Economic Growth Rate Downgraded to Anemic 1.6 Percent in Second Quarter

[ProfJohn]

Nope...as a professional investor, I can tell you that economic trends tend to be cyclical. The smartest investors will judge a quarter based on the same quarter from last year or the year before. QonQ can be interesting, but is usually less informative.

Most recoveries move in ONE direction, upwards.

This one has started to move backwards. Not a good sign in any way shape or form.

 

[Viditor]

Most recoveries move in ONE direction, upwards.

This one has started to move backwards. Not a good sign in any way shape or form.

Actually, I can't think of a single recovery that didn't have a pullback. It's usually the very best time to invest (which I am doing right now, big time).
I will predict that we will have some very nice numbers in January...though the election may screw with that a bit.

 

[Fear No Evil]

Actually, I can't think of a single recovery that didn't have a pullback. It's usually the very best time to invest (which I am doing right now, big time).
I will predict that we will have some very nice numbers in January...though the election may screw with that a bit.

Translation: I predict better numbers, unless the numbers aren't good and then I reserve the right to blame the republicans.

 

[IGBT]

so all you PBF's (poor broke fusks) that are scratching by from pay check to pay day loan to pay check, how are you going to make it when the obama taxes VAT cap and trade tax obama medical tax and inflation kick in next year??

 

[Viditor]

Translation: I predict better numbers, unless the numbers aren't good and then I reserve the right to blame the republicans.

LOL...I like that. Sadly, nobody will accept that if my predictions are wrong.
I don't see any issues occuring unless there's a wild swing (which I don't expect). I think both the Republicans and Democrats will be equally ineffectual...

Edit:BTW, by the election screwing with the numbers, I'm talking about timing only. January can be a coin toss, but certainly by March. And if there IS a delay, the correction up will be even higher.

 

[Phokus]

Well, for one thing, nonprofjohn, you have yet to explain to me how food stamps is an example of 'trickle down economics'. That statement makes you look really really dumb.

Did it occur to you that the reason the permanent tax cut section has the lowest modifier is because those tax cuts are already in effect and have already done what they were suppose to do years ago.

Taking a tax cut that already exists and extending it is not going to produce a huge economic gain. But ending a tax and thus raising taxes will certainly have a HUGE negative effect on the economy.

What we need is a chart that compared the positive effect of extending the tax cuts vs the negative effect of letting them end.

The reason why those Republican tax cuts won't work is because some of that money is going to people who are going to save. You're ignorant if you think otherwise. Look at what happens if you introduce a NEW across the board tax cut:

Across the Board Tax Cut 1.03

now compare that with spending increases:

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

Also notice how the chief economist doesn't advocate extending the bush tax cuts?

You can't be this ignorant, can you? Oh wait, it's you we're talking about.

BTW the Bush tax cuts actually favored the poor. Look at the tax cut as a percentage of income and you will see that the people at the bottom got a much bigger cut in their tax bill. Thanks to Bush millions of Americans who paid taxes under Clinton pay no income taxes at all today!

Also, if the tax cuts 'favored' the rich then why do the rich now pay a higher percentage of incomes taxes than before the cuts despite the fact that their overall share of income is nearly the same as it was pre-tax cut?

Stop lying, you're only looking at income tax rates. 1) You don't include the effective of slashing the capital gains rates had on the rich, and the effect was ENORMOUS because they derive a large portion of their income capital gains. 2) The 2nd round of Bush taxcuts did squat for the bottom/middle of america.

If tax cuts favored the poor, how come warren buffet pays less in taxes than his secretary? http://www.timesonline.co.uk/tol/money/tax/article1996735.ece

How come the Americans who had the highest incomes only paid a 16% tax rate?

http://content.usatoday.com/communi...hest-averaged-345m-in-07-income-16-tax-rate/1

IRS: 400 richest averaged $345M in '07 income, 16% tax rate

STOP YOUR LYING NONPROFJOHN

Lastly, i like how you cherry pick the article i posted, when the author said the 2 most effective way at stimulating the economy is 1) food stamps and 2) Aid to financially strapped state governments. That other example is, again, NOT talking about republican tax cuts. If anything, he's probably talking about using liberal stimulus packages with the least worst form of tax cuts that would be politically viable for a total stimulus package.

