US added 288,000 jobs in June...Unemployment down to 6.1% (from 6.3%)

[realibrad]

I can't post it right now but if you look at the correlation between austerity and GDP growth the trend is pretty stark.

As for the adjustment necessary for Europe, what metric are you using? Household debt? Government debt? Both?

I am for looking at things that correlate, but its not causation. The EU went through a debt crisis, which hurt growth. Then you had private capital flowing into the US, because the EU was thought to be too risky to invest in.

If you look at the countries that are doing better post 2008, they have had among the highest rates of income inequality. I dont think anyone would argue that income inequality is helping drive economies, but there is also a correlation.

 

[Cozarkian]

I would argue that they would still fall into the 2 categories. ...
But, if you are living at home with your parents holding out for a high paying job, you have wealth, just not personally earned.

Why bother with 2 categories then? Why not just say if you aren't in the labor force you have enough money you don't need to work?

There is a pretty big difference between somebody who doesn't want to work because they inherited a fortune and a mom who quit her job to raise toddlers and would like to re-enter the work force now that the children are older, because the family would prefer to start saving for college rather than relying upon student loans. Unfortunately, said mom gave of hope of finding a job in this economy and stopped looking because they don't technically need more money to meet their basic survival needs so she decided to focus on being a housewife until the economy recovers and her prospects of finding a job will be better.

For starters, the first person has sufficient wealth, the second family has sufficient income and would like to build wealth. Lumping them into the same category is detrimental to obtaining an accurate analysis of the economy.

 

[fskimospy]

I am for looking at things that correlate, but its not causation. The EU went through a debt crisis, which hurt growth. Then you had private capital flowing into the US, because the EU was thought to be too risky to invest in.

I agree that the ECB and Germany really screwed the other eurozone states over by basically causing a self-inflicted debt crisis, but I don't think that accounts for the differences. The UK, for example, also decided to go the austerity route without a debt crisis. Their growth was also badly hurt.

If you look at the countries that are doing better post 2008, they have had among the highest rates of income inequality. I dont think anyone would argue that income inequality is helping drive economies, but there is also a correlation.

Right, but we have a pretty well established body of research that shows greater inequality doesn't help growth. While research on austerity in a liquidity trap is less well established in some ways, the empirical research up to this point also indicated that austerity would have precisely the effect it did.

 

[glenn1]

I agree that the ECB and Germany really screwed the other eurozone states over by basically causing a self-inflicted debt crisis, but I don't think that accounts for the differences. The UK, for example, also decided to go the austerity route without a debt crisis. Their growth was also badly hurt.

Right, but we have a pretty well established body of research that shows greater inequality doesn't help growth. While research on austerity in a liquidity trap is less well established in some ways, the empirical research up to this point also indicated that austerity would have precisely the effect it did.

Greater inequality tends to be the outcome of growth, not its cause. We all get "richer" and better quality of life when innovation occurs, but the person who did the innovation tends to outpace others on a per-capita basis for obvious reasons. The key is whether you'd rather celebrate that everyone is better off, or bemoan the fact that the innovator is better off still on relative terms.

As to austerity, I'd argue it matters more what we spend the money on than just spending it. Krugman and other people arguing for stimulus would have us digging holes then filling them back up so long as money were spent, I strenuously disagree with the value of that approach. China and all its "ghost cities" are a testament to that approach and doing so doesn't create real and lasting wealth, just spending on frivolous and unproductive "assets" we'll be paying for years to come after they've depreciated to pennies on the dollar of what we paid for them.

 

[fskimospy]

Greater inequality tends to be the outcome of growth, not its cause. We all get "richer" and better quality of life when innovation occurs, but the person who did the innovation tends to outpace others on a per-capita basis for obvious reasons. The key is whether you'd rather celebrate that everyone is better off, or bemoan the fact that the innovator is better off still on relative terms.

Not true. The US in the 1940's to the mid 1970's saw the greatest peacetime expansion of our economy in history. This coincided with a massive decrease in income inequality. The two are not necessarily linked in this way.

What the research does show however, is that countries with greater income inequality at any given point will tend to grow more slowly in the future. It appears to be a direct inhibitor to growth.

As to austerity, I'd argue it matters more what we spend the money on than just spending it. Krugman and other people arguing for stimulus would have us digging holes then filling them back up so long as money were spent, I strenuously disagree with the value of that approach. China and all its "ghost cities" are a testament to that approach and doing so doesn't create real and lasting wealth, just spending on frivolous and unproductive "assets" we'll be paying for years to come after they've depreciated to pennies on the dollar of what we paid for them.

You'll be happy to hear that your opinion and Krugman's are closer than you might think. His position is that it's madness not to take this time where more spending has a high multiplier and put it towards productive, long term investments. His only point about digging holes is that if you have literally no other choice other than doing nothing such a policy would be preferable.

 

[glenn1]

Not true. The US in the 1940's to the mid 1970's saw the greatest peacetime expansion of our economy in history. This coincided with a massive decrease in income inequality. The two are not necessarily linked in this way.

The post WW2 boom was without historical precedent in our history, so which do you think represents the normal case and which the outlier?

