Americans aren't spending more despite job gains and lower gas prices.

[Attic]

Which is why we need to pass a minimum wage increase, increase taxes, or both.

I'd have preferred min wage increase over The Abominable Care Act.

Money in our society is freedom and prosperity, best get this into the hands of people as directly as possible rather than running in through the thieving funnel of Government bureaucracy and those it answers to (not the people).

 

[schmuckley]

Housing and food is way up, baby.

 

[werepossum]

On a macro level it is that simple. 50% labor participation rate means you have 1 worker for every 2 people. 55% means you have 1 worker for every 1.8 people. 60% is 1 worker for 1.66 people. Retired, stay-at-home parent, that's all irrelevant. It's the number of workers that determines a country's wealth. Someone who isn't working doesn't contribute to GDP as a producer of value.

You wouldn't say GDP is a useless number just because it doesn't include what industries generated the economic activity, would you?

I tend to agree, but ElFenix and Realibrad both have points. If 95% of our population worked for the federal government we'd have at least 95% labor participation, but almost no wealth to buy with our big gubmit salaries. Wealth-producing jobs doesn't cut it either; lawyers are the farthest thing from wealth-producing, yet a necessity to any modern society. (Well, any free modern society.) And just imagine a society with plenty of material wealth but no psychiatrists to make proggies feel superior (or at least normal.) Conversely a nation with 95% not working but with a mean wealth of several million in gold would be a pretty prosperous society. Even within the same general mix of jobs, labor participation can be tricky to decipher; less labor participation can actually be a sign of prosperity, as parents elect to stay home and people retire earlier. Labor participation is an important metric, maybe even the most important metric, but it's also difficult to interpret since an increase (or decrease) may be caused by more prosperity or less.

That's exactly what it is. Confidence has been shattered. People are aware that housing prices can go down. People are aware that stocks can go down. People are aware that jobs can be lost. We've seen 2 stock market crashes in the past 15 years. This isn't 1960 where you expect to have a job for 30 or 40 years at the same company. You expect to get fired when the company stock goes down 2%. Young people are loaded up with debt. Old people are afraid they won't have enough to retire. The whole country is in the mood to save money and brace for disaster. It's sort of like having your house flood then suddenly you're obsessed with flooding. Will the house flood?? We need to plan for flooding! Will another finance crisis happen?? We need to plan for another financial crisis!

It's not good or bad. It is what it is. The economy needs to adapt to the New Normal.

I'd say it's good. Recovery is slower, but society is more stable as fewer people are one pay check away from disaster.

I'd have preferred min wage increase over The Abominable Care Act.

Money in our society is freedom and prosperity, best get this into the hands of people as directly as possible rather than running in through the thieving funnel of Government bureaucracy and those it answers to (not the people).

In general I agree completely, but in its own way the Abominable Care Act (I like that!) is somewhat the same as a minimum wage increase. It targets a key Democrat demographic, low earners, and provides them with a benefit that saves them money and improves their health, thus allowing them to earn more money. Two key Republican demographics, high earners and business owners, are targeted and typically lose money, as business owners and consumers do when the minimum wage is increased.

 

[Jeff7]

That's exactly what it is. Confidence has been shattered. People are aware that housing prices can go down. People are aware that stocks can go down. People are aware that jobs can be lost. We've seen 2 stock market crashes in the past 15 years. This isn't 1960 where you expect to have a job for 30 or 40 years at the same company. You expect to get fired when the company stock goes down 2%. Young people are loaded up with debt. Old people are afraid they won't have enough to retire. The whole country is in the mood to save money and brace for disaster. It's sort of like having your house flood then suddenly you're obsessed with flooding. Will the house flood?? We need to plan for flooding! Will another finance crisis happen?? We need to plan for another financial crisis!

It's not good or bad. It is what it is. The economy needs to adapt to the New Normal.

And they're aware that pensions are going away, and even if your employer says you'll have a pension, they still have ways of greatly reducing the payout and benefits, especially if it means they can put out an improved earnings statement that will in turn help boost the stock price and get the executive board a net-worth boost of a few million dollars.


Confidence? How many movies and TV shows have been coming out lately that depict some kind of apocalypse or collapse-of-society scenario?

This isn't 1960 where you expect to have a job for 30 or 40 years at the same company. You expect to get fired when the company stock goes down 2%.

Of course, you go back a bit farther to the golden pre-union days, and you can expect to get fired when a machine rips off your arm, leaving you unable to work productively. Sucks for you, but I can find other people who have two arms. Now get off of my property. Tell your kids to come work for you instead.

