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-- Bush's National Economic Policies
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Just a little sidenote from our discussion:
Here in Kansas City is the headquarters of Sprint. Now as you may or may not know, Sprint has let go quite a number of workers worldwide, and at least some 7,000 or so workers here in KC in the last 2.5 years alone (I'm guestimating). Some of those folks happen to be friends of ours. One particular friend has been fortunate enough to keep his job through it all (primarily because he's one smart mother****** in anti-hacking security). Two weeks ago there was an announcement of more cuts to come, primarily in the IT Depts. And as you may have guessed, it will be due to outsourcing to India. And at one of the meetings he recently, their new CIO had this to say about their outsourcing plan:
"I don't want to hear any talk about patriotism. This is business, and we're here to protect our interests. And if those interests lie in India or elsewhere, then to hell with patriotism."
I wish I was kidding, and I wish he was lying. That quote was also confirmed by another aquaitence of ours in the meeting. Aside of this, he also mentions an extreme low morale in the company as a whole. He's not happy to be at work anymore, and the job he once loved is now completely sour. The money he makes, which is substantial, is no longer a factor.
I'm not sure one can infer from this example onto others in the corporate world who still have jobs, and I don't think it would be accurate for me to try right now. I just talked to my buddy this morning and he passed on this story to me, which was why I brought it up. I just thought it was interesting and somewhat relevant to the discussion at hand.
this isnt about bush's policies or anything more along the lines of what the thread evolved into, the job market
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Forbes Intel chief: U.S. losing tech lead, jobs It's not just that hundreds of thousands of technology jobs have been shipped overseas, Andrew Grove says -- it's that technical leadership seems headed that way, too. By Lisa DiCarlo, Forbes.com Andrew Grove is depressed. The chairman of Intel (INTC, news, msgs) says that the United States is facing a competitive crisis that puts the country is danger of losing its lead as the world's most innovative technology provider. "I'm here to be the skunk at your garden party," Grove told a group of about 150 beltway types gathered in Washington, D.C., this week for the Global Tech Forum, hosted by lobbying group Business Software Alliance. Why is the United States waning? Grove says it's because of offshore outsourcing, lack of federal support of sciences education and a "ho-hum" telecommunications infrastructure. "We've lost more than 500,000 tech jobs in the last two years to foreign competitors." Indeed, many U.S.-based companies are either thinking about or have already sent white-collar jobs outside the country. Companies can often cut costs and boost productivity dramatically by hiring skilled labor in India and other countries. Much of that work lately has involved software development and professional services. Money 2004. Smarter, faster and easier than ever. It is this area where Grove fears the United States will lose technical leadership and market share. As proof, he said that the U.S. market share for steel and semiconductors has dropped precipitously over the years. "Is software and services next? It's a very valid question, and it would be a miracle if it didn't happen," Grove said. A call to arms To pull off the miracle Grove is going to need help, and he knows it. "We must fight protectionism here and abroad, double our productivity and raise the hurdles for intellectual property litigation. We must rally around this goal." That might be tough, given that companies aren't ignoring the cost benefits of going offshore. In a morning session at the conference, the chief executive of Internet Security Systems (ISSX, news, msgs), Thomas Noonan, expressed what could be a widely held belief: "(Offshore outsourcing) is a train we've got to get on and drive or it's going to run over us." How can the industry rally against offshore outsourcing of jobs when there is such a difference of opinion? Grove says he's been there before, particularly in the 1980s when American semiconductor companies were getting the tar kicked out of them by the Japanese. "This is a democracy. Debate is good." Grove also is depressed about the state of sciences education in the United States, which could eventually put the country in the position of relying on others for innovation. "More than 50% of graduate students are foreign nationals," says Grove, who says the United States needs to attract foreign talent "with appropriate immigration policies." Grove himself emigrated from Hungary in the 1930s and went on to co-found Intel in the late 1960s. Where will outsourcing stop? Grove says that the U.S. government should invest more to attract and retain talented students. After all, the United States, he points out, has committed more than $60 billion in subsidies and aid to farmers, oil and steel companies and airlines. "One billion a year (to promote science education) would help us reach this goal." Phillip Bond, undersecretary for technology at the U.S. Department of Commerce, in a brief interview, disagreed with Grove's gloomy outlook. "Education is one of the administration's top priorities (and) we are committed to bringing talent here." That may be true, but it's worth noting that one of the tasks of the Commerce Department's technology group is to study foreign competitors. That includes warning against advancing or surpassing U.S. capabilities, which could prompt some federal funding to relevel the playing field. One example: the U.S.