Extending food stamps is the most effective way to prime the economy's pump. A $1
increase in food stamp payments boosts GDP by $1.73. People who receive these benefits
are very hard-pressed and will spend any financial aid they receive within a few weeks.
Because these programs are already operating, increased benefits can be quickly
delivered to recipients.

Another economically potent stimulus method is aid to financially pressed state
governments. This could take the form of general aid or a temporary increase in the
Medicaid matching rate to help ease health coverage costs. Such help appears unlikely in
the proposed plan, but this could quickly change if the economy’s problems grow more
severe and widespread in coming weeks as the legislation is being fashioned.
Fiscal problems have already developed in half the nation’s states. Tax revenue growth
has slowed sharply along with flagging retail sales and corporate profits. Income tax
receipts are also sure to suffer as the job market weakens. California and Florida are
under the most financial pressure, but states as far-flung as Arizona, Minnesota and
Maryland are also struggling.
Since most state constitutions prohibit budget deficits, most states are already drawing up
plans to cut funding for programs ranging from healthcare to education and are cutting
grants to local governments, which are having their own financial problems. Most rely on
property tax revenues, which are slumping with house prices. Cuts in state and local
government outlays are sure to become a substantial drag on the economy later this year
and into 2009.

 

[Budarow]

Nope...as a professional investor, I can tell you that economic trends tend to be cyclical. The smartest investors will judge a quarter based on the same quarter from last year or the year before. QonQ can be interesting, but is usually less informative.

Whether we're talking about economic reports or company profits, YonY comparisons are usually a better way to compare performance since it takes seasonality out of the equation. However, the above also assumes we're in a "normal" economic cycle. When clearly we are not.

The past ~6 quarters has been filled with trillions of $$$ of borrowed stimulus and government guarantees (U.S., China and the EU mostly) which turned an economic Artic winter in an Arizona summer over the short term.

Now it's 18 months later and at least the U.S. economy is moving closer towards 0 growth as stimulus programs end. If the private sector does not start spending more, and the world govenments are unable/unwilling to borrow/print and spend more, where do you honestly think the U.S. economy will be in 6-12 months from now?

Not trying to tell you what to do for yourself or clients, but if you are investing long in equities, you better hope the GDP fairies pull off some serious magic.

 

[nick1985]

nonprofjohn

lemon law?

 

[werepossum]

Well, for one thing, nonprofjohn, you have yet to explain to me how food stamps is an example of 'trickle down economics'. That statement makes you look really really dumb.



The reason why those Republican tax cuts won't work is because some of that money is going to people who are going to save. You're ignorant if you think otherwise. Look at what happens if you introduce a NEW across the board tax cut:

Across the Board Tax Cut 1.03

now compare that with spending increases:

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

Also notice how the chief economist doesn't advocate extending the bush tax cuts?

You can't be this ignorant, can you? Oh wait, it's you we're talking about.





Stop lying, you're only looking at income tax rates. 1) You don't include the effective of slashing the capital gains rates had on the rich, and the effect was ENORMOUS because they derive a large portion of their income capital gains. 2) The 2nd round of Bush taxcuts did squat for the bottom/middle of america.

If tax cuts favored the poor, how come warren buffet pays less in taxes than his secretary? http://www.timesonline.co.uk/tol/money/tax/article1996735.ece

How come the Americans who had the highest incomes only paid a 16% tax rate?

http://content.usatoday.com/communi...hest-averaged-345m-in-07-income-16-tax-rate/1

IRS: 400 richest averaged $345M in '07 income, 16% tax rate

STOP YOUR LYING NONPROFJOHN

Lastly, i like how you cherry pick the article i posted, when the author said the 2 most effective way at stimulating the economy is 1) food stamps and 2) Aid to financially strapped state governments. That other example is, again, NOT talking about republican tax cuts. If anything, he's probably talking about using liberal stimulus packages with the least worst form of tax cuts that would be politically viable for a total stimulus package.

