The State of the Economy

[Seraphim]

GypsyChic

Not so much of an art, I think, there are just too many variables that can skew the economy in various directions. Like the QE example - it SHOULD have worked as the Fed planned. They didn't take into account, I think, for the new legislation tightening up loans, because the bank's couldn't be trusted any further. So, as a result of the bond buying program, banks had available money, interest rates were rock bottom, and people showed up to take out new mortgages - only to find out, due to Dodd-Frank - the banks couldn't make the loans because the applicants were too risky according to the new federally enforced regulations...


Left hand, right hand...

 

[cdiggy]

 

[HarmonicaBruce]

I don't think you're a troll here in this discussion... I admire your willingness to bring a differing opinion to the table.

My ideas are original.

Seraphim... started with a definition of economics.

It's basically correct.

... in America many people would find it difficult to start eating an animal that is culturally considered a companion animal and not a traditional meat source.

I was being somewhat metaphorical. My point was that there are lots of unexploited food sources, unlike countries that truly have hunger.

To my knowledge there hasn't been a Kroger inside Detroit city limits for a least the past 10-15 years that I have direct knowledge of and probably much longer than that.

She worked at Kroger in the late 1970's. There are no chain grocery stores in Detroit, only small independents. Some of the stories she told me! People would shop lift meat, then stand outside the store and try to sell it to Kroger customers for half the marked price. After going through all the trouble to get someone arrested, they'd show up in court months later and if Kroger didn't have the meat in the court room, the person would be released. One thief fell the the ground and insisted she couldn't get up, so an ambulance came. Then later she just escaped. This is why there are no chain grocery stores in Detroit.

We may have more vacant homes in America than we have homeless but at this time I don't know of any program that is trying to eliminate either problem by somehow pairing the two. Do you?

Detroit is selling them pretty cheap,
http://auctions.buildingdetroit.org/home

I, personally, would be grateful if I had $3,500 available to put toward a trailer, be it a cargo trailer or a mobile home. I'm not sure which you are referring to. For some that is not as easy as it is for others. We are all in different circumstances.

I started working when I was about 8 years old, and I've saved my money my whole life. I was pretty broke when I was working and paying for college (lest I get sent to Viet Nam), but ever since, I've been terrified of being broke. So I've lived cheap.

Is it hard to work your tail off and save $1,000 / month? To do so you'd have to never go to the bar, don't drink, don't do anything that costs money. Maybe it is and I just don't see it. I'm asking.

 

[akrvbob]

Okay, the argument over hunger in America is over. Further posts will be deleted.

Lets stay on topic which is the economy, not arguments over minor details of the economy.

However, my compliments to all for showing such restraint. Other than arguing over minutia, the discussion is going well.

Bob

(Edited for dumb typo!)

 

[Seraphim]

Thanks Bob...

...for demonstrating I'm not the only one who can make humorous typos *grin*

---

A graph showing GDP, growth, indicative of the state of the economy

We've been unable, in the past five years, to get GDP growth back onto an average footing. The economy started a quick recovery, but then sort of flatlined: not bad, but not good, either.

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http://www.morningstar.com/cover/videocenter.aspx?id=676483

Morningstars Bob Johnson - their chief analyst, of whom I think highly: the source of the graphic.

 

[Seraphim]

As long as GDP growth stays low, I don't see the job market improving nor the true unemployment rate dropping. Making an observation, not a political statement:

With as many as 5 million new people tossed into the legal job market, with work permits, who will now be asking for standard wages ( no longer working for under the table pay for fear of discovery and deportation) the unemployment rate is going to see an increase, I suspect. Since they will be working legally, and reporting income (no longer an unknown the government can't track) wage standards apply to them. Their employers will no longer be able to cut costs by paying them a lower wage.

I see this as a) a larger calculable work force with b) the same number of existing jobs which equals to c) higher, but probably more accurate, unemployment figures. I suspect there may even be slightly fewer jobs in some markets, because those employers who become forced to pay a higher wage may have to make do with fewer employees. Just a thought I can't really substantiate.

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Since there's no increase in jobs, there won't be a significant increase in the tax base. Some, I think, but not a great deal.

 

[gypsychic]

Bob,

While I appreciate that you are trying to keep a discussion from getting offtrack or to dissolve to the point of personal attacks, I would have appreciated a suggestion to discuss the items that make up the economy at large in another thread instead of just shutting the discussion down. While I can read what Seraphim has to say about the economy, I have nothing to contribute. I am not versed in economics past an introductory course in both micro and macroeconomic theory. I can, however, speak to the issues surrounding hunger and, to a lesser degree, homelessness because I have worked directly or in tangent to those issues for 15 years both in my professional and personal (volunteering) life. I believe that the larger economic picture has effects on an individual's ability to keep a roof over their head and food in their belly.