-funded development of Cray (CRAY, news, msgs) supercomputers several years ago, after Japanese companies built what was then the fastest, most advanced computer in the world. Grove says it's wrong to assume that low-skilled jobs being outsourced now won't eventually work their way upstream to more critical tasks. When that happens, the United States could lose its edge. The People's Republic of China, he said, had stated a goal in 2001 to produce more world-class engineers. "Do we have the national will to take productive action? When the problem becomes obvious, it will be too late -- and the outcome will be too depressing, even for me." http://money.msn.com/content/invest/forbes/P63142.asp |
Economic Growth Strongest Since 1984
By Tim Ahmann
WASHINGTON (Reuters) - The U.S. economy rocketed ahead at its fastest pace in more than 19 years in the third quarter of 2003 as consumers, their wallets fattened by tax cuts, went on a buying spree, an unexpectedly strong government report showed on Thursday.
...
http://story.news.yahoo.com/news?tm...s_nm/economy_dc
reactinos? Does Bush finally deserve praise for helping out the economy in the past three years?
I was actually going to post this but I got caught up in a certain other thread 
. At any rate, a GDP growth of 7.2% is AMAZING. It's making me giddy as we speak ... expectations were at 6%. Consumer spending gained at 6.6% and I can almost assure you that a large part of that was due to the tax cuts. I posted before that the stagnancy of the labor market could have potentially been as a result of productivity gains, however, if a GDP growth of this magnititude does not stimulate the labor market, I don't know what will.
However, like I stated before this growth will be unsustainable without correlation with the labor markets. Hmmmm I wonder if it is no coincidence that these are the highest gains since Reagan ...
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| Originally posted by occrider However, like I stated before this growth will be unsustainable without correlation with the labor markets. Hmmmm I wonder if it is no coincidence that these are the highest gains since Reagan ... |
LoL!! I knew this was going to get brought up. Yeah I heard it on the news, and was very surprised. Higher growth then expected, but then again, this hasent reflected on the Jobs situation. Lets see what the diagnostics on the upcoming months will be, and if this will be the start of a trend, or just one of those few very welcomed unexpected growths. And yeah, Im glad to see that at least on some part is starting to affect.
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| Originally posted by LiquidX LoL!! I knew this was going to get brought up. Yeah I heard it on the news, and was very surprised. Higher growth then expected, but then again, this hasent reflected on the Jobs situation. Lets see what the diagnostics on the upcoming months will be, and if this will be the start of a trend, or just one of those few very welcomed unexpected growths. And yeah, Im glad to see that at least on some part is starting to affect. |
. At any rate, it's nice to see the growth finally translate into GDP. With respects to labor markets, they always lag behind growth by a month or two, but ideally we SHOULD see changes in the next few weeks. Already, jobless claims have been below 400,000 (past that figure denotes an expansion) for the past several weeks. Tomorrow we should see figures on personal income, personal spending, and the chicago PMI come out. One item of important note with relation to labor markets is the trend in business spending this past quarter ... business spending increased 11.1 percent!!! And of course when businesses spend more to build up capital they add jobs to their payrolls. However temporary Sec Tresurer Snow's weak dollar policy is, it certainly came at the right time to give a boost to the manufacturing sector.
Well, the Chicago PMI rose from 51.2 to 55. It looks like the manufacturing sector is healthily rebounding. Furthermore personal income was up .3%. I look forward to seeing how factory orders and the unemployment rate do next week ...
JUST BECAUSE HIS FINANCE LOOKSLIKE THIS ..
DOESNT MEAN WE SHOULDNT HAVE FAITH IN !!!!
Why the US economy is growing. This is a bit of an oversimplification but it will have to do given their are very complicated and interrelated issues.
