Economic Growth Rate Downgraded to Anemic 1.6 Percent in Second Quarter

[Doc Savage Fan]

Dems have done nothing to mitigate the uncertainty that's so profoundly affecting businesses and consumers. The sugar rush is over and what do we have to show for it? Nothing. Dems have failed our country.

 

[child of wonder]

It would help tremendously if Obama and congress didn't constantly attack and hinder/harm business with their words and legislation. That is the main reason for the mess we're in.

The housing bubble is the main reason we're in this mess.

I'm sick and tired of hearing Republican hacks and Democratic hacks going at each other.

It's like a husband and wife that just fight constantly about everything rather than forgetting about hating each other and working together to fix a common problem. Meanwhile, the whole family suffers.

 

[jman19]

What would GDP growth have been if there was no war in Iraq?


The problem with the stimulus was it artificially, temporarily, inflated the economy. Now we are spiraling right back down to where we were before the stimulus. We are in the same place, now with a much larger national debt.

Yes, I know it was a temporary boost. I'm just curious how much of a boost - i.e. what is a "normalized" GDP growth %?

 

[child of wonder]

Tax cuts are out of the question (unless your'e talking about tax cuts for the poor/middle class, who would most likely spend the extra tax savings and move that money into the economy)

The biggest GDP multiplier effect comes from spending increases. In fact, i would argue that you should raise taxes on the rich and increase spending if you're so afraid of the additional debt.

Spending Increases
Extend Unemployment Insurance Benefits 1.64
Temporarily Increase Food Stamps 1.73
Issue General Aid to State Governments 1.36
Increase Infrastructure Spending 1.59

Why should we not be afraid of additional debt? At some point we won't be able to spend our way out of messes anymore.

 

[IndyColtsFan]

So what the fuck do we do? More stimulus (aka more debt)? More tax cuts (aka more debt)?

We can try to encourage people to spend all day long but more people have learned they need to save more rather than spend. We can't always use the credit card to bail ourselves out as has been happening the last 10 years.

I think the problem you run into with tax cuts/tax rebates/tax credits is that many (dare I say most?) Americans are wising up to some extent and using the additional cash flow to pay down their huge personal debt rather than buying goods and services. That won't help the economy grow, but in reality, it is something they definitely need to do. I really don't know what the heck the answer is but I do know the middle class is shrinking and the free trade mantra is a bunch of crap.

 

[Phokus]

Actually, the real funny thing is, one of the largest part of the 'uncertainty' you conservatives are talking about is the uncertainty of how much the government is willing to intervene.

Also, here's an article explaining the multiplier effect study:

Food stamps offer best stimulus - study
Moody's study suggests extending unemployment benefits, increasing food stamps fastest ways to stimulate economy.
January 29 2008: 1:57 PM EST

WASHINGTON (CNN) -- As Congress and the White House consider a $150 billion stimulus package that includes tax rebates and tax incentives for business, a report released Tuesday suggests that other methods would do a better job of infusing money into the flagging economy and doing it fast.

The industry research firm Moody's Economy.com tracked the potential impact of each stimulus dollar, looking at tax rebates, tax incentives for business, food stamps and expanding unemployment benefits.

The report found that "some provide a lot of bang for the buck to the economy. Others ... don't," said economist Mark Zandi.

In findings echoed by other economists and studies, he said the study shows the fastest way to infuse money into the economy is through expanding the food-stamp program. For every dollar spent on that program $1.73 is generated throughout the economy, he said.

"If someone who is literally living paycheck to paycheck gets an extra dollar, it's very likely that they will spend that dollar immediately on whatever they need - groceries, to pay the telephone bill, to pay the electric bill," he said.

Tracking that single dollar spent through the economic chain shows what economists call the ripple effect, Zandi said. For example, that dollar spent at the grocery store in turn helps to pay the salaries of the grocery clerks, pays the truckers who haul the food and produce cross-country, and finally goes to the farmer who grows the crops.

The report pointed to expanding unemployment benefits as the program that gets the next biggest bang for the buck. That's because, although the unemployed are already getting checks, they need to spend the money. For every dollar spent here, the economy would see a return of $1.64, Zandi said.

Expanding the food-stamp and the unemployment insurance programs are not in the current stimulus package expected to be passed by the House. In the Senate, the Finance Committee is now working on its own version of a stimulus package that might include extending unemployment benefits and other options.