Someone who actually thinks that the two most effective ways to stimulate the economy are extending food stamps and aiding financially strapped state governments is abysmally and spectacularly stupid. I imagine that this person instead is merely devoted to extending dependency and government - in other words, a progressive - and is willing and eager to inflict misery on as many people as possible in furtherance of that goal. And please note that Warren Buffet pays much, much more in taxes than does his secretary; he merely pays a lower rate. This is because most people recognize that in order to make a prosperous society one needs savings and investment, and there is no reason to invest if the rate of return after taxes does not make the investment worth the risk. Savings accounts and CDs fund things like home mortgages and automobile loans; venture capital and stock investment drive new companies, new products, new technologies. Personally I would prefer taxing everyone equally on what they spend and keeping overall rates low enough to encourage investment, but taxing investment at high rates is a sure way to drive investment capital offshore to other countries and further accelerate our country's decline.

 

[Phokus]

Someone who actually thinks that the two most effective ways to stimulate the economy are extending food stamps and aiding financially strapped state governments is abysmally and spectacularly stupid. I imagine that this person instead is merely devoted to extending dependency and government - in other words, a progressive - and is willing and eager to inflict misery on as many people as possible in furtherance of that goal. And please note that Warren Buffet pays much, much more in taxes than does his secretary; he merely pays a lower rate. This is because most people recognize that in order to make a prosperous society one needs savings and investment, and there is no reason to invest if the rate of return after taxes does not make the investment worth the risk. Savings accounts and CDs fund things like home mortgages and automobile loans; venture capital and stock investment drive new companies, new products, new technologies. Personally I would prefer taxing everyone equally on what they spend and keeping overall rates low enough to encourage investment, but taxing investment at high rates is a sure way to drive investment capital offshore to other countries and further accelerate our country's decline.

Gosh, who am i going to believe, the chief economist of Moody's referencing a study showing spending is the best type of stimulus or some drooling idiot conservative who just spouts off GOP talking points without any actual study or proof to back up his claims? Gosh golly Gee, that's a hard one to decide.

 

[GarfieldtheCat]

Someone who actually thinks that the two most effective ways to stimulate the economy are extending food stamps and aiding financially strapped state governments is abysmally and spectacularly stupid.

I guess real economists and other people who know about this would disagree with you. Unsurprising.

Looking at those numbers, food stamps look pretty good, don't they? But don't let these facts get in the way of your preconceived beliefs.

 

[manimal]

I guess real economists and other people who know about this would disagree with you. Unsurprising.

Looking at those numbers, food stamps look pretty good, don't they? But don't let these facts get in the way of your preconceived beliefs.

Some of us have been referecing these numbers for months here in the forum while denialists hold their breath and scream bailout...


The disingenuous nature of the political climate has made facts debatable. The predators are preying on the weak with their steadfast belief in supply side and vodoo economics...

Its time we start calling out this ignorance on a large scale...

 

[piasabird]

This is lower than inflation. Assuming there is any inflation. Inflation use to be considered a 3% nominal rate. Of course that was not even counting things like Gas prices and Food.

 

[Darwin333]

I guess real economists and other people who know about this would disagree with you. Unsurprising.

Looking at those numbers, food stamps look pretty good, don't they? But don't let these facts get in the way of your preconceived beliefs.

Of course putting more borrowed money into the economy helps a hellofa lot more than letting people keep and spend their own money. I am assuming you read the disclaimer at the bottom, right?

I can make the GDP numbers look as good as you want them with unlimited credit as long as you don't take into account the future impact that credit has.

 

[PeshakJang]

Some of us have been referecing these numbers for months here in the forum while denialists hold their breath and scream bailout...


The disingenuous nature of the political climate has made facts debatable. The predators are preying on the weak with their steadfast belief in supply side and vodoo economics...

Its time we start calling out this ignorance on a large scale...