I also disagree with the term argument, at least on my side. I know from my own experience that there are people who have similar beliefs to what Bruce has espoused. I do not believe that I have the ability to sway him to dissolve his current belief structure and take one more to my liking. Nor do I believe he would do the same to my belief structure. But being able to have a cordial exchange of ideas, without dissolving into personal attacks, is important, in my opinion, if we are to come away with greater understanding of both the issues at hand and how our own personal ideas are not how everyone else thinks or believes. In my working career I felt it was helpful to understand the other side in order to address their concerns so that they felt heard and inclusive in whatever solution or program was being put forth.

As I stated I don't believe Bruce was trolling the discussion. Knee jerk responses that automatically decide he is wrong without further investigation into his reasons and foundations of his current beliefs do not, again in my opinion, lead to greater understanding. I hope that Bruce and you feel that I was being respectful of his position, while not necessarily agreeing with it. I wouldn't want anyone I am discussing something with to feel like i was attacking who they are personally.

While you may feel that the issues of hunger in America, keeping a place to live, saving money and the idea of whether the ability to make it in these current economic times is directly or indirectly related to trying hard enough are minutia within the larger scope of the current state of the economy I dare say they are important to me and I don't believe I am the only one. They are part of my everyday reality and how I interface within the larger esoteric machine of economic theory.

I realize you may delete this post as it may be considered as going against your guideline as administrator but I hope that you don't as I am merely trying to state my opinion to your response, not continue the discussion that you had deemed closed. While I like participating in this forum particularly because you don't let discussions dissolve into personal attacks, I don't agree with this current decision, in part, because my intent was not to take away from the larger discussion at hand nor to personally attack Bruce for having a viewpoint and experiences that is so radically different than my own.

GypsyChic

 

[akrvbob]

Thanks Bob...

...for demonstrating I'm not the only one who can make humorous typos *grin*

Yeah, but I can go in anytime and fix my stupid mistakes!
Bob

 

[akrvbob]

Gypsychic, to be honest with you I don't have any problem with a discussion of hunger in America; just the opposite, it's a topic I deal with personally on a regular basis and I'm very interested in.

Nor do I have any complaints about the posts, you were all very kind and reasonable. I did a stupid typo which I corrected which says " my compliments to all for showing such restraint."

I simply didn't like the way that discussion was going or the potential problems I saw coming. Since I didn't see a way to correct it without being unkind I closed the whole train of thought.

It might have been a mistake, it won't be the first. It might have been an abuse of power, that's a danger I face every day and work hard to avoid, but sometimes I fail.

It was a judgement call and right or wrong I made it.
Bob

 

[HarmonicaBruce]

As long as GDP growth stays low, I don't see the job market improving nor the true unemployment rate dropping.

First of all, many, perhaps most people do not know how the unemployment rate is calculated. This article explains it: http://www.bls.gov/cps/cps_htgm.htm To summarize, 60,000 households are surveyed. They're asked how many people in the household are working, how many are looking, how many are not working and not looking for work. Just because someone is collecting unemployment doesn't mean he is unemployed. If they're not actually looking for work, they're not part of the labor force.

If there is a shortage of workers, that may seem to be good for the workers, as it's easier for them to find work. However, it's bad for employers who want to expand or start a business.

What makes a "good" economy? To consider the agricultural industry, is the economy good when there are lots of people working in agriculture, or is it good when lots of food is produced? I claim it's the latter. Today we have fewer people working in agriculture than ever before, but we produce more than we ever have. I claim that's a good thing.

One way to measure how good the economy is doing is how many pairs of shoes do people own. Many people today, perhaps most, can afford all the shoes they want. They're available at the salvation army for $2 / pair.

While we have few people working in agriculture and manufacturing, and producing more because of improved technology, we have more and more people working in "mental health", providing "therapy". Is the fact that we have more and more people seeing therapists a good thing? Personally, I don't think so.

I realize my views on virtually everything are quite different than the mainstream. That makes me happy because I'm quite sure that almost everything the mainstream believes is wrong.

 

[gypsychic]

Gypsychic, to be honest with you I don't have any problem with a discussion of hunger in America; just the opposite, it's a topic I deal with personally on a regular basis and I'm very interested in.

