Thread: US Economy: next 5 years - You Tell Us

as David Harvey reminds us time and time again that capitalism never solves it's problems, it only moves them around. unfortunately for the middle class and people at the lower levels of income there are only so many hits to their wealth that can be taken before they are flat broke or in the case of many american's severely upside down in their mortgages, so negative equity. and with home prices in many area's continuing to decrease things simply don't look good for the future of the "middle class" in the US or UK.

* If you go to line #34 you can see how the increase in personal savings the past couple of years is causing GDP growth to slow and this will continue as more americans reduce spending to save and/or pay down revolving debt. typically you would also see an increase in the personal savings rate as there is less wealth "created" from home ownership, more monies need to be saved.


http://www.bea.gov/national/nipaweb/...JavaBox=no#Mid

if the FRB would ever increase interest rates we would also see an increase in government savings but it doesn't look like that's is going to happen anytime soon.

another thing is that people don't realize is that with globalization and the inter-mingling of the various nations economies, etc. what happens on the other side of the world effects everyone now.

we'll just put another band-aid on it in a few years.

It's all just a game anyway.

Resources available are resources available.

All the pretend value (money/economy) surrounding it may collapse, but it won't be the end of the world....or will it?

Perfect combination of Socialism and Capitalism or middle ground? Because I beleive both are two extreme opposite.

Increased personal savings will slow GDP growth in the short run. But, in the long run, more savings will be good for the economy. The fact that so many were trying to live beyond their means, for such a long time, was a great contributing factor to the financial meltdown. The fact that the Federal Reserve kept interest rates artificially low for many years helped to facilitate the massive borrowing orgy that ultimately led to it. This correction/prolonged recession will take many more years to work itself out. I'm not too optimistic about the coming years.

still the massive problem with wages. many new jobs are paying poverty wages and many jobs have not kept up with cost of living increases or reduced pay so wages in those jobs have fallen into poverty levels. service sector jobs only pay on average from $8-$14/hour and avg rent in the US is $700/month.

ever increasing military complex budget still has to be addressed. it's 1B a year just to maintain each carrier, etc.

BEA - National Income and Product Accounts Table
U.S. Department of Commerce. Bureau of Economic Analysis

2010 GDP was 14.6T out of that Personal Consumption Expenditures (PCE) was 10.3T which comes out to 70% of GDP from consumption. which wouldn't be a problem if we were exporting far more than we are importing but the exact opposite is true. the US doesn't trade evenly with anyone, not even with our closest OECD partners Mexico and Canada. and that's a whole separate issue and it's effects on the US economy.

Top Ten Countries with which the U.S. Trades
Foreign Trade: Data

U.S. Trade in Goods and Services - Balance of Payments (BOP) Basis
http://www.census.gov/foreign-trade/...ical/gands.pdf

If you look down the road, say 20-30 years, the picture might not look so bleak. China recently passed Japan as the world's 2nd largest economy. The middle class in the US & UK obviously have a much greater buying power than the average middle class person in China. But, because of the economic growth in China, as well as the outsourcing of jobs, the supply and demand curve for labor in China is changing. This is why a lot of unskilled labour jobs that would have been allocated to China are now going to countries like Vietnam and Laos. IOW, wages in China are increasing and so is the buying power of the average middle class person. It may take a while, but the fact that wages are increasing for the middle class in China may help to reduce the trade deficit b/w the two countries over time. And, with 1.3 billion consumers, that could be great news for us. They certainly love US made products over there.

Originally Posted by GearsMcGilf

This is why a lot of unskilled labour jobs that would have been allocated to China are now going to countries like Vietnam and Laos. IOW, wages in China are increasing and so is the buying power of the average middle class person. It may take a while, but the fact that wages are increasing for the middle class in China may help to reduce the trade deficit b/w the two countries over time. And, with 1.3 billion consumers, that could be great news for us. They certainly love US made products over there.

yep...that's the "game" that manufactures of consumable products play, they constantly have to find the cheapest labor to maximize profits. I know wallmart force's it's buyers to come in at 5% less every year so many of them will definitely be moving operations to Vietnam and Laos.

from a pure geographic standpoint there can be only so many of these shifts in manufacturing before this problem catches up to itself.

it would be nice of the US could increase the national savings rate while simultaneously increasing exports and reducing imports.

Well, having been in China in 2000 and several times again over just 10 years, it's amazing what a transformation the country has made. American products are like crack to many of those consumers. Sure, you can get the same exact thing, faked for much less, but no one wants that if they can afford the real deal. I'm not optimistic about the economy over the next 5 years. It's kind of funny when you think about it. Being a yankee, I was all over the fake products because they were exactly the same, but a fraction of the price. But, the Chinese were all about labels.