1) The Federal Reserve is printing more money than ever, creating liquidity in the economy. The US has the capacity (and willingness) to print money far more than its competitors because the US dollar is the global reserve currency. The ECB on the other hand focuses foremost on fighting inflation and other countries lack the ability or willingness to print more money.
In a country like Australia printing more money would quickly lead to inflation, but the USA can get away with it more easier because their are 6 billion people in the world who could potentially use US dollars as opposed to 20 Australians. Ie there is a greater demand for US dollars - for now.
If you live in a third world country with a weak country and a suspect banking system you would be safer having your money in US dollars because the US dollar is a stable currency and during the 90's its value increased, so for instance the Russian factory worker who changes their Roubles to dollars preserves their capital and also makes money because the US dollar went up against the Rouble. A free form of investment if you will. Go to any third world country and people exchange their currency for Dollars but now increasingly Euros.
Other countries buy up US dollars and US assets (China and Japan principally) to keep the value of the US dollar high. So when the government issues treasuries to pay for the government debt it is bought by foreigners, approximately 30% of US debt is bought by the Chinese and Japanese central banks (the last time I checked) and they also have vast stores of US dollars.
2) The Tax Cuts. They put massive amounts of BORROWED money into the economy which it otherwise wont have, meaning people can spend money now they otherwise wont have. Paid for by foreigners.
3) An increasing population. Unlike other OECD countries, the USA has an increasing population compared to its competitors who have falling birthrates or declining populations. Increasing populations means more consumers and also more workers which keeps the cost of labour down. Contrast this to Japan with an ageing population which unless it is addressed its long term economic decline is absolutely inevitable.
Economic growth is in essence population growth and productivity growth added together. So the USA has the population growth in its favour.
4) Productivity growth. This is the killer. Put cynically if the company has two employees and it fires 1 and gets that 1 to do the job of two employees you have an instant doubling in productivity.
As US corporations seek to repair their balance sheets which are enormously indebted from the 90's they need to improve profitability. They cant increase prices because it is too competitive so they need to reduce costs which means looking for productivity gains, improved efficiencies etc but the biggest cost for most businesses is labour so companies reduce staff. Or even better shift the labour component altogether to a cheaper labour source. This process has been going on for a long time but now people are really complaining because now it is the middle class jobs that are going.
Thus you have economic growth but not labour growth, because the productivity gains are directly caused by the actions of companies to improve profitability by cutting costs. It also looks good to the market when a company cuts staff, the stock analysts almost always look favourably on job cuts and the stock price goes up.
The companies can still be profitable when there are less consumers because people can borrow. They have their tax cut money and they have low interest rates, this has led to a boom in household spending, home refinancing etc. All on borrowed money.
The global economy has an infinite capacity to loan the US money in the belief that the US consumer will pull the global economy out of stagnation.
In other words US growth is subsidised by other countries but this cant go on forever for reasons I have mentioned previously
2 points:
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| Originally posted by rupert 3) An increasing population. Unlike other OECD countries, the USA has an increasing population compared to its competitors who have falling birthrates or declining populations. Increasing populations means more consumers and also more workers which keeps the cost of labour down. Contrast this to Japan with an ageing population which unless it is addressed its long term economic decline is absolutely inevitable. Economic growth is in essence population growth and productivity growth added together. So the USA has the population growth in its favour. |
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4) Productivity growth. This is the killer. Put cynically if the company has two employees and it fires 1 and gets that 1 to do the job of two employees you have an instant doubling in productivity. As US corporations seek to repair their balance sheets which are enormously indebted from the 90's they need to improve profitability. They cant increase prices because it is too competitive so they need to reduce costs which means looking for productivity gains, improved efficiencies etc but the biggest cost for most businesses is labour so companies reduce staff. Or even better shift the labour component altogether to a cheaper labour source. This process has been going on for a long time but now people are really complaining because now it is the middle class jobs that are going. Thus you have economic growth but not labour growth, because the productivity gains are directly caused by the actions of companies to improve profitability by cutting costs. It also looks good to the market when a company cuts staff, the stock analysts almost always look favourably on job cuts and the stock price goes up. The companies can still be profitable when there are less consumers because people can borrow. They have their tax cut money and they have low interest rates, this has led to a boom in household spending, home refinancing etc. All on borrowed money. The global economy has an infinite capacity to loan the US money in the belief that the US consumer will pull the global economy out of stagnation. In other words US growth is subsidised by other countries but this cant go on forever for reasons I have mentioned previously |