But of course, we did open up trade with countries that don't play by the same rules as us. Of course you're going to get a better price if you're buying from a country that doesn't give a damn about worker safety, pollution, or above-poverty wages. So, we send our money overseas to the benefit of someone else's economy. A few people here benefit greatly, often those who are already quite wealthy, while the rank and file are quite clearly told that the only way they can remain valuable to a company is if they're willing to lower their standard of living and get by on third-world wages.

 

[Matt1970]

That doesn't explain the prosperity of the 50's & 60's when labor participation rates were even lower than today.

That was back when there were a lot more single income families.

 

[BoberFett]

That doesn't explain the prosperity of the 50's & 60's when labor participation rates were even lower than today.

What prosperity? When Americans saved instead of spending like drunken sailors?

Apples and oranges.

 

[Jhhnn]

What prosperity? When Americans saved instead of spending like drunken sailors?

Apples and oranges.

Hardly. It was when median incomes & GDP grew at the same rate. When those diverged, middle America just got a bigger line of credit in lieu of wage increases which culminated in the collapse of the ownership society. We pretty much lost pensions, jobs & job stability in the process while the Job Creators have worked hard to offshore & automate everything possible. They've profited immensely.

 

[blastingcap]

That was back when there were a lot more single income families.

And a lot less global competition because most of the developed world (Europe, Japan) was in shambles due to WWII.
Plus the USA was the largest oil exporter and producer in that era, before we become the largest oil IMporter.

 

[Jhhnn]

And a lot less global competition because most of the developed world (Europe, Japan) was in shambles due to WWII.

That's standard right wing propaganda. Other than during the brief period of the Marshall Plan, US trade was basically balanced until 1979 or so. If we benefited from their weakness, we'd have shown a trade surplus, which didn't happen-

http://krugman.blogs.nytimes.com/2012/11/19/the-europe-in-rubble-excuse/

 

[blastingcap]

That's standard right wing propaganda. Other than during the brief period of the Marshall Plan, US trade was basically balanced until 1979 or so. If we benefited from their weakness, we'd have shown a trade surplus, which didn't happen-

http://krugman.blogs.nytimes.com/2012/11/19/the-europe-in-rubble-excuse/

It would not necessarily show up in a trade surplus, that is only one of the ways that it might show up. It can also show in dollar valuation or, if you want to look at non-econ metrics, health. Did you know that Europeans were a lot shorter back then? It took them a while to catch up after the devastation of WWII. They did catch up and even surpass average height in the US, because they eliminated more malnutrition/poverty than the US did, but that came later. Further, back then there wasn't even that much trade, the VAST majority of the economy was internal. You aren't addressing other people's points about single earner families, nor how the US wasn't running up huge deficits and was an oil exporter back then.

http://www.amazon.com/The-Two-Income-Trap-Middle-Class-Parents/dp/0465090907

 

[sportage]

When people lose their job and face hard times, then because of the policies of a good president despite attempts by a not so good congress to derail that president, those policies create jobs and our outlook for the future has hope, it make sense to conserve financially once a paycheck is coming in and spend as little as possible.
After all, with republicans now controlling the house and senate, you never know what crap they will pull next.

Most people were caught off guard by the 2008 GW Bush economic meltdown.
Many lost jobs and then lost their homes, cars, livelihood, and families. Not to mention all hope.
While many savings and 401K retirement plans have recovered since the 2008 market crash, a lot of retirees living off retirement funds in 2008 lost much.
And at their age, they were not able to return back into the job market to replenish their losses.

Bottom line, people are working again, but spending less.
They do not want to be caught off guard a second time.
And while republicans are elected, people do not trust them to do the right thing in the peoples best interest.

On top of all that, things are changing in other areas.
Cars use less gas and are more efficient. People spend less.
Housing is more affordable. Houses cost less.
And technology saves people a lot of money.
More people drop expensive cable and satellite companies for cheaper internet media.
Cell phones instead of land lines.
Netflix instead of HBO via cable and satellite.

Lower gas costs and job gains would normally entice people to spend more.
But after the shell shock of the Bush administration, and the wars, and the economic losses, people are more cautious with their paychecks.

Anyone that suffered through the Bush years, lost much, but have now managed to recover, those folks are not going to be foolish a second time.
Not unless they are fooled into voting more republicans in office.
Should that happen, look out!

 

[nickqt]

It would not necessarily show up in a trade surplus, that is only one of the ways that it might show up. It can also show in dollar valuation or, if you want to look at non-econ metrics, health. Did you know that Europeans were a lot shorter back then? It took them a while to catch up after the devastation of WWII. They did catch up and even surpass average height in the US, because they eliminated more malnutrition/poverty than the US did, but that came later. Further, back then there wasn't even that much trade, the VAST majority of the economy was internal. You aren't addressing other people's points about single earner families, nor how the US wasn't running up huge deficits and was an oil exporter back then.

http://www.amazon.com/The-Two-Income-Trap-Middle-Class-Parents/dp/0465090907

MMT.