Nor do I have any complaints about the posts, you were all very kind and reasonable. I did a stupid typo which I corrected which says " my compliments to all for showing such restraint."

I simply didn't like the way that discussion was going or the potential problems I saw coming.

Do you have a suggestion about how we can continue the discussion in another thread with some clearly defined boundaries that you would feel comfortable enough allowing either the current exchange or at least the topic to continue?

My apologies Seraphim for hijacking your thread yet again. It will be the last time. I'm enjoying reading your thoughts on the topic you started with.

 

[flying kurbmaster]

I think the only issue with the American economy and every other economy on the planet, is that it does not print it's own money, it lets faceless money lenders do it, for an outrageous fee, if we printed our own money there would be plenty to go around, the interest on debt is the biggest issue, all the rest of the stuff is smoke and mirrors, intellectual debate, paper shuffling. Only two presidents printed their own currency one was Davies ?, he balanced the budget and the other was Lincoln he won a war, they both got shot.

 

[SoulRaven]

If anyone thinks the "economy' is not manipulated by the government(s) they are delusional. I see many younger people who are trying to get ahead with low paying, entry level jobs and pay rent, food, bills,etc.. A young person from a poor or lower middle class family will have a major struggle to life a comfortable life.

I have read the thread and many people know what the situation is but don't know the solution. Neither do I. I mentioned in a thread a few weeks back that I was staying in a Day,Week, Monthly hotel. Budget Suites, Nice and clean, $1000.00 a month and many young families here. Mostly it's a transition house for those either moving up and also for those on the downhill slide. They don't last too long here, on site cop and security.

So for the folks who have expounded all these high ideals and morals, what is your solution in 1000 words or less. People who can quote statistics can pound sand, have an actual idea, not some long drawn out diatribe about trickle down effect and all that fancy sounding and meaningless crappola.

 

[gypsychic]

Thanks for the link. I haven't read it yet, just your summation. I will dive into it later. I am aware that data is taken from a small sample and then extrapolated up but I wasn't aware the sample size was that small.

First of all, many, perhaps most people do not know how the unemployment rate is calculated. This article explains it: http://www.bls.gov/cps/cps_htgm.htm

If there is a shortage of workers, that may seem to be good for the workers, as it's easier for them to find work. However, it's bad for employers who want to expand or start a business.

What makes a "good" economy?

Great question! One I don't even know the theoretical answer for. I should do some reading in the very near future.

To consider the agricultural industry, is the economy good when there are lots of people working in agriculture, or is it good when lots of food is produced? I claim it's the latter. Today we have fewer people working in agriculture than ever before, but we produce more than we ever have. I claim that's a good thing.

Good for whom? My underlying reason for asking the question is while the ag industry may be producing more calories with the least amount of effort than ever before in human history, I don't think that those calories are necessarily translating into better nutrition for consumers. Sure we won't be dying from lack of caloric intake in this country anytime soon but the nutrient density of our food system has decreased as the total amount of calories has increased. The slow food movement, organics movement and local food movements are in direct response to our industrial food system. While the product that is being produced is good for the Ag business I don't think the product is good for the consumer or the ag worker.

I don't know if having a business friendly environment is necessarily healthier for an economy. I do believe that any entity that has power without checks will do what's in it's own self interest without regard for how it affects others. Be that a government, an industry, a business or even most people. I think the saying Absolute power corrupts absolutely is true.

Producing more calories an inexpensively as possible is great for big Ag in terms of profits. They can then reinvest those profits in their business to employ more workers or they can give more money to their current workers. That is the basic theory behind a business friendly environment if I remember correctly. But I don't see the current Ag system giving raises to migrant farm workers anytime soon without passing the cost onto consumers. American's enjoy the lowest cost of food as a percentage of their total income in the world. And that has been a trend for the last several decades. But rising food costs are in the news. I don't believe American consumers would foot the entire bill to give migrant farm workers a raise, let alone a living wage. I also don't believe that the consumers should foot the bill 100%. It should be a cost shared by both industry and consumers.

I am not aware of the ag system using it's ability to obtain more calories per level of input to help anyone but themselves, i.e. senior level management and shareholders. While management does have a fiduciary responsibility to it's shareholders I haven't heard of management taking a pay cut to help raise wages for workers. It is strictly concerned with getting the most for the least.

Back to my original question. Who does this help within the economy? This isn't a question directed just at Bruce. I am trying to understand because to me it just seems to mirror other industries that build wealth on the backs of the poor and disenfranchised. How in the real world does a business friendly environment with a successful industry help the overall economy. It doesn't feel like the case of a rising tide lifts all boats. Perhaps I'm not seeing things as they truly are.