Did either of you read what it says at the bottom? "Bang-for-the-buck" is estimated by the one-year change in GDP it would produce. That's basically what has already happened. Massive spending has resulted in basically a one-year increase in GDP numbers, which are quickly beginning to back off.

Giving out food stamps and welfare is treating the symptoms without addressing the problems that are dragging the economy down. As Zandi said in his most recent commentary, it's exports and American business that are going to lead any recovery. Even if that initial investment resulted in less of an immediate boost to the GDP, how can that not be seen as fixing the fundamental issues that we are facing?

I mean, for Christ's sake, Obama right now is pushing for some of the things on that list that have the lowest "Bang-for-the-buck", in terms of business tax relief, capital gains relief, extending tax cuts, etc. Maybe he's started to realize that it would be better for us all if we fixed the foundation of the house instead of throwing another coat of paint on and hoping somebody will buy it.

 

[Darwin333]

Did either of you read what it says at the bottom? "Bang-for-the-buck" is estimated by the one-year change in GDP it would produce. That's basically what has already happened. Massive spending has resulted in basically a one-year increase in GDP numbers, which are quickly beginning to back off.

Giving out food stamps and welfare is treating the symptoms without addressing the problems that are dragging the economy down. As Zandi said in his most recent commentary, it's exports and American business that are going to lead any recovery. Even if that initial investment resulted in less of an immediate boost to the GDP, how can that not be seen as fixing the fundamental issues that we are facing?

I mean, for Christ's sake, Obama right now is pushing for some of the things on that list that have the lowest "Bang-for-the-buck", in terms of business tax relief, capital gains relief, extending tax cuts, etc. Maybe he's started to realize that it would be better for us all if we fixed the foundation of the house instead of throwing another coat of paint on and hoping somebody will buy it.

You forgot the "with borrowed money" part. That is really important in the context of this discussion.

 

[Acanthus]

This is lower than inflation. Assuming there is any inflation. Inflation use to be considered a 3% nominal rate. Of course that was not even counting things like Gas prices and Food.

There is a very high risk of deflation with the current housing market.

 

[nonlnear]

There is a very high risk of deflation with the current housing market.

By "risk of deflation" you mean the bubble might finish popping?

 

[Acanthus]

By "risk of deflation" you mean the bubble might finish popping?

In those words, yes.

Housing prices need to continue falling in a lot of markets.

The days of building a house for $100k and selling it for $350k are over.

 

[manimal]

In those words, yes.

Housing prices need to continue falling in a lot of markets.

The days of building a house for $100k and selling it for $350k are over.

While housing will continue to be an issue in the coming years we are in a crisis of demand right now. With savings near 6 percent for US households demand will continue to stifle growth.

 

[werepossum]

Gosh, who am i going to believe, the chief economist of Moody's referencing a study showing spending is the best type of stimulus or some drooling idiot conservative who just spouts off GOP talking points without any actual study or proof to back up his claims? Gosh golly Gee, that's a hard one to decide.

I guess real economists and other people who know about this would disagree with you. Unsurprising.

Looking at those numbers, food stamps look pretty good, don't they? But don't let these facts get in the way of your preconceived beliefs.

Some of us have been referecing these numbers for months here in the forum while denialists hold their breath and scream bailout...


The disingenuous nature of the political climate has made facts debatable. The predators are preying on the weak with their steadfast belief in supply side and vodoo economics...

Its time we start calling out this ignorance on a large scale...

I have three liberals in a row referencing as fact something clearly labeled as estimates, just two libs away from idiot bingo! But to get past that, there are three additional major issues here. First, as Darwin has repeatedly mentioned this government spending is being done with borrowed money, so no matter what the stimulus affect there is also a corresponding restraint on the economy. More government borrowing means less available credit for non-government projects and less available government money in the future due to payment of interest and principal. In particular, loans for small business are at the moment very difficult to get even for companies who have made money throughout this recession, mostly because banks that have money to loan prefer to loan to government. Second, the more government handles money the more of that money is spent on that government handling, which is non-productive overhead. Programs like food stamps and unemployment have high overhead, and overhead is by definition non-productive. Third, any money spent has an immediate stimulus affect, but money spent by government tends to have an equal and opposite negative effect when it stops, as witnessed recently by the surge in home and automobile sales when government subsidizes them and the corresponding drop in those sales when the subsidies end. We saw this in spades during the Great Depression, and we're seeing it now. (By the way, Zandi, who has been wrong in every major prediction going into this recession, has now "discovered" that Obama's government action actually did end the "Great Recession". Pay no attention to the unemployed man behind the screen.)

