Over 2,500 data points as of last Thursday, which makes it the most current long-term insight available. Over that 48-year period, the 4-week moving average change (year-on-year) was +5.7%. That means, new claims typically went up 5.7% year.

              In the past year, it has been -20.1%, and over the past 4-1/2 years, -19.6%. Think of it as the difference between cross-country and downhill skiing.

              Here’s the track record since just after the post-WWII slump (ADD: so, not the same weekly measure)
              The measure is percentage points change in the unemployment rate, from the peak.
              Only periods where the unemployment rate fell for at least three years in a row are included.

              Sorry, major revision -- my formula jumped a column

              1949-53 _ _ -3.1 pts (-0.6 pts per year)

              1963-66 _ _ -1.8 pts (-0.4 p.a.)

              1976-79 _ _ -2.6 pts (-0.7 p.a.)

              1983-89 _ _ -1.9 pts (-0.3 p.a.)

              1993-00 _ _ -1.4 pts (-0.2 p.a.)

              2010 -14 _ _ -3.5 pts (-0.7 p.a.)


              The challenge for job seekers is to ensure that their skills, and the pay they want, is in line with the risk employers have to take when hiring a new person.

              = = = = =

              tbm3fan,

              Remittances rise with more Filipinos going abroad, not with stronger demand in the Philippines, and not with stronger growth in places where Filipinos already work. Their pay tends to be fixed over a longer term.

              The exports are both manufacturing and services (better than +12% in real terms for both). Call centers are a huge new addition.
              Last edited by DOR; 17 Feb 15,, 10:26.
              Trust me?
              I'm an economist!

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              • Originally posted by DOR View Post
                tbm3fan,

                Remittances rise with more Filipinos going abroad, not with stronger demand in the Philippines, and not with stronger growth in places where Filipinos already work. Their pay tends to be fixed over a longer term.

                The exports are both manufacturing and services (better than +12% in real terms for both). Call centers are a huge new addition.
                Yes, I figured it would be remittances. Heck, I just did my indirect part when my wife sent $150 over to a niece who just lost her job and has to buy food for the children. Happens about 4x a year along with roofs 2x a year due to typhoons. Damn typhoons! Oh, and by the way their is stronger demand. The relatives are demanding more money!!!

                Forgot about call centers till you mentioned it. Another one of my favorites when I end up talking to them. I know they are Filipino even though they are trained not to say. Can always catch them by asking them a question that they are not trained for. I can trip them up and make them go silent for a few moments just like Mater would startle the sleeping tractors. I know it is a little cruel but they are so well trained to stick to the script that I can't help myself. My wife took several years to learn to think out of the box.

                Comment


                • Oh, their managers can definitely think out of the box. I work for a major Fortune 50 and we outsourced a call center to the Phillipines recently. They get paid by the incoming phone call. For a brief period of time, we printed incorrect invoices to the customers and got a LOT of angry phone calls (which our Filipino call center got paid for!)
                  Then we fixed the problem. No more calls!
                  What a nightmare for our call center...they held meetings, meetings, meetings...their solution? Auto-dial all our customers and tell them they have problems with their accounts, and they better call right away (just to be told there are no problems).

                  Oh they can definitely think outside the box. It's all about incentives.
                  "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

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                  • So basically you are saying they need to be paid extra, a bribe so to speak, in order to think out of the box. Well doesn't surprise me since the Philippines pretty much runs on having the skids greased. Too bad they just can't do it because you simply should.

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                    • Originally posted by DOR View Post
                      Japan’s economy failed to grow in 2014 due to weak (-1.2%) consumer spending. Q-4’s -0.5% year-on-year performance was the third consecutive decline. Private consumption fell 2.5% in the latest period, also the third drop in a row. Capital investment (-1.7%) fell for the second straight quarter.

                      Korea expanded 2.4%, up slightly from 2013 on the basis of capital investment (+5.9%) and sluggish imports. Taiwan managed a 3.7% expansion during the course of the year, up from 2.2% in 2013 thanks to a revival in consumer demand.

                      Singapore
                      ’s economy expanded 2.9% in 2014, despite sluggish (-1.9%) capital investment and exports (+2.1%). Private consumption rose 2.5%, but domestic demand fell by 3.3%, the second consecutive decline. Hong Kong reports in next week.

                      Malaysia, Indonesia and the Philippines continue to out-perform the rest of South-east Asia. Malaysia turned it its 6th straight quarter of better-than 5% real growth (5.8% in Q-4), and topped 6% for the entire year. Indonesia was down a notch, at 5% in Q-4 and for the full year. The Philippines topped the ranks with 6.9% real growth based on solid (+5.4%) private consumption and strong export numbers.