China's leaders are much smarter than ours. That much is obvious to anyone who has been observing changes in China vis-a-vis the USA over just the last few years. When China surpasses the US as the world's largest economy, and I believe it will happen in the next 20 years, there will be a lot of Chinese consumers with deeper pockets and wages will be more on par with western wages. Once this occurs, they will be buying up US made products and we may see a revival of manufacturing in the US.

Here in AL, we've had many new foreign auto manufacturing plants set up shop over the last 7-8 years - Hundai, Mercedes, and Honda, to name a few. They are all non-union, yet faring much better than their non union counterparts. They seem to pay competitive wages and benefits in order to avoid the problems we've seen in Detroit.

http://www.al.com/opinion/birmingham...410.xml&coll=2

Originally Posted by GearsMcGilf

Increased personal savings will slow GDP growth in the short run. But, in the long run, more savings will be good for the economy.

And savers are being punished. Interest rates are so slow, it's a form of punishment.

Although many are cashing up at the moment, saving what little they can.

It's hard to save much with gas prices at $4.00/gal. Your not getting much of a return on your savings. But, at least you're not paying 16% on your mortgage. It cuts both ways.

Originally Posted by GearsMcGilf

It's hard to save much with gas prices at $4.00/gal. Your not getting much of a return on your savings. But, at least you're not paying 16% on your mortgage. It cuts both ways.

that's why I say hedging by those not able to actually take possession of the items or even those not directly associated with that industry should not be able to participate in that specific type of trading.

for example - jet fuel purchases:

Airline Industry - Hedging allowed
Wallstreet Banks - Hedging not allowed

I'm still looking for the green shoots. "Horror" is over-the-top, and yes it's from London. But still...it ain't good.
---

Horror for US Economy as Data Falls off Cliff

Wednesday, 1 Jun 2011

Patrick Allen
CNBC EMEA Head of News

The last month has been a horror show for the U.S. economy, with economic data falling off a cliff, according to Mike Riddell, a fund manager at M&G Investments in London.

"It seems that almost every bit of data about the health of the US economy has disappointed expectations recently," said Riddell, in a note sent to CNBC on Wednesday.

"US house prices have fallen by more than 5 percent year on year, pending home sales have collapsed and existing home sales disappointed, the trend of improving jobless claims has arrested, first quarter GDP wasn’t revised upwards by the 0.4 percent forecast, durables goods orders shrank, manufacturing surveys from Philadelphia Fed, Richmond Fed and Chicago Fed were all very disappointing."
"And that’s just in the last week and a bit," said Riddell.

Entire: News Headlines

And this:

"Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything," Yastrow said. "We’re on the verge of a great, great depression. The [Federal Reserve] knows it.

Entire: http://www.cnbc.com/id/43236764

Originally Posted by Big Smoothy

I'm still looking for the green shoots. "Horror" is over-the-top, and yes it's from London. But still...it ain't good.
[B][SIZE="4"]---

Entire: News Headlines

And this:


Entire: News Headlines

in order to get accurate information on US economics you have to go outside of the country, most US economists sugar coat everything, after-all they have bosses to.

Originally Posted by LAM

that's why I say hedging by those not able to actually take possession of the items or even those not directly associated with that industry should not be able to participate in that specific type of trading.

for example - jet fuel purchases:

Airline Industry - Hedging allowed
Wallstreet Banks - Hedging not allowed

Fuck! I never thought I'd agree with our resident communist. But, I have to agree that if you have no skin in the game, you shouldn't be able to bid up the price for the rest of us. If Exxon wants to hedge their cost of oil, they should be allowed to buy a contract to purchase 1000 barrels of oil for $120/barrel if they believe the price is going ^. But, if Chase Bank wants to do the same (having no intention of closing regardless of where the price goes), they should be required to put down 50% so that there is some skin in the game. Otherwise, speculation should be limited to those who are actually in the business.

Originally Posted by GearsMcGilf

Fuck! I never thought I'd agree with our resident communist.

I couldn't be any further from a communist. I'm just not a blind follower of the perverted US flavor of capitalism which obviously favors the political entrepreneur and the monopoly. nor are any of my beliefs tied to a rigid ideology, they are all based on empirical data and change accordingly.

The US economy will crash an burn and I have a front row seat to watch it.

Originally Posted by Dale Mabry

The US economy will crash an burn and I have a front row seat to watch it.

How stupid of you to take front row seat. You will be the first one to taste the impact of the crash. If I were you I would either get out or take the last row seat.

Originally Posted by chobby192

How stupid of you to take front row seat. You will be the first one to taste the impact of the crash. If I were you I would either get out or take the last row seat.