Food stamps aside, there are no free lunches, only lunches paid for by others. We cannot recover prosperity by having government take money from one person and give it to another, no matter how many tables and graphs are produced. I personally favor extending food stamps and unemployment benefits on humanitarian grounds, but as economic stimuli these are merely additional shovels for our hole.

 

[theeedude]

If you think this is bad, wait till GOP gets Congress. 2 years of infighting and gridlock at the time of economic trouble. Going to have simultaneous private and public sector contraction. My plan is to cash out on th euphoria rally that "pro-business" GOP is back in business, then go short big time.

 

[GarfieldtheCat]

Of course putting more borrowed money into the economy helps a hellofa lot more than letting people keep and spend their own money. I am assuming you read the disclaimer at the bottom, right?

I can make the GDP numbers look as good as you want them with unlimited credit as long as you don't take into account the future impact that credit has.

I'm certainly no economist, and I bet no one else here is either, but my understanding is that lowering taxes doesn't help short-term.

Assuming someone has a job, and isn't going bankrupt, if you cut taxes (ie, give back more money) these people will just save it (or most of it) in case they need it in the future. This doesn't really help the economy, since the money doesn't really get used to buy things, it just sits in a bank somewhere.

But giving money (ie food stamps) to people without jobs, pretty much forces them to spend the money, and getting it back into the economy. Since they have no money or income, they can't save it, and lowering taxes when they don't make any money anyway.

 

[GarfieldtheCat]

I have three liberals in a row referencing as fact something clearly labeled as estimates, just two libs away from idiot bingo!

Way to go werepossum.....got it wrong again, and still started off with the personal attacks. BRAVO!

Did you ever learn in school to debate, as opposed to hurl insults? Just wondering.

 

[werepossum]

I'm certainly no economist, and I bet no one else here is either, but my understanding is that lowering taxes doesn't help short-term.

Assuming someone has a job, and isn't going bankrupt, if you cut taxes (ie, give back more money) these people will just save it (or most of it) in case they need it in the future. This doesn't really help the economy, since the money doesn't really get used to buy things, it just sits in a bank somewhere.

But giving money (ie food stamps) to people without jobs, pretty much forces them to spend the money, and getting it back into the economy. Since they have no money or income, they can't save it, and lowering taxes when they don't make any money anyway.

In a modern economy money is never just "sitting in a bank". With fractional reserve lending, a bank can lend several times its reserves, so the economic activity of savings is actually multiplied. It is in effect creating money, whereas things like food stamps are merely circulating money. A dollar borrowed by the federal government and spent in food stamps is one dollar; a dollar saved and loaned is in effect several dollars. These loans are what people use to buy houses, buy automobiles, start or expand businesses - in short, to actually repair the economy.

A tax cut certainly helps the economy in the short term, as it has the same effect as government spending but with lower overhead. (Most people agree that the expense of NOT taking and redistributing anything is always lower than the expense of taking and redistributing it.) Where tax cuts may fail is in the longer term. If we cut taxes 10 percent then the economy will be stimulated and will grow, which gives a larger pie from which government can carve its piece. But after the runaway inflation of the Carter years the Fed is very sensitive to inflation, so if the economy heats up beyond perhaps 6 percent the Fed begins to clamp down with interest rates to cool it off. Therefore it may no longer be practical for tax cuts to pay for themselves by growing the economy, although they may still be desirable for other reasons as long as you are willing to see government get a slightly smaller slice of a larger pie.

And for the record, "idiot bingo" was damned funny.