Also, income inequality has been on the rise in basically every wealthy country, how would you explain that? Is it because France, Germany, Sweden, Italy, and other countries have Republicans in charge also?

What the research does show however, is that countries with greater income inequality at any given point will tend to grow more slowly in the future. It appears to be a direct inhibitor to growth.

Or perhaps the key to growth is economic freedom instead of inequality. Compare the two tables and tell me which you think is the stronger effect and why. It would also be helpful if you can find a chart which supports your point that has actual data quality metrics such as R squared. Even just eyeballing the two charts it seems the R Squared for economic freedom is a lot stronger correlation than inequality.

 

[fskimospy]

The post WW2 boom was without historical precedent in our history, so which do you think represents the normal case and which the outlier?

Your argument was that inequality is the result of economic growth. It seems like there needs to be a pretty hearty explanation for why the largest period of economic growth in our history had the exact opposite effect, no?

Also, income inequality has been on the rise in basically every wealthy country, how would you explain that? Is it because France, Germany, Sweden, Italy, and other countries have Republicans in charge also?

Who brought up Republicans?

Or perhaps the key to growth is economic freedom instead of inequality. Compare the two tables and tell me which you think is the stronger effect and why. It would also be helpful if you can find a chart which supports your point that has actual data quality metrics such as R squared. Even just eyeballing the two charts it seems the R Squared for economic freedom is a lot stronger correlation than inequality.

First, I would say that your chart still clearly shows a negative effect on growth from increasing inequality, although I'm not sure why they only included developing countries.

As for the Economic Freedom Index, that index is basically junk economics, designed for a predetermined outcome. (it's a product of the Heritage Foundation) For some examples of various problems with it:

1. It rates tax burden on top rates, not the rates people actually pay. It should be obvious why that's a bad idea.

2. It counts rate of change in government expenditures, not their absolute amount. So for example, if I spent $1 last year on welfare and you spent $1,000 and then I went from $1 to $5 and you stayed the same, I would be viewed as having the more burdensome welfare state. That's illogical.

3. Worst of all, it says that the larger your informal economy is, the less free you are. As poor and less developed countries have larger informal economies basically by definition, you get bonus points for simply being a more prosperous country.

4. Finally, many of its results are manifestly insane. It rates many of the fastest growing countries in the world as the least free.

It is a very, very silly index.

EDIT: Additionally, your two charts cannot be compared to one another. The first is looking at GDP growth rate to Gini coefficient while the second is comparing the EFI to absolute GDP. They are two very different things.

 

[realibrad]

The first one shows that productivity went down, and wealth was going up. That was bound to fail

This one makes the UK not look so bad for its growth.

This one shows the productivity of government spending vs economic growth. The UK does not seem to be following austerity here.

[/IMG]

This one shows the jobs created vs gov spending

 

[fskimospy]

Lots of issues with those charts. Will update later.

Primarily, they are only comparing the UK to countries that pursued even worse austerity. If anything, they prove my point.

 

[Knowing]

The UK does not seem to be following austerity here.

They weren't. They had a really hard time controlling the NHS.

 

[dmcowen674]

US added 288,000 jobs in June...Unemployment down to 6.1% (from 6.3%)

Imagine if McCain and Romney got in the WH after Bush.

We were on the verge of rolling out Bread and Soup lines at Walmart.

Preparations were being made.

Obama got this done despite the Republican dominated Congress and anti-people Corporations.

They cut back so much during the Bush years they had to hire some back even though at much reduced wages.

Of course the Republitards on here will never acknowledge any success of this Administration.

 

[Matt1970]

Imagine if McCain and Romney got in the WH after Bush.

McCain and Romney were not on the same ticket.

We were on the verge of rolling out Bread and Soup lines at Walmart.

Preparations were being made.

Link?

Obama got this done despite the Republican dominated Congress and anti-people Corporations.

Obama got what done? Republicans haven't dominated congress at any point during Obama's presidency. They got the house in 2010 but before that Dems had enough of a majority in the house and senate they could pass anything they wanted without a single Republican vote. I am not sure what anti-people Corporations are.

They cut back so much during the Bush years they had to hire some back even though at much reduced wages.

What?

Of course the Republitards on here will never acknowledge any success of this Administration.

 

[michal1980]

Lots of issues with those charts. Will update later.

Primarily, they are only comparing the UK to countries that pursued even worse austerity. If anything, they prove my point.

IMF says you are wrong on the UK.

 

[schmuckley]

Not sure where those figures come from but..
People have generally lost jobs lately.
Everything is NOT going fine.
GDP is down.
Even if GDP is up,it needs to be up by a certain percentage to be right..but it's down.
Bottom line: People are unemployed.Moreso than in any times except maybe the Great Depression.Maybe equal to..it's hard to tell with the way the current government is skewing the numbers.

 

[Attic]

How different was 2008 from 2006? And what led up to 2008?

We may have some understanding of what happened a few years ago, and better understandings of what happened 10 years ago. Right now we are throwing darts if trying to put claims on 2014 economic policy. This will get it's day in a few years and be much more clear in 10 years time.