Finally, Moody's report says business incentives such as tax breaks for buying new equipment - so-called accelerated depreciation - would give the least bang for the buck and potentially provide the slowest infusion of money. A dollar spent there would generate only 33 cents in the economy because, Zandi said, it takes longer for businesses to implement any benefit received.

http://money.cnn.com/2008/01/29/news/economy/stimulus_analysis/index.htm

 

[Doc Savage Fan]

Actually, the real funny thing is, one of the largest part of the 'uncertainty' you conservatives are talking about is the uncertainty of how much the government is willing to intervene.

And therein lies the rub. The word "willing" is an interesting word choice.

 

[bl4ckfl4g]

It would help tremendously if Obama and congress didn't constantly attack and hinder/harm business with their words and legislation. That is the main reason for the mess we're in.

No the main reason we are in this mess happened well before Obama. He hasn't done anything good to fix it but you'd have to be blind to attribute the economic collapse to him.

 

[Phokus]

And therein lies the rub.

Like i said, Krugman was right. The government initially balked at voting in favor of TARP. It was only after the financial markets got hammered did they vote in favor of it to remove that uncertainty (note: i'm not endorsing TARP, that was a bailout for the rich, i would have preferred temporary nationalization, but it was better than not doing anything). Had they done nothing, the GLOBAL economy would have imploded. Like, literally no lending to businesses, which most businesses depend on.

However, that was just the financial markets, but in terms of the general economy, government hasn't NEARLY been as forceful in trying to stimulate the economy and that leads to uncertainty for businesses.

 

[bamacre]

Krugman put himself in a win-win situation. No matter how much stimulus was offered, he could always say it wasn't enough. We're $14 trillion in the hole, what would that number be if Krugman had his way? And when interest rates rise, how much would our interest payments be on that now higher debt? Bush and Greenspan offered a massive stimulus, and sure enough, that prevented a stronger recession, but not for long. We paid a heavy price in the end. We cannot just keep inflating bubbles without suffering when they burst. We need a real, sustainable economy, and unfortunately we'll have to endure some pain before that can be allowed to happen.

 

[PeshakJang]

 

[Phokus]

Krugman put himself in a win-win situation. No matter how much stimulus was offered, he could always say it wasn't enough. We're $14 trillion in the hole, what would that number be if Krugman had his way? And when interest rates rise, how much would our interest payments be on that now higher debt? Bush and Greenspan offered a massive stimulus, and sure enough, that prevented a stronger recession, but not for long. We paid a heavy price in the end. We cannot just keep inflating bubbles without suffering when they burst. We need a real, sustainable economy, and unfortunately we'll have to endure some pain before that can be allowed to happen.

How the hell is that a 'win-win' situation. If the piddling stimulus worked, he would have looked dumb.

If *YOU* had your way, the financial markets would have imploded and we'd be living in some sort of Mad Max dystopian universe right now.

 

[her209]

 

[Doc Savage Fan]

Like i said, Krugman was right. The government initially balked at voting in favor of TARP. It was only after the financial markets got hammered did they vote in favor of it to remove that uncertainty (note: i'm not endorsing TARP, that was a bailout for the rich, i would have preferred temporary nationalization, but it was better than not doing anything). Had they done nothing, the GLOBAL economy would have imploded. Like, literally no lending to businesses, which most businesses depend on.

However, that was just the financial markets, but in terms of the general economy, government hasn't NEARLY been as forceful in trying to stimulate the economy and that leads to uncertainty for businesses.

TARP was a necessary evil to prevent a disasterous economic collapse...no question about it.

The stimulus package though is a horse of a different color. I personally think it was a horrible idea and you apparently think we should have spent way more. But one thing is pretty clear here...the $787B hasn't given us any obvious results (now estimated at $814B assuming Throckmorton's insinuation of lies hasn't caused the CBO to revise their current estimate).

Any way you slice this (too big, too small)...the Dems stimulus plan, that they proposed and passed, has failed. Not the mention the fact that they've also failed at mitigating uncertainty for businesses and consumers which is at the very core of the problem. The Dems no longer have anyone else to blame but themselves.

 

[PeshakJang]

Not mine, but still funny

 

[Phokus]

Look, you conservatives have to read what Krugman actually wrote:

http://www.nytimes.com/2009/01/09/opinion/09krugman.html

bamacre is insinuating that krugman is just pulling out the 'stimulus wasn't big enough' out of thin air. Krugman was using CBO estimates on the economic short fall and compared it to the actual stimulus. IT WASN'T NEARLY ENOUGH

Doc Savage, not only is the stimulus failed because it was too small, but only 60% of that stimulus was public spending, the rest were TAX CUTS, which, as i showed you earlier via the multiplier effect, is one of the worst ways to stimulate the economy.

