How bad is the economy in the US? Seriously...

[GSOYF]

Well to put things in perspective, I got a job out of school bout a month ago for a financial services firm, and if you knew me you would say to yourself...."damn the market can't be all that bad"


-straight butter

 

[Pliablemoose]

I suspect we're in for another downturn, P:E ratios are too high, and the soothsayers that are guiding the markets are focusing on the positive news, rather than the real figures & negative news.

Sept 11th just triggered the downward cycle, we're in for some turbulence folks, buckle your seatbelts...

 

[Pabster]

Rage187 wrote:

"Clinton rode the coat tails of Reaganomics, and got the credit for it..

He then plays his version of Clitonomics, and Bush ends up taking the blame for ruining the economy.."

How true Clinton didn't have a clue. He was too busy screwing Monica to bother with such minor things as the economy. Reagan achieved so much more while in office, there is no comparison.

Bush is now taking the blame for the games Clinton played while in office.

 

[NesuD]

<< Dubbya's the one who began the recession speculation back when he was campaigning in August/September of last year. If anything, he fostered doubt in American's minds which created a self-fulfilling prophecy. >>



LOL!!! You can't be serious. Sorry but consumer confidence remained high until late last spring. That must have been a delayed reaction seed of doubt he planted. You sure it wasn't actually the poor earnings reports that we have been battered with the past year and the resulting layoffs and cutbacks that actually got the ball rolling. I am of the opinion that a president really has very little effect on the ups and downs of our economy especially if he hasn't even been in office a year yet. Our economy is a cyclical thing and right now it is in a down cycle. I personally think that the markets have seen the worst of the bleeding already and will steadily rebound from here on out. That should begin trickling down to the economy in general by the end of next year if not sooner.

 

[BDawg]

<< That must have been a delayed reaction seed of doubt he planted. >>



It doesn't sound so far fetched if you believe that it took 12 years for Reaganomics to kick in.

 

[b0mbrman]

Hmmm...regardless though. Are we worse off than we've been in the past?

 

[BDawg]

<< Are we worse off than we've been in the past? >>



That's a difficult question to answer.

Worse than 2 years ago? Yes

Worse than late 30s? No

 

[KokomoGST]

Well, we're definitely not that bad... but a TON people in the NY/NJ area and lots of other areas too (Enron??) have lost their jobs... which unfortunately includes myself. The Internet bust was bad enough... not we have to deal 9-11 on top... joy. :frown:

 

[drewshin]

heh heh, i love armchair economics, really.

i was econ major, and professor would always say, ask 5 economists their opinion on an issue and you'll get 6 opinions.

 

[AdamDuritz99]

It's horrible, it's the end of the world i tell you!
We are all gonna die, We're gonna di....


peace
sean

 

[NesuD]

<< It doesn't sound so far fetched if you believe that it took 12 years for Reaganomics to kick in. >>