                      The Thai economy grew just 0.7% in 2014, down from nearly 3% the year before. Private consumption expenditure grew just 0.3% in real terms last year, the same as in 2013. Contractions in capital investment and imports drove domestic demand down by 7.3%, the worst performance since 2009.


                      NB: there are plenty of other threads on the Chinese economy.
                      I have a question. Is it good to have consumer spending driving our economic growth?

                      I guess a better question would be "is there an unhealthy level of economic growth supported by consumerism?"

                      What happens if a society (like ours) that was sustained by continual high consumer spending via debt, but then decided to slowly reduce this debt and to build up a reserve? Is that good or bad?
                      "Only Nixon can go to China." -- Old Vulcan proverb.

                      Comment


                      • Originally posted by gunnut View Post
                        I have a question. Is it good to have consumer spending driving our economic growth?

                        I guess a better question would be "is there an unhealthy level of economic growth supported by consumerism?"

                        What happens if a society (like ours) that was sustained by continual high consumer spending via debt, but then decided to slowly reduce this debt and to build up a reserve? Is that good or bad?
                        Originally posted by gunnut View Post
                        I have a question. Is it good to have consumer spending driving our economic growth?

                        I guess a better question would be "is there an unhealthy level of economic growth supported by consumerism?"

                        What happens if a society (like ours) that was sustained by continual high consumer spending via debt, but then decided to slowly reduce this debt and to build up a reserve? Is that good or bad?
                        It is far better to have consumer spending driving an economy than not to have that economy growing at all. When it comes to the optimal driver, or mix of drivers, it will vary from economy to economy, and often from decade (generation) to decade within a single economy.

                        Over-dependence on any single driver -- private consumption, government consumption, capital investment or net trade -- isn't all that great simply because it sharply increases the risk that something will Go Wrong.

                        If a modern, wealthy and secure society depends on consumer demand for growth, that's just normal. In such a society, private consumer expenditure (PCE) will usually run 60-70% of GDP, government consumption expenditure (GVT: excluding capital investment) 22% and capital investment (CAP: private, public and inventories) 15%. Trade is generally a rounding error, except in East Asia and Germany.

                        It changes over time. In the 1980s, US PCE was 62% of GDP; now it's 68%. GVT was 25%; now it's 19%. CAP was 13%; now, 16%. So, in fact the US is becoming less and less dependent on consumption -- public and private -- and more dependent on investment.

                        To grow the economy at 2%, we need 3% growth in PCE (that's the average over the last 40 years), and nothing else. Or, if I'm anti-consumer, I can get the same 2% annual growth via 5% growth in GVT (avg: 1.7% p.a. since 1975) and 5% CAP (avg: 3.3%), and no growth in PCE.

                        Balance is the key, with one type of demand taking up the slack when the others falter. Keynes figured out that if consumers and investors go on strike, the government had better go shopping, or things were going to get really ugly.

                        BUT BUT BUT and BUT again! When private demand (consumption, investment) is doing its job, the public sector needs to pull back, to avoid competing with the private sector (crowding out) and causing inflation, and to gather its fiscal ammunition for battles to come.
                        Trust me?
                        I'm an economist!

                        Comment


                        • Originally posted by DOR View Post
                          It is far better to have consumer spending driving an economy than not to have that economy growing at all. When it comes to the optimal driver, or mix of drivers, it will vary from economy to economy, and often from decade (generation) to decade within a single economy.

                          Over-dependence on any single driver -- private consumption, government consumption, capital investment or net trade -- isn't all that great simply because it sharply increases the risk that something will Go Wrong.

                          If a modern, wealthy and secure society depends on consumer demand for growth, that's just normal. In such a society, private consumer expenditure (PCE) will usually run 60-70% of GDP, government consumption expenditure (GVT: excluding capital investment) 22% and capital investment (CAP: private, public and inventories) 15%. Trade is generally a rounding error, except in East Asia and Germany.

                          It changes over time. In the 1980s, US PCE was 62% of GDP; now it's 68%. GVT was 25%; now it's 19%. CAP was 13%; now, 16%. So, in fact the US is becoming less and less dependent on consumption -- public and private -- and more dependent on investment.

                          To grow the economy at 2%, we need 3% growth in PCE (that's the average over the last 40 years), and nothing else. Or, if I'm anti-consumer, I can get the same 2% annual growth via 5% growth in GVT (avg: 1.7% p.a. since 1975) and 5% CAP (avg: 3.3%), and no growth in PCE.

                          Balance is the key, with one type of demand taking up the slack when the others falter. Keynes figured out that if consumers and investors go on strike, the government had better go shopping, or things were going to get really ugly.