Finally, Moody's report says business incentives such as tax breaks for buying new equipment - so-called accelerated depreciation - would give the least bang for the buck and potentially provide the slowest infusion of money. A dollar spent there would generate only 33 cents in the economy because, Zandi said, it takes longer for businesses to implement any benefit received.

Now you compare that with 33 cents on the dollar of benefit from business tax cuts to public spending:

Spending Increases
Extend Unemployment Insurance Benefits 1.64
Temporarily Increase Food Stamps 1.73
Issue General Aid to State Governments 1.36
Increase Infrastructure Spending 1.59

And you'll see why the stimilus is just a drop in the pond.

The stimulus should have been 100% public spending and should have been much larger.

 

[Doc Savage Fan]

Doc Savage, not only is the stimulus failed because it was too small, but only 60% of that stimulus was public spending, the rest were TAX CUTS, which, as i showed you earlier via the multiplier effect, is one of the worst ways to stimulate the economy.

Don't look at me...save it for Obama and the Dems...they're the ones who screwed up...we just disagree on how they screwed up.

 

[Phokus]

Don't look at me...save it for Obama and the Dems...they're the ones who screwed up...we just disagree on how they screwed up.

If we did it the conservative way (cut taxes/cut spending), the screwup would have been 10000 times worse).

 

[Slew Foot]

You wouldnt need any stimulus if people had jobs.
And government jobs cant last forever, so you need to get the private sector back to hiring. Whats the best way to do that? Ban chinese imports? Super high tariffs? Eliminate outsourcing?

 

[Doc Savage Fan]

If we did it the conservative way (cut taxes/cut spending), the screwup would have been 10000 times worse).

"IF" is a damn big word and we'll never know what they would have done or what would have happened if they had control. Blaming Republicans on pure speculation...nice. Meanwhile...Dems 'fiddle' while Rome burns.

 

[child of wonder]

"IF" is a damn big word and we'll never know what they would have done or what would have happened if they had control. Blaming Republicans on pure speculation...nice. Meanwhile...Dems 'fiddle' while Rome burns.

Phokus, Doc... can we stop with the "Dems" this and "Repubs" that? I know you both to be intelligent and decent guys. We are "fiddling while Rome burns" when we just lob partisan attacks at each other.

We all stand to benefit by solving this economic downturn but nothing is served by us pointing the finger at each other. I refuse to believe that the human race is incapable of thoughtful debate, reasonable compromise, and a little bit of objectivity when dealing with those of dissenting opinions.

 

[Phokus]

"IF" is a damn big word and we'll never know what they would have done or what would have happened if they had control. Blaming Republicans on pure speculation...nice. Meanwhile...Dems 'fiddle' while Rome burns.

I'm not talking about your average republican politician would do in that situation, i'm talking about what your ideal Tea Party candidate would do. Say, if Milton Friedman was president.

The point is, conservative economic policies don't work, and when given the chance, GOP politicians typically don't usually enact them when the shit hits the fan.

 

[First]

What would GDP growth have been if there was no war in Iraq?


The problem with the stimulus was it artificially, temporarily, inflated the economy. Now we are spiraling right back down to where we were before the stimulus. We are in the same place, now with a much larger national debt.

Interesting you're this wrong and that slow. Fact is before the stimulus was spent GDP was at -5%. To say it's back where it was before the stimulus means you weren't paying attention. Sort of like the Angle-Reid race lol.

 

[Thump553]

If I may be allowed a Pollyanna moment, most economists expected the downward revision to be even worse, 1.4% was the consensus figure for 2Q. And yesterday's unemployment figures were also better than expected.

In reality, though, this is an extremely tough economic crisis to crack. The worst of the crisis is definately behind us but how to get an actual jobs growth recovery going is the big question. I have more than a passing interest in and knowledge of economics, and I admit there is no untried solution I am aware of. I'd certainly listen with interest if the GOP made an actual substantive proposal.

 

[nick1985]

Interesting you're this wrong and that slow. Fact is before the stimulus was spent GDP was at -5%. To say it's back where it was before the stimulus means you weren't paying attention. Sort of like the Angle-Reid race lol.

Why are you always such a giant asshole when you post? You are almost worse than Umbrella



Let me re-phrase. I feel we are headed right back where it was before we started. Look at the graph in the cnn link in the OP. We are headed backwards.

Also, do I get to make fun of you when Angle wins?