Bush: U.S. is not headed for recession
Who is right?
MSN- President Bush said Thursday the country is not recession-bound and, despite expressing concern about slowing economic growth, rejected for now any additional stimulus efforts. “We acted robustly,” he said.
“We’ll see the effects of this pro-growth package,” Bush told reporters at a White House news conference, acknowledging that some lawmakers already are talking about a second stimulus package. “Why don’t we let stimulus package 1, which seemed like a good idea at the time, have a chance to kick in?”
Bush’s view of the economy was decidedly rosier than that of many economists, who say the country is nearing recession territory or may already be there. “I’m concerned about the economy,” he said. “I don’t think we’re headed to recession. But no question, we’re in a slowdown.”
On one issue particularly worrisome to American consumers, there are indications that paying $4 for a gallon of gasoline is not out of the question once the summer driving season arrives. Asked about that, Bush said “That’s interesting. I hadn’t heard that. … I know it’s high now.”
U.S. STOCK MARKET IS IN RECESSION IT’S HEADING FOR A CRASH!
[...] News, headlines and articles on politics, business, finance and the future! wrote an interesting post today on Bush: U.S. is not headed for recessionHere’s a quick excerptI hadn’t heard that. … I know it’s high now.” READ MORE U.S. STOCK MARKET IS IN RECESSION IT’S HEADING FOR A CRASH! [...]
Unemployment still at or below 5%.
DJ still holding around 12000
Interest rates still as low as in history
Certainly there are some bad numbers out there, but it is a bit premature to call this a recession or crash. It is more media generated than real.
Well, aside from the fact that the numbers are manipulated, I don’t think we will see the classic definition of a recession. We can under report inflation and ramp up government spending fast enough, since it is part of GDP, to keep it higher than it would be without government increasing spending.
If you are going to have a 2% drop in GDP, then you spend enough in government spending to keep it 2% higher. Of course that increases inflation but that is a lag factor. So, as long as you keep spending (and borrowing to do so) fast enough, you can keep from having 2 negative quarters of growth.
That is why the rush for these policies recently. Keep spending ahead of drops in GDP from the private sector and you can avoid the appearance of a recession.
However, look at just the income from the 42% of job growth that was tied to housing. In real estate, for example, we added 900,000 agents to the 600,000 we had. They don’t get unemployment insurance nor are the counted as unemployed even though they may not be making wages as high as welfare recipients receive. That is 1.5 million people no longer making anywhere near what they were and thus, paying a lot less in sales and income taxes.
The lack of a recession isn’t stopping states from being billions in the hole due to lost tax revenues. California is ending dental services to the poor, cutting spending on education and releasing 30,000 prisoners early into a declining employment market to cut spending due to their $16 billion shortfall.
Inflation is going to be the biggest problem for most. Even if they have a job, it will feel like a recession when they can’t buy discretionary items due to food and energy and interest on credit cards consuming most of their paychecks.
If we start infrastructure rebuilding with federal money as the states are asking, we could have $800 billion added to the debt each year for the next several years regardless of who is President. But, we won’t have a recession, if the Governments spending plan works. No! That will come in a few years when our children and grandchildren are given the bill.
Bart, the DJ holding a 1200? Only if you price it in dollars. It is losing buying power even on the days it is going up.
If you sold 100 bushels of any grain, or 100 barrels of oil or 100 ounces of copper or nickel or gold and bought the DOW in 2000, you are deep in the hole now. You have lost well over 20% of your money even though the DOW never dropped that much. Even at the high of 14,000, if you sold and tried to buy back what you had sold, you couldn’t.
You lost money in just about every year you owned stocks when the buying power of that money is calculated. Even Bernanke admitted in questioning that “real wages” hadn’t kept up for most Americans with total inflation.
They keep saying we will throw out food and energy because they are “too volatile.” Not anymore. They are steady as a rock. Each month they move up steadily higher and higher and higher. Volatile indicates rapid rises and falls in price. That isn’t the case any more with oil or food.
However, in defense, they do eventually affect other prices, as we are now finally seeing. But, by not including them in say a “rolling moving average,” we create such a “lag factor,” that wages can’t keep up with total inflation.
I do agree that eventually food and energy will raise the other things but, the lag factor is too big for the average worker. A rolling average on food and energy would make more economic sense, but not good political sense if you want to use inflation for monetary and political policies, like keeping COLA adjustments for seniors on social security down.
If you are examining economic performance the last numbers you want to use are numbers “generated” by the government.
I disagree with Jan, I think we are headed for a sharp recession.
I think we are too, Capt. Menace but, it won’t be called a recession because the “numbers” the government uses will be projected as “positive.”