It's more fun, plus I won't taste the crash at all.

Originally Posted by Dale Mabry

The US economy will crash an burn and I have a front row seat to watch it.

i would find more humor in it if those causing the problems at the top actually felt the effects. wall street unemployment rates never really go beyond 4%.

economics is really not that confusing until you get down to the macro level but it is made to sound/look more than it is at some levels to discourage self-learning. globalization also causes so many problems now in evaluating macro.

when you compare the GDP's of OECD countries and especially the highly industrialized/advanced ones like the US and UK they have all fallen significantly since 1980. and in just about all OECD countries the nation's share of income going to labor has also taken a fucking beating, ever decreasing while the labor pool and populations continue to grow.

I'm pretty sure things will get worst when the CIS becomes a full OECD member and we start to "trade" with them.

privatization also decreases the share of income generated by labor but people still haven't caught on to this.

population control is more important now then ever in the US, it should be free and readily available.

Originally Posted by LAM

i would find more humor in it if those causing the problems at the top actually felt the effects. wall street unemployment rates never really go beyond 4%.

economics is really not that confusing until you get down to the macro level but it is made to sound/look more than it is at some levels to discourage self-learning. globalization also causes so many problems now in evaluating macro.

when you compare the GDP's of OECD countries and especially the highly industrialized/advanced ones like the US and UK they have all fallen significantly since 1980. and in just about all OECD countries the nation's share of income going to labor has also taken a fucking beating, ever decreasing while the labor pool and populations continue to grow.

I'm pretty sure things will get worst when the CIS becomes a full OECD member and we start to "trade" with them.

privatization also decreases the share of income generated by labor but people still haven't caught on to this.

population control is more important now then ever in the US, it should be free and readily available.

The next time it happens Wall Street will feel it. If they don',t expect what's going on in Syria and the Middle East to start happening here.

Originally Posted by Dale Mabry

The next time it happens Wall Street will feel it. If they don',t expect what's going on in Syria and the Middle East to start happening here.

how do you get American's to turn off their tv's and pick up a book when half are illiterate or can't understand reading above the 10th grade level?

tv was designed to entertain but now it is used to "inform" people of everything they need to know, to keep them consuming.

the US military complex is bankrupting the country but to mention a decrease in that budget makes you "for" terrorism...military contractors have outsourced production and labor then "import" the finished products back into the US tariff free, all so us taxpayers can pay a premium on these goods...lol @ 700B a year on the military

The economy is just one big house of cards where the richer get richer and the poorer get poorer....If the Feds raise rates, no one will survive....what "recovery" have we seen thus far? NONE - Don't let the DOW JONES fool you - it's just a number that will only get smaller.


U.S. NATIONAL DEBT CLOCK

The Outstanding Public Debt as of 02 Jun 2011 at 07:19:54 PM GMT is:

The estimated population of the United States is 310,680,876
so each citizen's share of this debt is $46,195.91. The National Debt has continued to increase an average of
$3.98 billion per day since September 28, 2007!

Originally Posted by LAM

how do you get American's to turn off their tv's and pick up a book when half are illiterate or can't understand reading above the 10th grade level?

Make it so they can't afford to watch it.

Originally Posted by LAM

I couldn't be any further from a communist. I'm just not a blind follower of the perverted US flavor of capitalism which obviously favors the political entrepreneur and the monopoly. nor are any of my beliefs tied to a rigid ideology, they are all based on empirical data and change accordingly.

And, hardcore democratic ideology. Hence, the sacred cow, Barry.

Originally Posted by GearsMcGilf

And, hardcore democratic ideology. Hence, the sacred cow, Barry.

why is anything anti-GOP either liberal or considered hardline democrat. I just have no desire to live in a banana republic nor do I really want my friends children to grow up in such a place. obviously you have no problems with it, hence your embrace of the neo-liberal economic doctrine.

Nah, you just seem to defend any and all of Barry's policies unconditionally, while bashing anything put forth by the GOP. In more conservative circles, there is always room for debate and disagreement on any issue. Yet, in leftist/liberal circles, there is rarely any dissent. Leftists seem to walk lock-step, in group think. I rarely meet a leftist/liberal that doesn't buy everything on the democratic menu, from climate change (aka global warming), to govt spending, to the eradication of religious expression. Not really making a point here, just an observation.

Originally Posted by GearsMcGilf

Nah, you just seem to defend any and all of Barry's policies unconditionally, while bashing anything put forth by the GOP.

what policy's have the GOP brought to the table that will not make things worst in the short and long term? besides encouraging off-shore drilling while imposing zero improvements in safety since the deep water horizon disaster....