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| Originally posted by Mikado JUST BECAUSE HIS FINANCE LOOKSLIKE THIS .. DOESNT MEAN WE SHOULDNT HAVE FAITH IN !!!! |
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| Originally posted by occrider Who has faith in him? He's a horrible fiscal spender, however democrats should take note of the apparent success of his specific economic policies. The tax cuts appear to have been the right thing to do ... they increased government revenue, and they stimulated the economy. If only people could seperate their economics from their politics ... At any rate, I only have faith in this man: |
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| Originally posted by occrider Who has faith in him? He's a horrible fiscal spender, however democrats should take note of the apparent success of his specific economic policies. The tax cuts appear to have been the right thing to do ... they increased government revenue, and they stimulated the economy. If only people could seperate their economics from their politics ... At any rate, I only have faith in this man: |
Paul Krugman summed up my points pretty well in his NYTimes ed. piece:
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| October 31, 2003 OP-ED COLUMNIST A Big Quarter By PAUL KRUGMAN The Commerce Department announces very good growth during the previous quarter. Many observers declare the economy's troubles over. And the administration's supporters claim that the economy's turnaround validates its policies. That's what happened 18 months ago, when a preliminary estimate put first-quarter 2002 growth at 5.8 percent. That was later revised down to 5.0. More important, growth in the next quarter slumped to 1.3 percent, and we now know that the economy wasn't really on the mend: after that brief spurt, the nation proceeded to lose another 600,000 jobs. The same story unfolded in the third quarter of 2002, when growth rose to 4 percent, and the economy actually gained 200,000 jobs. But growth slipped back down to 1.4 percent, and job losses resumed. My purpose is not to denigrate the impressive estimated 7.2 percent growth rate for the third quarter of 2003. It is, rather, to stress the obvious: we've had our hopes dashed in the past, and it remains to be seen whether this is just another one-hit wonder. The weakness of that spurt 18 months ago was obvious to those who bothered to look at it closely. Half the growth came simply because businesses, having drawn down their inventories in the previous quarter, had to ramp up production even though demand was growing slowly. This time around growth has a much better foundation: final demand � demand excluding changes in inventories � actually grew even faster than G.D.P. So it's unlikely that growth will drop off as sharply as it did back then. But � you knew there would be a but � there are still some reasons to wonder whether the economy has really turned the corner. First, while there was a significant pickup in business investment, the bulk of last quarter's growth came from a huge surge in consumer spending, with a further boost from housing. These components of spending stayed strong even when the economy was weak, so there shouldn't have been any pent-up demand. Yet housing grew at a 20 percent rate, while spending on consumer durables (that's stuff like cars and TV sets) � which last year grew three times as fast as the economy � rose at an incredible 27 percent rate last quarter. This can't go on � in the long run, consumer spending can't outpace the growth in consumer income. Stephen Roach of Morgan Stanley has suggested, plausibly, that much of last quarter's consumer splurge was "borrowed" from the future: consumers took advantage of low-interest financing, cash from home refinancing and tax rebate checks to accelerate purchases they would otherwise have made later. If he's right, we'll see below-normal purchases and slower growth in the months ahead. The big question, of course, is jobs. Despite all that growth in the third quarter, the number of jobs actually fell. And new claims for unemployment insurance, a leading indicator for the job market, still show no sign of a hiring boom. (By the way, for the last month there's been a peculiar pattern: each week, headlines declare that new claims fell from the previous week; a week later, the past week's number is revised upward, and the apparent decline disappears.) And unless we start to see serious job growth � by which I mean increases in payroll employment of more than 200,000 a month � consumer spending will eventually slide, and bring growth down with it. Still, it's possible that we really have reached a turning point. If so, does it validate the Bush economic program? Well, no. Stimulating