Thats like comparing apples and oranges. What is referred to as reaganomics was brought about by legislation that reformed the income tax system. The effects of that legislation were realized by the mid 80's after that legislation was enacted. The effect of that tax reform was to actually more than double federal tax revenue by lowering income tax rates across the board. How was that possible? It happened for a couple different reasons. The first and the one most cited is that by reducing the tax rates more money was left in the hand of the taxpayers for investment which in turn spurred the economy and created new income subject to taxation. In other words the end result was that it actually created a much larger taxable base on which to levy taxes. The second and probably more immediate way it did that was along with the tax rate reductions the large majority of loopholes in the income tax code were eliminated or reduced thereby increasing the gross percentage of taxable income. The major flaw with Reaganomics was that spending limits were not legislated along with the new tax code so for every new tax dollar taken in as a result of the new tax code the feds spent 2-3 dollars bloating the federal deficit even further. The credit for that mess can go to both congress and the whitehouse. the congress of the 80's era for porkbarreling the deficit to new highs and the whitehouse for not putting a stop to the spending frenzy. That deficit spending is probably more responsible than anything else for the recession of the early 90's. fast forward to 1993 Clinton and the democrats push their tax increase through and the economy experiences a mild recovery. How could that be? Well when we went into the recession congress started to pull back a bit on the unbridled deficit spending thereby reducing the drain on available capital which helped to lower interest rates which in turn had a positive effect on new business investment. Fast forward to the new congress elected in the 1994 elections control passed to the republicans who among other things campaigned on deficit spending reform and appeared to actually be serious this time. They in fact made huge gains to reduce the deficit and balance the budget and while many did not like the way it was done the fact is that it was done. What they did is what should have been done in the mid 80's. At this point in time some of the Reagan taxcuts are gone although rates still are much lower than before reagan. But look at what else is still left over from reaganomics. Most of the Loopholes that were eliminated or reduced still haven't returned or gotten bigger. This combined with major progress throughout the decade towards balancing the federal budget is more responsible than anything for the huge economic expansion of the second half of the 90's. On a side note none of this would have happened without the democrats coming onboard to help balance the budget so all partys can share the credit for that. With that said at the same time the blame for the current slowdown cannot be layed at one persons doorstep either. this recession probably more than the last two most recent ones has less to do with our federal government than it does with the cyclical nature of the economy. The tech boom or fantasy depending how you look at it is what most directly lead to this. After a period of adjustment and a dose of reality we will settle into a steadier economic climate. A good portion of that has already come to pass. Fundamentally our economy is built on a solid foundation and that will start to show soon enough after all the incredible debt of the dot com mess has been eliminated which we are well on our way to doing. While this is an incredible simplification of our economic picture for the last 20 years in general I think it hits the mark pretty closely.

 

[JellyBaby]

It's not good. State budgets are going into deficit spending mode, UE is high, layoffs continue. Thankfully gas is still cheap in most areas. People seem to be buying a lot of XBoxs and Gamecubes, though. I'm sure that's helping the economy.

 

[HamSupLo]

is it me or is that econ professors seem to be the most cynical people around?

 

[mithrandir2001]

Armchair economics, ha ha.

Historically, no, it's not bad now. Unemployment is still under 6%, inflation is well contained, the stock market is rather buoyant. If we have a credit crunch or a default crisis, then it could get bad.

Of course, I am ready to fire a few shots at all of those WIMPS who dumped all their long-term Treasury bonds recently and sent interest rates on the long-end soaring. I thought I was going to get a mortgage at about 6.25% and not even a month later it's now over 7%. B@stards. I'm looking at about $100 more a month. :disgust: Selling those bonds isn't going to help out the recovery because borrowing costs shot up almost overnight.

 

[dullard]

<< Well, you gotta define what's worse though. Inflation and unemployment dance with each other...you gotta have one or the other >>



That is mostly true, however there were two known exceptions: 1) During Ronald Regan's term we had high unemployment AND high inflation, 2) During Clinton's term we had low unemployment AND low inflation. All the other years in history we had one or the other.



<< Dubbya's the one who began the recession speculation back when he was campaigning in August/September of last year >>



Every part - except one - of the economy was great until Feb, 2001. GDP, unemployment, salaries, productivity, confidence, consumer spending, etc were all at or near record highs in Feb 2001. Then in March 2001 the economy slipped slightly into a recession. This was a very slight recession until Sept 11, 2001.

The only exception was the stock market. The stock market slumped in spring 2000 the day the ruling came against Microsoft. That led to a downward trend in the stocks which still hasn't fully recovered. I think we can blame Clinton for the Microsoft case, but we cannot blame any government for the highly overvalued tech stocks before then... I mean a small travel agency worth $3 billion dollars? It had to happen some time...

There is an interesting historical trend: every republican has had a major recession during his office - many democrats didn't.

 

[b0mbrman]

I guess that's true. So whose recession was worse? The elder or younger Bush?

 

[AaronP]

compared to the last 7 years, its in bad shape, but compared to the last 100 years, its not that bad of a year. We're not in that bad of shape, and all this will be healed within a year or two. The economy WILL be rolling strong right around election time in 2004. Sucks to be a democrat!

 

[Rage187]

The economy is a boomerang...

It has an 8 year return cycle..



The effects of Reagan's policies showed themselves at the end of Clinton's first term, thats the only reason Clinton got elected for his second term, he took credit for what Reagan had started in the early 80's...