I think spending was critical after 2008, my concern is was it too much and not targetted well rather than spending not being enough. Austerity is for the little guys that just happen to drive economies, bad place to be clamping down. If lions share of wealth is being delivered to a few hands then austerity measures ought to be put in those areas, problem is austerity always gets placed on lower economic classes who can least afford it.

 

[Attic]

Not sure where those figures come from but..
People have generally lost jobs lately.
Everything is NOT going fine.
GDP is down.
Even if GDP is up,it needs to be up by a certain percentage to be right..but it's down.
Bottom line: People are unemployed.Moreso than in any times except maybe the Great Depression.Maybe equal to..it's hard to tell with the way the current government is skewing the numbers.

IMO the skewing is done so that the skim operation of lions share of wealth created by the country can go to the very top. This is much harder to address if numbers say thigns are ok rather than having numbers show the real depths of problems.

Basically why change if everything is ok? In this case the sleight of hand re-definition of "ok" is from it's intended meaning to "massive wealth inequality". Makes sense to create the sense of "ok" if you are benefiting from the current set up. In this the government paid number fudgers are a huge problem to the common man because of the deception being created and used against the common guy/gal. This is where the folks peddling the government slop on the rest of us are acting in harmful manners to other folks well being.

 

[sportage]

God republicans hate good economy news. First they blamed Obama for Bush, then cried obamacare would kill jobs, and now it's the math.
Just imagine for one second that if congress actually cooperated and passed a jobs bill, imaging the roads and bridges that we could repair along with thousands employed to do the job. Just imagine the good we could do for the country only if republicans were not so anti American.
Dreams can come true. Blue skies and golden rainbows.
It's simple so simple. Vote against republicans in November.
Kick them out. Let the adults take charge.
Adults that support job bills and immigration reform.

There are a lot of republicans and many new tea party republicans hoping to get elected this November. Tea party republicans that want YOU to give them a job in congress where they sit on their butts, collect a paycheck from the tax payers, and do absolutely not one thing for one single citizen.
I say we put up sighs in congres stating no loitering.
Dead beats need not apply.

If you owned a business would you hire someone who's only intention was to clock in, collect a paycheck, and clock out?
Don't we have enough dead beat republicans in congress collecting a paycheck while doing absolutely nothing?
Do we reall need more of that?
Think about it. Then vote accordingly.
Why elect them to congress when you would never tolerate a single one of them within your own business.
Lets clean house ... !
Who do these dead beat republicans in congress think they are? Union workers?

 

[schmuckley]

Just imagine all the illegals that could be working on the roads and bridges
With funding from taxpayers,creating 0 jobs for citizens of the US.

There's been some pretty decent people in Congress this last time around.
Too bad all their efforts get blocked by the Senate and President.
example: Government shutdown.

Look at the way the current administration has changed the way unemployment numbers
are generated..that should tell people something.i.e. They are being deceptive.


Unemployed used to mean: "without a job"
now it means: "not on unemployment"

Do the people really want more politicians in office that dishonestly redefine things like that to make themselves look better?

It's like this:
You can fool some of the people some of the time.
You can fool some of the people all the time.
but
You cannot fool all the people all the time.

 

[fskimospy]

IMF says you are wrong on the UK.

No, they don't.

 

[Matt1970]

I think spending was critical after 2008, my concern is was it too much and not targetted well rather than spending not being enough.

And the fact that it took years to pay out.

 

[Matt1970]

God republicans hate good economy news. First they blamed Obama for Bush, then cried obamacare would kill jobs, and now it's the math.
Just imagine for one second that if congress actually cooperated and passed a jobs bill, imaging the roads and bridges that we could repair along with thousands employed to do the job. Just imagine the good we could do for the country only if republicans were not so anti American.
Dreams can come true. Blue skies and golden rainbows.

You can blame Reid for that one. There are a butt-load of jobs bills he refuses to put to vote.

 

[IGBT]

http://cnsnews.com/news/article/ali-meyer/record-number-americans-not-labor-force-june

In June, according to BLS, the labor force participation rate for Americans was 62.8 percent, matching a 36-year low. The participation rate is the percentage of the population that either has a job or actively sought one in the last four weeks.

This means that there were 92,120,000 Americans 16 and older who not only did not have a job, but did not actively seek one in the last four weeks.

That is up 111,000 from the 92,009,000 Americans who were not participating in the labor force in April.

 

[michal1980]

No, they don't.

they said they were wrong about austerity in the uk. I already linked it.

but in case you missed it.

http://www.telegraph.co.uk/finance/...t-was-wrong-on-George-Osbornes-austerity.html

 

[fskimospy]

they said they were wrong about austerity in the uk. I already linked it.

but in case you missed it.

http://www.telegraph.co.uk/finance/...t-was-wrong-on-George-Osbornes-austerity.html

They said they overestimated its effects for one year. Nothing about that said that means the effects aren't bad overall. Why don't you go look at what they have to say about austerity?

 

[fskimospy]

Additionally, six years after the crash, not only is the UKs debt to GDP ratio not been much improved by austerity, but their economy is still smaller than it was before the crash, six years ago. Compare that to the US's performance.