 

[HarmonicaBruce]

... while the ag industry may be producing more calories with the least amount of effort than ever before in human history, I don't think that those calories are necessarily translating into better nutrition for consumers....

Really? One of the great things about economic freedom is we have choices. Consider eggs for example. I think most of the people on this forum probably buy eggs. How many are buying "free range", "organic" eggs for $3 / dozen, or caged eggs at $1 / doz. You have a choice. The ag industry produces huge amounts of food that is very affordable. Some people might not like it, but others do, and we all have a choice.

 

[GotSmart]

50 years ago we sold fresh eggs for 50 to 60 cents a dozen. The grains did not have hormones in them, and the yolks were a bright yellow

At that price we made money, and could deliver them to your door.

Today $3 is break even for the small farmer. They have to raise the birds free range to avoid the hormone packed commercial feeds. Most store bought "organic" eggs do not have the same look. I would get my eggs from an "Amish" store,and pay $2.50 and get the real thing. They have lower cost in using recycled cartons and "child" labor. (Kids,time to take care of the chickens!) How I remember that!

 

[gypsychic]

With deference to our moderator and the OP, I'll refrain from responding directly about food issues but I wouldn't mind taking it to another thread.

I'm not trying to put words in your mouth so please correct me if I'm wrong. I'm just trying to understand what you are say. Are you saying that the benefit to consumers for a strong industry is economic freedom of choice in products? In your opinion, are there other benefits? I'm asking because I have heard a lot about calling for pro-business environments but I don't understand why. I do get the simplistic idea that is companies are doing poorly they can't hire more workers and may lay off their own workers. But taking it up to the macro level, how does pro-business or pro-industry environment lead to a healthy overall economy?

Seraphin (and others): please list out a few economic books or blogs that you find helpful. Maybe with a scale of beginners and advanced. I'll take a look at the sourc e for a graph you posted early on.

I need to go to bed as I'm misspelling several words in each sentence. My brain must be tired. Goodnight all.

 

[Seraphim]

First of all, many, perhaps most people do not know how the unemployment rate is calculated. This article explains it: http://www.bls.gov/cps/cps_htgm.htm To summarize, 60,000 households are surveyed. They're asked how many people in the household are working, how many are looking, how many are not working and not looking for work. Just because someone is collecting unemployment doesn't mean he is unemployed. If they're not actually looking for work, they're not part of the labor force.

If there is a shortage of workers, that may seem to be good for the workers, as it's easier for them to find work. However, it's bad for employers who want to expand or start a business.

What makes a "good" economy? To consider the agricultural industry, is the economy good when there are lots of people working in agriculture, or is it good when lots of food is produced? I claim it's the latter. Today we have fewer people working in agriculture than ever before, but we produce more than we ever have. I claim that's a good thing.

One way to measure how good the economy is doing is how many pairs of shoes do people own. Many people today, perhaps most, can afford all the shoes they want. They're available at the salvation army for $2 / pair.

While we have few people working in agriculture and manufacturing, and producing more because of improved technology, we have more and more people working in "mental health", providing "therapy". Is the fact that we have more and more people seeing therapists a good thing? Personally, I don't think so.

I realize my views on virtually everything are quite different than the mainstream. That makes me happy because I'm quite sure that almost everything the mainstream believes is wrong.

The unemployment is actually calculated several different ways from the same set of polls. Some include discouraged workers in the labor force, others don't. The data set generally quoted by the politicians is the latter, because it looks more favorable. The former is more accurate.

And a shortage of workers is also bad for SS, as Bobs graphic pointed out. Fewer workers supporting more retirees. But job availability is also a function in the equation.

What makes a good economy, in your example? You can't choose one factor or the other - that's simplistic thinking which fails to consider ALL factors. Both the ones you mentioned are important, plus others besides.

Used goods play no real factor in the economy. The manufacture, and purchase of new goods ( supply and demand) are a factor in, and an indicator of, the economy. Were we discussing personal finance, that would be another matter.

As we have increased technology, more people are moving into ALL aspects of the service industry. By definition, the US is no longer considered a manufacturing economy, but a service economy. Is more people going to mental services a good thing? That depends. If more people are going to the doctor because more doctors are available, and a formerly untreated portion of the population are now being treated, then Id say it's a good thing. If it's because new factors in life are making life more stressful, than its probably not a 'good thing'. It's too easy to confuse cause and effect, especially with insufficient data. But that's not an economic issue, either, unless you're arguing the economy is creating the problem.