the economy in the short run is supposed to be easy, as long as you don't worry about how much debt you run up in the process. As William Gale of the Brookings Institution puts it, "Almost any tax cut or spending increase would succeed in boosting a sluggish economy if the Federal Reserve Board follows an accommodative monetary policy. . . . The key question is, therefore, not whether the proposals provide any short-term stimulus, but whether they are the most effective way to provide stimulus." Mr. Gale doesn't think the Bush tax cuts meet that criterion, and neither do I. To put it more bluntly: it would be quite a trick to run the biggest budget deficit in the history of the planet, and still end a presidential term with fewer jobs than when you started. And despite yesterday's good news, that's a trick President Bush still seems likely to pull off. http://www.nytimes.com/2003/10/31/opinion/31KRUG.html |
Well no economic policy is designed to be sustaining ... they can only provide stimulus and at that point the market forces will dictate the path the economy is to head in. Like I stated before, all this growth will translate into nothing without a corresponding increase in jobs. Now that there is growth and demand in the economy as brought on by the consumers, it is now up to businesses to respond by hiring more workers, these workers start spending, etc. Signs are looking good that businesses will respond. For the past year the corporate sector have been trimming its excesses and have become net savers to strengthen balance sheets through lower wages and increased productivity. Now with business spending going up 11% and investments in equipment and software up 15% businesses are spending and they are adding capital. Furthermore, chicago pmi report has shown a sharp drop in inventory suggesting that businesses are not keeping up with demand and they're going to have to boost production. The hope now is that they will start adding payrolls.
Oh by the way ... I disagree with that author's opinions about tax cuts not being the most efficient way to stimulate the economy . Who's going to be more efficient, the market or the government in increasing expenditures?
Consumer Spending dips!
- But then again. this seems somewaht confusing for those that arent into economics. Such as me. Today we saw that the Consumer spending on september fell. I'll bring the article I found on CNN. It would explain better.
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| Consumer spending dips Driver of two-thirds of the total economy fell in September, ending 3Q boom, as incomes rose. October 31, 2003: 9:34 AM EST NEW YORK (CNN/Money) - Personal income rose, but spending fell in September, the government said Friday, as a robust third quarter ended with a whimper. The Commerce Department said personal income rose 0.3 percent after rising a revised 0.3 percent in August. Economists, on average, expected it to rise 0.2 percent, according to Briefing.com. Spending by consumers, which accounts for about 70 percent of the nation's economic activity, fell 0.3 percent after rising a revised 1.1 percent in August. Economists, on average, expected spending to fall 0.1 percent, according to Briefing.com. U.S. stock prices rose in early trading after the report; traders were more likely to focus on separate reports, due later Friday morning, on consumer confidence and Chicago-area manufacturing. Treasury bond prices rose. Consumer spending grew at a 6.6 percent annual rate in the third quarter, which ended in September, according to a separate Commerce Department report on Thursday. Gross domestic product, the broadest measure of economic activity, surged at a 7.2 percent annual rate as a result. Child credit tax rebates and proceeds from a wave of mortgage refinancing helped fuel the burst of spending in the summer, effects that have faded in the early fall. Disposable, after-tax income dropped 1.0 percent in September, in fact, marking the end of rebate checks, according to the department. "The ... report makes it clear that, without the treats given to us by tax cuts and low interest rates, consumers are on their own," said Joel Naroff, president and chief economist of Naroff Economic Advisors in Holland, Pa. "Let's just hope they don't trick us and slow spending sharply." Many economists believe that future consumer spending will depend, in large part, on improvements in the job market. Non-farm payrolls grew modestly in September, the first such growth since January, according to the Labor Department, and economists hope that growth will accelerate. An improving job market should boost wages, which have been supported during the longest labor-market slump since World War II by astonishingly high rates of growth in productivity, which is a measure of output per worker hour. Productivity cuts the cost of doing business, and the savings have been shared between corporate profits and those people who still have jobs. But wage growth slowed in September, gaining 0.1 percent, following August's 0.2 percent gain. Proprietors' income, which some economists believe reflects in part the income of a new group of self-employed workers, rose 0.7 percent, including various accounting adjustments, following August's 0.5 percent gain. Personal saving -- disposable income minus spending -- fell to $235.2 billion from $294.3 billion in August. Personal saving as a percentage of disposable income was 2.9 percent, compared with 3.5 percent in August. |
Re: Consumer Spending dips!
