US Economy is Bad

[peter12]

Originally Posted by Slava

Well all I can say is that statistically more people are working in the US now than were before the recession. I don't know how you want to spin that into bad news, but I'm sure that you'll give it a shot.

What numbers are you using? The Administration's official set has been highly criticized. Wage growth has also stagnated or actually decreased for most jobs.

[Slava]

Originally Posted by peter12

What numbers are you using? The Administration's official set has been highly criticized. Wage growth has also stagnated or actually decreased for most jobs.

Well that's basically what I was posting about before when I said that these figures have been bandied about since the dawn of time. Those are political arguments, and frankly they spin those to advance an ideology. The reality is that almost every metric (maybe even every metric) is positive since the recession. I have no idea how you could justify that the US hasn't seen a recovery.

[peter12]

Originally Posted by Slava

Well that's basically what I was posting about before when I said that these figures have been bandied about since the dawn of time. Those are political arguments, and frankly they spin those to advance an ideology. The reality is that almost every metric (maybe even every metric) is positive since the recession. I have no idea how you could justify that the US hasn't seen a recovery.

An economy where wages have stagnated severely for the bottom 50%, costs have increased, and more and more people have to take second jobs, it is clear that this so-called recovery has not benefited most people.

[Flash Walken]

Originally Posted by Slava

Well that's basically what I was posting about before when I said that these figures have been bandied about since the dawn of time. Those are political arguments, and frankly they spin those to advance an ideology. The reality is that almost every metric (maybe even every metric) is positive since the recession. I have no idea how you could justify that the US hasn't seen a recovery.

There are all sort of different indicators you can use.

Consumer spending is up, outpacing wage growth. Part of this is the falling price of gas, a major source of monthly household spending. Part of it is consumer spending financed by debt. Some of it is consumer spending financed by longterm savings.

Most of this consumer spending growth appears to be in the form of large items like Cars, which makes me believe it is largely debt financed.

[peter12]

In regards to that, I think it is fair to say that a lot of the income discrepancy has been driven by the middle class making very poor financial decisions (in relation to their income). We know that personal finances matter in this economy, stocks and mutual funds are your best source of long-term income, so why do people need the massive house, car, etc... Making a bad problem even worse.

[Slava]

I don't know how to respond to these things. First you say there is no recovery. Then you say it's a jobless recovery. Now you say that there is a recovery and people are working two jobs and spending too much money.

So, long story short, there is in fact a recovery. Will it go forever? Clearly not, but that's the business cycle. It winds up where people are over-leveraged and the economy contracts again.

[peter12]

Originally Posted by Slava

I don't know how to respond to these things. First you say there is no recovery. Then you say it's a jobless recovery. Now you say that there is a recovery and people are working two jobs and spending too much money.

So, long story short, there is in fact a recovery. Will it go forever? Clearly not, but that's the business cycle. It winds up where people are over-leveraged and the economy contracts again.

It all makes sense. Very clear sense. This so-called recovery is driven by gauzy employment numbers, increasing costs of living, high spending driven by low interest rates, and the virtual disappearance of the lower middle class.

We are seeing something new that is not explainable by traditional economic models. There is no business cycle anymore. Increasing technological returns have changed everything.

As for my previous comment, it would be a good idea for middle earners to stop spending so much money, and start putting as many assets into investments. That is the only reliable source of stability in this economy. The labour market sucks, and I don't see that changing for a long time.

[AcGold]

Did they ever change the deregulations that got Brooks Lee Born canned for bringing attention to? My understanding was deregulations from the Clinton office let wall street go wild with speculation and are what caused the recession in the first place.

[Slava]

Originally Posted by peter12

It all makes sense. Very clear sense. This so-called recovery is driven by gauzy employment numbers, increasing costs of living, high spending driven by low interest rates, and the virtual disappearance of the lower middle class.

We are seeing something new that is not explainable by traditional economic models. There is no business cycle anymore. Increasing technological returns have changed everything.

As for my previous comment, it would be a good idea for middle earners to stop spending so much money, and start putting as many assets into investments. That is the only reliable source of stability in this economy. The labour market sucks, and I don't see that changing for a long time.

Well I don't buy the 'this time is different' talk, so maybe that is where we have a distinct point of departure. But let's say you're right and there is no recovery, or its driven by spurious factors. Why would people be wise to invest?

I don't mean that as in what's the point (it's how I make a living after all), but if things are as bad as you say, and the outlook as gloomy as you predict, you would best to keep the money in your mattress, right?

[OMG!WTF!]

I don't want to sound like a ninety year old war vet, but honestly, I've been hearing about the upcoming financial collapse in the USA since I was a wee lad. If they had a financial doomsday clock, it would be permanently stuck at 11:59. What seems more likely is that bad news will continue to create massive returns for the right people. I love bad news. It's going to suck if we don't get more bad news by September.