Everything else is just silly.

1932-1945 was one huge stimulus. It created the foundation of the middle class. Since then, we've decided to sell off the infrastructure for higher dividend returns for the wealthy and the people who manage the wealth.

Shortsighted, but it works. For the wealthy.

 

[MongGrel]

http://www.bloomberg.com/news/artic...-aren-t-spending-even-in-a-booming-job-market

The chickens coming home to roost. Consumer of last resort got screwed one time too many and is not consuming, what's plan B for the corporatists? More trickle down and QE?

I'm not even going to read the thread.

I can just see the title and say "Really, no shit?"

 

[Matt1970]

That's standard right wing propaganda. Other than during the brief period of the Marshall Plan, US trade was basically balanced until 1979 or so. If we benefited from their weakness, we'd have shown a trade surplus, which didn't happen-

http://krugman.blogs.nytimes.com/2012/11/19/the-europe-in-rubble-excuse/

Hypocrisy at it's finest. You are so extreme left you embarrass liberals. You are the poster child for communist propaganda. Look at you own chart, we ran trade surpluses till 1970. That's not "basically balanced", that was us winning. That was us as a nation making more than we consumed. Just like I have told you multiple times when the share of income for middle America started to decline.

 

[nickqt]

Hypocrisy at it's finest. You are so extreme left you embarrass liberals. You are the poster child for communist propaganda. Look at you own chart, we ran trade surpluses till 1970. That's not "basically balanced", that was us winning. That was us as a nation making more than we consumed. Just like I have told you multiple times when the share of income for middle America started to decline.

Communist

Take a shot!

 

[ch33zw1z]

Other staples are going up. Food, Health Care is just ballooning in the last 5 years. Even if gas stays down, I wouldn't expect wise people to spend more, but save now.

 

[Jhhnn]

Hypocrisy at it's finest. You are so extreme left you embarrass liberals. You are the poster child for communist propaganda. Look at you own chart, we ran trade surpluses till 1970. That's not "basically balanced", that was us winning. That was us as a nation making more than we consumed. Just like I have told you multiple times when the share of income for middle America started to decline.

And now, the splitting of the very finest hairs.

The chart is % of GDP. The greatest difference from 1949 to 1979 is approx 1%. That does not support the Europe in shambles hypothesis of prosperity in the slightest.

 

[Fenixgoon]

how were wealth gains distributed? most of it is at the top. which means people around the middle don't actually have much more to spend (if they choose) than before.

 

[Jhhnn]

how were wealth gains distributed? most of it is at the top. which means people around the middle don't actually have much more to spend (if they choose) than before.

That likely applies to wage gains as well, the subject of the thread. I suspect we're seeing an extension of two tier wage scales at a macro level. Boomers & GenX'ers who held employment thru the crash continuing to advance, if slowly, & those employed & re-employed being forced to settle for less.

Boomers are the high earners of the current population, having advanced thru the ranks. Even the youngest are now 50-51 years old so they're trying to reduce debt loads & save/ invest for retirement so their spending will obviously be down.

 

[blastingcap]

how were wealth gains distributed? most of it is at the top. which means people around the middle don't actually have much more to spend (if they choose) than before.

Yes, good point and one that is well-documented.

Also in my own household we don't spend more just because gas prices dipped because we know it's temporary. Ever-escalating food, healthcare, education expenses offset brief "gains" like this, and I say "gains" because I watched an old Simpsons episode from 1997 recently where the gas price was ~$1.50. So even at $3 we're still paying a LOT more than we used to.

 

[WHAMPOM]

http://www.bloomberg.com/news/artic...-aren-t-spending-even-in-a-booming-job-market

The chickens coming home to roost. Consumer of last resort got screwed one time too many and is not consuming, what's plan B for the corporatists? More trickle down and QE?

Record February snow and cold have anything to do with that?

 

[inachu]

Not spending more because 92 million are out of work. duhhhh

 

[nickqt]

Not spending more because 92 million are out of work. duhhhh

1/3 of the population is unemployed?

 

[Carson Dyle]

We're expected to spend more because of lower gas prices? Like what - I'm going to spend more of my time in the evenings just randomly driving around?

 

[shortylickens]

1/3 of the population is unemployed?

Yeah. But the majority of THAT is old folks and kids and inmates.

The bulk of able bodied Americans are at work. The issue comes from the 1 to 10 million employable people who dont stay employed all the time. As that number changes, the economy has minor changes.


The real problem is the top 1 percent stockpiling wealth in Swiss banks and not spending it here.
I dont hate the top 1 percent. I wanna be rich someday too. And I dont want the government taxing my ass off for all my hard work.
But if you make it big in America you owe to society to spread the good luck. Buy shit. Invest in things here. Be a generous tipper.