Sorry if I wasn’t clear on that. Millions will be laid off or not making as much. Their buying power will be in the toilet. They will feel like they are in a recession but the Government will tell them they aren’t.
We have been in a recession if you count the buying power of low to middle class workers now for quite a while. But, government spending which is 44% of national income makes things look better than they are.
Sounds like we are on a similar page Jan.
As for bb, it says a lot about modern conservatism when a self-professed “conservative” can look (or not look as the case may be) at the economic shape we are in today and say… “It is more media generated than real.”
And you wonder why the rest of the country is sick of “conservatives”…
Capt menace
When you say “sharp” recession, most of the “experts” I read agree. However, they are in disagreement as to when. Some believe this will delay it a year or two. Also, if they do the massive infrastructure spending states want, it will put ten’s of thousands to work across the nation (if they can borrow $400 billion more on top of what they are already borrowing) and delay it.
The states say the “plans” are already in hand. They planned for the infrastructure building but, never were able to get the funds. Thus, they say, as soon as the Fed would approve the spending, they could actually start hiring and work on the projects. They claim that would actually do more than a “rebate” because month after month, high paying construction jobs would be pumping money into consumers.
There is only one downside that is really glaring. $800 billion a year added to debt and the interest on that that would rise $40-50 billion a year depending on the interest rates foreign nations would require for increasing their loans to us that much.
I think the pain we will see in the short term is loss of purchasing power with the U.S. dollar (inflation). I believe this problem will be exacerbated over the long run by a continuing rise in commodity prices (specifically energy and food).
Yes, the greater the debt the greater the long term pain. The reality is that the long term isn’t that far off.
As for bb’s unemployment and market numbers. They are pure crap. Keep eating the government cheese. It’s good for you.
“Sick of Conservatives?”
Maybe because the majority that say they are conservatives aren’t. What are they trying to conserve? “Guns and butter economies?” Bad decades of foreign policy? Corporatism where only the biggest can survive in an international market because of bad business policies that reward corruption?
Don’t get me wrong. Socialism is worse but, both parties are driving this nation into the dumps and probably at equal speeds but they just use different “spending a tax policies” to do it. One uses a gun and the other a knife buy, you are still dead by the time they get done with you.
Peter G. Peterson covers the two parties both destroying the nation in different ways, in his book “America: Running on empty.”
That is the “CFR” guy that the Comptroller General, David Walker is resigning to go and work with in his new foundation. Walker has been warning of the coming crisis for years now.
While I am no fan of the CFR because they believe a “one world government” is the solution to our problems, Walker is correct we are in deep trouble and Peterson was right in his book both parties are the problem.
“Socialism is worse”
Jan, they are two sides of the same coin.
Socialism is simply capitalism managed by the government. Socialism or corporatism (both forms of capitalism) both result in a biased distribution of wealth/resources. Whether or not it is right or wrong is completely dependent on whether you are the giver or the taker.
I’m sure that God could care less whether you are a socialist or a capitalist.
The point here is that we have a very corporate-biased form of capitalism running this country, and at the present time our charted course is leading us right into some rocks. And these rocks may be damaging enough to sink the boat.
CM,
What is “pure crap” about full employment and plenty more jobs to be filled?
I know you libs and some isolationists who call themselves conservative only focus on the negative, but there is some foundational good out there if you want to acknowledge it.
“The economy lost jobs in January for the first time in more than four years, and economists surveyed by Bloomberg this month forecast the unemployment rate will rise through midyear.”
From the liberally-biased Bloomberg – U.S. Economy: Spending Eroded by Inflation, Chicago Index Drops
Taking measure of the economy is much more about looking forward than looking back.
If you’re continually looking towards the stern of the riverboat you’ll never see the rapids that lie directly ahead.
Oops, forgot to close the link.
BB
we added 900,000 to the 600,000 real estate agents during the boom. They are “still employed” as long as they work for an agency but don’t make much money. Then you add the contract workers like real estate agents that didn’t pay into unemployment and they don’t show up on roles but they aren’t “employed” and making money to pay taxes with or buy things with.
To that add the 250,00 that financial services are laying off and the 1/2 the work force GM is hoping will take buyouts. Add the 5 million that gave up looking and aren’t counted in unemployment numbers.
Yes it is true we need more dish washers and waiters and things like that but are needing less in R&D, truck driving, factories, high tech, financial services, etc.
We do have a lot of illegals leaving (at least here in the Maricopa county area that is making jobs available for some but, we are still 16% in the hole on tax revenues for the state due to the losses in our economy.
That is how you know how full of garbage government numbers are. If we had a good economy, states wouldn’t be losing so much sales tax, property tax and other sources of tax revenues.