[nfotiu]

Originally Posted by peter12

It all makes sense. Very clear sense. This so-called recovery is driven by gauzy employment numbers, increasing costs of living, high spending driven by low interest rates, and the virtual disappearance of the lower middle class.

We are seeing something new that is not explainable by traditional economic models. There is no business cycle anymore. Increasing technological returns have changed everything.

As for my previous comment, it would be a good idea for middle earners to stop spending so much money, and start putting as many assets into investments. That is the only reliable source of stability in this economy. The labour market sucks, and I don't see that changing for a long time.

You are saying a whole lot of nothing, and I am having trouble following your point. I live in the suburbs of Richmond, Va. We don't really seem to have high peaks or valleys in our economy and have a metro population about the same as Calgary. Without a real dominant industry, we seem to follow the general ups and downs of the country as a whole.

Sure, this all anecdotal, but 5-6 years ago, every construction project shut down, and nothing really new started for 3-4 years. In the last couple years, there has been a huge turnaround and everything has started up again. The restaurant industry is thriving, all sorts of large, upscale stores are moving in, IT jobs are in demand, sales jobs are in demand, large suburban houses are selling fast, and on and on.

Housing has recovered, but is still very affordable. Generally, cost of living around here has stayed very reasonable (far,far cheaper than Calgary by every measure). I don't know anyone (kids looking for part time, middle class, lower middle class) who has a hard time finding work. I work at a place that gives market based raises every year, and we've seen standard 3-4% raises for the last 3 year after being frozen for 3 years.

Maybe I'm way off base,but I'd think that our situation is pretty typical for mid-sized cities in this region. It could all fall apart I suppose, but for now things seems pretty solid economically.

[Tron_fdc]

I own property in Arizona and it's value has increased by 20% (at least) in the last 2 years. I work across the USA in a lot of major urban centers, and I see the same thing. Our main industry is infrastructure, and it's going crazy on the West Coast right now, as well as NC, SC and VA.

Yep, the US economy sure sucks.

[oilyfan]

Originally Posted by peter12

It all makes sense. Very clear sense. This so-called recovery is driven by gauzy employment numbers, increasing costs of living, high spending driven by low interest rates, and the virtual disappearance of the lower middle class.

We are seeing something new that is not explainable by traditional economic models. There is no business cycle anymore. Increasing technological returns have changed everything.

As for my previous comment, it would be a good idea for middle earners to stop spending so much money, and start putting as many assets into investments. That is the only reliable source of stability in this economy. The labour market sucks, and I don't see that changing for a long time.

"Gauzy" employment numbers? The methodology for calculating these numbers is the same as before the recession, and the trend is very good. Yes wage growth is a problem, but inflation is also well under control. You are trying find the cloud inside the silver lining, and you are welcome to, but it's not bourne out by the facts.

Oh, and the weekly jobless claims as a percentage of the working population is now at the lowest level in more than 50 years!
http://www.bloomberg.com/news/videos...-they-re-great

[Mike F]

Originally Posted by peter12

The US employment rate is an official 5.4% but experts estimate that if you include people who have given up looking for work or who have been forced to take minimal part-time work in the USA, then the number would rise to over 10.5%. There is no economic recovery in the US.

Following the bailouts of 2008, a new super elite of 0.1% earners was created. Everyone else suffered.

Originally Posted by Flash Walken

Correct, the rate of 'under employed' people in the US, basically anyone working less hours than they could/would like to, is over 11%.

That's a massive drag on a consumer economy.

Originally Posted by oilyfan

"Gauzy" employment numbers? The methodology for calculating these numbers is the same as before the recession, and the trend is very good. Yes wage growth is a problem, but inflation is also well under control. You are trying find the cloud inside the silver lining, and you are welcome to, but it's not bourne out by the facts.

Oh, and the weekly jobless claims as a percentage of the working population is now at the lowest level in more than 50 years!
http://www.bloomberg.com/news/videos...-they-re-great

I'll add a bit to this:

The Bureau of Labor Statistics appears to be calculating the unemployment numbers the same way before and after the crash.

Here's the report for March 2007: 4.4% unemployment rate, plus 1.4M people not looking for work.

Here's the report for July 2015: 5.3% unemployment rate, plus 1.9M people not looking for work.

Not saying the recovery has been complete, just saying the statistics do not appear to be being skewed to make the unemployment situation look better than reality.

[OMG!WTF!]

Originally Posted by Mike F

I'll add a bit to this:

The Bureau of Labor Statistics appears to be calculating the unemployment numbers the same way before and after the crash.

Here's the report for March 2007: 4.4% unemployment rate, plus 1.4M people not looking for work.

Here's the report for July 2015: 5.3% unemployment rate, plus 1.9M people not looking for work.

Not saying the recovery has been complete, just saying the statistics do not appear to be being skewed to make the unemployment situation look better than reality.

Good point. Also, when it comes to absolute number of people looking for work, you could adjust a bit for the increase in population...about 5%.