It's easy to condemn 'mainstream thinking' and rebel in ones self perception as a bit of a rebel and independent thinker. But forming opinions based on surface appearances, and assuming something is automatically wrong merely cause it's the mainstream belief, does not qualify one, in my opinion, as an independent thinker. The reality of the economy is far more complicated than it seems you're making it out to be.

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With deference to our moderator and the OP, I'll refrain from responding directly about food issues but I wouldn't mind taking it to another thread.

I'm not trying to put words in your mouth so please correct me if I'm wrong. I'm just trying to understand what you are say. Are you saying that the benefit to consumers for a strong industry is economic freedom of choice in products? In your opinion, are there other benefits? I'm asking because I have heard a lot about calling for pro-business environments but I don't understand why. I do get the simplistic idea that is companies are doing poorly they can't hire more workers and may lay off their own workers. But taking it up to the macro level, how does pro-business or pro-industry environment lead to a healthy overall economy?

Seraphin (and others): please list out a few economic books or blogs that you find helpful. Maybe with a scale of beginners and advanced. I'll take a look at the sourc e for a graph you posted early on.

I need to go to bed as I'm misspelling several words in each sentence. My brain must be tired. Goodnight all.

I mostly used online course material provided by major universities. They include good reading lists. For day to day information, I follow a lot of analysis from Morningstar.com. While they sell data, they provide a lot of free commentary on what economic factors affected the market during the day. Good information even if you're not investing, but want to understand what's affecting us on a day by day basis.

I tend to avoid pundits - people who already have their minds made up and are merely trying to convince others of their POV - and sources which end in ' for more information, order my book' lol.

I'll try to come up with a few sources I particularly liked.

---

Correction above: should be "revel in one's self perception'

 

[Seraphim]

Thinking about the agricultural example and economics brought corn to mind.

Corn generally had two principal markets at a time - feedlots for animal consumption and markets for human consumption. We'll include distilleries in the latter -*grin*.

Corn, however, also became important in the production of biofuels, but corn production appeared to be plentiful for all purposes. Then - I'm guessing about ten years ago, but I don't really recall the time frame - the government decided in its infinite wisdom to help the green cause by requiring all oil companies to manufacture a mandatory amount of biofuels - which required oil companies buying large lots of corn.

Quandary - there was an insufficient amount of corn being produced to meet all demands. Effect - heavy competition between oil companies and feedlots for corn. Result - price of a bushel of corn skyrocketed. I think the the price increased by a factor of 6, but I may be misremembering. It was a substantial amount. That price increase was also reflected at the grocery store. (Anyone interested in exact details can probably find the reference online. My recollections as to time frame and such may be somewhat inaccurate). The effects were more far reaching than this, involving increased production, need for more migrant workers, insufficient labor pool for such, increased hue and cry over immigration...nothing is ever simple. Most people, however, merely noted the price of corn went up, and some people took it off their shopping list (I suspect).

Someone commented that the government manipulates the economy. The Fed was fairly recently TASKED with responsibility of manipulating the economy, specifically via the market. The purpose of the Fed was originally to expedite transfer of funds between central banks, determine interbank loan rates, to ensure all banks had sufficient funds to do business and meet their reserves. Again not certain of my time frame, but one administration decided the Fed should have the power, and responsibility, to manipulate the economy for the good of the people ( my words). Refer again to recent QE . Id offer my opinion, but the discussion might turn political. Lol

everything is like stone tossed in the pond: far reaching ripples.

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Addendum: I may have grossly overstated the price increase of corn in my example. I went to find a link on the topic, and can't substantiate that much of an increase. Mustn't rely strictly on my memory anymore...

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Doing a little more research indicated that another result of the regulation was an increase in farmland from other crops being devoted to corn. One paper stated a 25% increase. We can speculate how that affected the price and availability of other food crops. The competition doesn't seem to be as fierce now, and the paper suggested ethanol buyers no longer drive the price increases on corn. Interestingly enough, there appears to be suggestions this year that the mandate be reduced. Again, we can speculate on the decreased demand against the larger production, should those mandates be reduced.

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Sorry it's late, I couldn't sleep, cause my mind was stuck on this topic. Maybe I can sleep now...

 

[cdiggy]

Bottom line is the government controls the economy and the government is controlled by the major corporations. That is good for the ultra wealthy and the companies they own and bad for everyone else. Until the government is by the people for the people and not 'We, the corporations of The United States' we will continue to see middle class America disappear and more people at or below the poverty line.