88-92 Bush had a pretty damn good economy thanks to Reagan..

92-00 Clinton reap the benefits of what Reagan and Bush had done..

00-04 Bush Jr. is going to get all the blame for Clinton's policies..

 

[dullard]

<< I guess that's true. So whose recession was worse? The elder or younger Bush? >>



I think that this current recession is quite minor so far. Thus elder Bush's was worse. However, no one can predict the future - the current recession might be nothing or it might turn into a depression. Who knows?

There are two major portions of the economy: consumer/corporate spending (2/3) and government spending (1/3). If both portions spend lots of money the economy is good. If both portions cut spending the economy is bad. Bush has direct control over the 1/3rd government spending. Bush has only indirect control over the 2/3rds of the rest. Thus a president thus cannot force an economy to be good. It is up to us to keep spending, keep hiring, and keep investing (except lets not invest in public debt since that is the only investment with no chance of long term gains).

 

[dullard]

<< The economy is a boomerang...

It has an 8 year return cycle..



The effects of Reagan's policies showed themselves at the end of Clinton's first term, thats the only reason Clinton got elected for his second term, he took credit for what Reagan had started in the early 80's...

88-92 Bush had a pretty damn good economy thanks to Reagan..

92-00 Clinton reap the benefits of what Reagan and Bush had done..

00-04 Bush Jr. is going to get all the blame for Clinton's policies.. >>



Every republican says this to take credit for democrats successes and to blame their problems on the previous democrat president. If this was true why was there a major recession during elder Bush's term (didn't he get the benefit from Reagan's eight years before?) Give me one shread of evidence that this is true.

A tax cut kicks in within 1 year. Increased government spending kicks in within 1 year. Interest rate changes are theoretically instant (but realistically take 6 months for banks to significantly adjust loan rates). Presidents effect on personal confidence kicks in quickly. Even most long term investements (such as building new factories) takes under 4 years. Although, the vast majority of major investments takes 1-2 years (new machines, new computer systems, altered production techniques, etc). So why would we believe that it is a 8 year cycle?

 

[b0mbrman]

Fantastic! So where do you guys get your economic statistics?

 

[Lankin]

The last 8 months ofr GHWB's term, things were already on an upswing, after a minor recession. It was worse than the current one, but it still wasnt that bad.

 

[KevinH]

Okay, it's been awhile since I finished the last of my Econ courses but I'm fairly certain that the economy under the elder Bush was DEFINITELY not good. In fact, for the bulk of his term, we were in a "recession" and didn't pick up until the tail end of his presidency. Interesting thread. I've seen quite a few posts that seem based off of news clippings, etc.


Jooksing - The reason most econ professors are cynical is because they realize the reactive nature of Fed policies and how useless they are.

 

[Mister T]

<<Of course, I am ready to fire a few shots at all of those WIMPS who dumped all their long-term Treasury bonds recently and sent interest rates on the long-end soaring. I thought I was going to get a mortgage at about 6.25% and not even a month later it's now over 7%. B@stards. I'm looking at about $100 more a month. Selling those bonds isn't going to help out the recovery because borrowing costs shot up almost overnight.>>

This is what is pissing me off too. I have been watching the 10-year treasuries since august. Over 5.1% yield on the 10yr, when only 1 month ago it was around 4.2%... I am thinking that the spreads widened since the 30-yrs were discontinued. That is the only rational explanation I can accept.

This economy is going nowhere. I think the optimism is unfounded and people refuse to beleive the recession will last more than a year. I think holiday spending will be down, and Ford/GM are defnitely going to be hurting the next couple quarters because of all the free financing. Layoffs are not over either, unmfortunately.

 

[charrison]

dullard,




<< That is mostly true, however there were two known exceptions: 1) During Ronald Regan's term we had high unemployment AND high inflation, 2) During Clinton's term we had low unemployment AND low inflation. All the other years in history we had one or the other. >>




Reagan's first term start with high inflation and high unemployment and both dropped significantly while he was in office. By 1982 the these started to fall after taxcuts where put into place. There was a little dip in 92, must like the little dip we are having now. But the cycle of economy, it will fall no matter who is in office.