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| Originally posted by LiquidX - But then again. this seems somewaht confusing for those that arent into economics. Such as me. Today we saw that the Consumer spending on september fell. I'll bring the article I found on CNN. It would explain better. |
Re: Re: Consumer Spending dips!
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| Originally posted by Yoepus they're saving their money for christmas |
Re: Re: Consumer Spending dips!
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| Originally posted by Yoepus they're saving their money for christmas |
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| That's ludicrous rupert and you know it. You cannot state that economic growth is due to population growth because growth is a relative measure with other measures acting against it. If you have a population increase of a million people yet you only add 100 jobs to the market, your absolute output may increase, however, your relative measures of growth will not. Furthermore, growth of the economy is not sustainable without growth in labor markets. |
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| We need more than just a stimulus - we need a real solution. So what is the proposed solution? |
oh ya and the US might want to think of a new constiution while they're at it...
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| Dramatically increase the size of the IRS to go after tax evasion to increase government revenue rather than rely on debt to finance expenditure. Establish a broad based tax on consumption so that the corporate sector pays its share of the tax burden. |
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| Originally posted by imokruok Calculations have been done that a NRST of about 17% would give the government the same revenue it gets today, without all of the hassle. And yes, I know that this means the poor will pay the 17% tax like everyone else. But there is a societal benefit - it gives everyone a stake in the system. Right now, the poor don't give a damn about national economic policy, because as long as they don't pay taxes, they don't care that taxes get raised on everyone else. Make them part of the system and give everyone an interest. The "rich" will pay their fair share as well, when they buy big ticket items. |
Great, we've got a little stimulus on our economy. No about those jobs:
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| Job-cut announcements jump U.S. companies set 172,000 job cuts last month, the highest in a year, outplacement firm says. November 4, 2003: 10:13 AM EST NEW YORK (CNN/Money) - U.S. job-cut announcements rose in October to their highest level in a year, according to a report Tuesday by an outplacement firm that keeps track of job cuts. U.S. businesses announced 171,874 job cuts in October, up 125 percent from September's level of 76,506, according to Chicago-based Challenger, Gray & Christmas. It was the greatest number of job cuts since 176,010 in October 2002. Challenger CEO John Challenger noted that October has in recent years become one of the worst job-cutting months of the year, since it's a time when many companies are finalizing budgets and plans for the following year. Nevertheless, Challenger said he doubted new jobs would be quick in coming. "With factors like technology, outsourcing and consolidation working against job creation, any job market rebound we see in the near future will be relatively small," Challenger said. Though unemployment is typically a lagging economic indicator, the U.S. economy has enjoyed eight straight quarters of economic growth, including a growth rate of 7.2 percent in the third quarter of 2003, without significant job creation. In fact, since the declared end of the latest recession, in November 2001, more than a million payroll jobs have been lost, according to the Labor Department. Challenger's firm also surveyed about 50 human resources executives and found that 78 percent don't expect to see a "significant" upturn in hiring until the second quarter of 2004. Eleven percent of those surveyed said the pick-up would be delayed until the third or fourth quarter of 2004. Another 11 percent said there would be no hiring rebound at all in 2004. So far this year, there have been 1.04 million job-cut announcements, making 2003 the third straight year in which more than a million cuts have been announced. The automotive industry led the payroll-trimming, with 28,363 announced cuts. Retail followed with 21,169 cuts, the long-suffering telecommunications sector announced 21,030 cuts, the "industrial goods" sector announced 17,484 cuts and the consumer products sector announced 12,077 cuts. Among U.S. states, Michigan had the most job-cut announcements, with 31,105. Texas followed with 21,033 cuts, New York had 20,486 cuts, New Jersey had 10,750 cuts and California had 10,719 cuts. http://money.cnn.com/2003/11/04/new...dex.htm?cnn=yes |
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