You have people losing even prime rate homes because they can’t make the payments anymore and still pay the inflated prices for food and energy and other expenses.
I admit that it isn’t “that bad yet,” but it will be if the consumers don’t start spending and inflation doesn’t come down so they can spend more on things besides fuel and food.
The economy is a basket case but it just hasn’t fallen off the shelf yet. When it does, everything in the basket will crash. Employment, buying power, tax revenues, foreclosures, bankruptcies, corporate layoffs, profits, currency, etc.
Whether it is this year or next or the year after, the basket is going to get “jarred” off the shelf.
We have been in negative GDP growth for most of the past few years due to underreporting inflation and using debt to spend enough to keep it positive. Now, we are paying almost 1/2 a trillion in interest alone. While 1/2 of that goes to trust funds for their loans, it is immediately loaned back to the general fund and spent to keep GDP higher.
Capt. menace
Socialism or corporatism (both forms of capitalism) both result in a biased distribution of wealth/resources.
======================
Corporatism is a form of socialism (for the wealthy). Capitalism in the “good” sense is where you or I or anybody can get an education, skills, seek opportunities and grow to a level of wealth you deem “comfortable.” Whether you use your wealth morally as did many wealthy people in the Bible as did some immorally, is another story.
However, in our system we are trying to straddle the fence with socialism to both.
Capitalism is not fair. You used the word “biased.” That is a good term. Capitalism is biased to the educated, the connected, the wealthy, the skilled, the creative (inventors) and people who network.
For example, when the Jews came here most were dirt poor and often discriminated against but, they net worked. The worked and saved and pooled their money. “Sol, you are a good cobbler. Here is our money. You start a shoe store and hire our children.”
They continued to save and went to Saul and said you are a good tailor. Here is our money. You start a store and hire our Children.”
They continued to save and expand the businesses. The made their children study and become lawyers, bankers, landlords etc. but, always, help your family, friends and fellow Jews.
One fellow during the depression has only a nickel (or so the story goes) and bought and apple and sold it for a dime and bought two more apples to sell. At the end of the day, he had enough money to eat and buy apples for the next day. He eventually became wealthy as a produce wholesaler. John Johnson was black and denied a loan because he was black but convince the declining bank officer to tell him where he could get a loan and give him a recommendation. He got that, went and got the loan and ended up on Forbes wealthiest 400 with a $500 loan.
Most would have given up in both of those examples but with capitalism they could excel where most wouldn’t. It was only “fair” to them because they had the skills to use the system.
Under socialism, whether it is the kind we think of as socialism were the state controls all the wealth distribution in the classic sense or under corporatism where we only take the wealth of those “not connected to the party,” the majority of people will be miserable.
In even communist nations there were the “wealthy” that got to use yachts, eat caviar, and take long vacations in summer homes. Only they were the party leaders and the property was “state owned” but nobody could use it except the elite. In the meantime all the people stood in lines for bread. As they say “we pretend to work and they pretend to pay us.
Here, our corporatism is complex. The people, workers, like you and me, own the companies. We own them with the stock over 1/2 of Americans and many foreigners own of the shares. But, we don’t control them. The same people that control the parties, control the corporations.
Corporations don’t control politicians. The elite that control the politicians control them and use them just like they use the politicians. The tell the politicians through the experts and political appointees and CFR, Federal Reserve, and other organizations “what is best.” Then, they use the corporation’s boards of directors they control to direct payments to campaigns, lobbyists, and corrupt politicians so that “what is best” gets done.
It isn’t capitalism that is the problem but how we have distorted it and taken it away from being a means for the “little” guy willing to work hard and get skills for running a business to a means for keeping a corrupt government funded.
When Exxon got $10 billion that one quarter, it was $16 billion before taxes. The gov. got $6 billion and school teachers, factory workers, city workers with pension plans etc. got much of that $10 billion. Vanguard, just one mutual fund company had over 1 billion shares of the 6.3 billion shares outstanding at that time (less now with buy backs). Those were mostly little investors that pooled their money in mutual funds and they own Exxon but, they don’t control it.
The government rewards and punishes corporations that don’t play ball with it. The elite that control the parties decide when and who to target to send messages to all corporations that the government is in control. About the only time that system doesn’t work is when some “whistle blower” reveals to the press something and the public gets wind of it and then “government has to act” to appear like it isn’t away of what goes on.
That is one reason “whistle blows” are often punished as well in some way.
Capitalism may be unfair but, if run like our founders intended, it is way ahead of what we have or any form of socialism for the nation but, never for all people. Yet, without the nation being healthy then all the people in it are miserable. You can never have a society that is fair to all people.