                          BUT BUT BUT and BUT again! When private demand (consumption, investment) is doing its job, the public sector needs to pull back, to avoid competing with the private sector (crowding out) and causing inflation, and to gather its fiscal ammunition for battles to come.
                          Thank you for the easy to understand explanation. I'd "like" it twice if I could. But alas, the system only allows me to do it once.

                          Another question, where does savings rate come in? Or is the savings rate part of capital investment? I don't think it's healthy for the consumers to go into debt to maintain spending levels. Likewise it's probably unhealthy if the consumers save too much.

                          My Asian background prevents me from owing too much money. I hate owing money. I can sacrifice consumerism to be debt free.

                          I know, I know, moderation is the key, including moderation. But is there a "right" amount of moderation?
                          "Only Nixon can go to China." -- Old Vulcan proverb.

                          Comment


                          • Savings

                            Over saving = under investing (“savings glut”)

                            Savings is the opposite of investment; if you park your money under the mattress, instead of in the stock market, that’s savings. Another way to look at it is anything you don’t consume (i.e., spend or PCE + GVT) or invest (CAP) is savings.

                            In a national, US-type economy, when savings goes up consumption goes down (see graph, where the red line is savings as a percent of disposable income and the blue line is the real growth rate of private consumption). One of the outcomes of the shock and fear of the Great North Atlantic Financial Crisis was a surge in the US private savings rate. Which is the same as a collapse in consumer demand, and therefore Not A Good Thing.
                            Attached Files
                            Trust me?
                            I'm an economist!

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                            • A 'cast Too Far

                              China's contribution to global growth has at least two key components. First, China's own remarkable growth, and second, the dismal performance of just about every other major economy in the world.

                              Comparing contributions to global growth in 1999-2008 to those of 2008-2015 (est), the nearly 17 percentage points rise in China's share – from 18% to 34% – is not quite counter-balanced by the more than 16 percentage point drop in the contributions from the EuroZone, Japan and the US.

                              A second point that should be considered is that the US economy, growing at 3% in real terms, generates as much new economic activity as does the Chinese economy growing at 6%, or the EuroZone growing at 4.2%. While the latter is highly unlikely (absent deep, dangerous deflation), many serious observers of the Chinese economy would not lightly dismiss the prospects of China growing just 6% in 2016.

                              The number of competent macro-economist who think the US will grow by 3% or more in the coming year may be smaller, but the fact remains that there is a serious flaw in the analysis that predicts a 5% drop in global GDP in 2016.


                              http://www.forbes.com/sites/timworst...y-5-next-year/

                              Morgan Stanley's Bloodcurdling Economic Forecast: Global GDP To Shrink By 5% Next Year

                              This is of course the time when everyone rolls out their forecasts (aka “guesses”) for the year ahead. And there’s a fairly bloodcurdling one from Morgan Stanley MS -0.37%, that global GDP growth is going to go into reverse next year: the world at the end of 2016 will be 5% poorer than it was at the beginning of the year. This is, of course, possible. For it has happened before, that the world ended the year poorer than it started. The big concern this time around though is different. This is the first time that we’ve really worried about the influence of China on global GDP: because this is the first time for a couple of centuries that China has been a large enough portion of global GDP for events there to make that much of a difference. There’s also something of a measurement problem here. Whether growth does fall or not will depend, in part, on what it is that you try to measure.

                              The basic worry seems just right:

                              The problem is that China’s recent economic rise has been facilitated by a massive and unsustainable stimulus campaign. No emerging nation has ever tacked on debt at such a furious pace as China has done since 2008, and a rapid increase in debt is the single most reliable predictor of future economic slowdowns and financial crises. Policymakers in Beijing have been trying to sustain an unrealistic and randomly selected growth target of 7 per cent by steering cheap loans into one bubble after another-first housing, and most recently the stock market -only to see each bubble collapse. While China reported that its GDP grew exactly in line with its growth target of 7 per cent in the first three quarters of this year, all other independently-collated data -from electricity production to car sales -indicate that economy activity is increasing at a pace closer to 5 per cent.



                              Add: if China only grows 5%, the EU matches that contribution to global growth with just 3.5% growth, and the US does the same at 2.5%.
                              Trust me?
                              I'm an economist!

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                              • China will also slow down as more people become aware of their environmental problems. China is experiencing everything the west has experienced during the industrialization era. Cleaning up the process and cleaning up the aftermath of industrialization will be a big drag on the economy. It's quite remarkable that the US is still growing at 3% with all this drag.
                                "Only Nixon can go to China." -- Old Vulcan proverb.

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