What is your economic forecast for the US?

[prophetofdoom]

The economy is the major issue in politics at the moment. The official unemployment number given through the BLS is at 9%. However, many economists say this number is very skewed. I found this chart (Alternate Unemployment Charts) with figures from 15% to 20% unemployment if you factor in long term discouraged workers not being counted and those working part time but cannot find full time employment.

My forecast is a worsening recession with more industrial base being transferred to China. We also will continue to see food prices rise and the price of other commodities increase with the Federal Reserve's quantitative easing programs.

The growth we have seen recently in the economy is the growth of the investment class, not average individuals (in my opinion).

What do you think?

[Guest]

Inflation. Soon.

I don't understand your "investment class, not average individuals". Majority of average individuals are investors.

[prophetofdoom]

Inflation. Soon.

I don't understand your "investment class, not average individuals". Majority of average individuals are investors.

How many people actually make passive income through their investments? Not many. I have a 401k but I don't see any income coming out of it currently.

[Guest]

How many people actually make passive income through their investments? Not many. I have a 401k but I don't see any income coming out of it currently.

Your statement was addressing "economic growth" which does not always equal "passive income". I don't understand what you are trying to say.

[prophetofdoom]

Your statement was addressing "economic growth" which does not always equal "passive income". I don't understand what you are trying to say.

Okay, I understand. Yes, people have seen their 401ks "grow" but don't see any passive income. When I use the term "investment class" I am talking about people who make a majority of their income through passive income. Does that clarify?

[Guest]

Okay, I understand. Yes, people have seen their 401ks "grow" but don't see any passive income. When I use the term "investment class" I am talking about people who make a majority of their income through passive income. Does that clarify?

I think I understand what you're trying to say... but you are measuring "economic growth" with the wrong yardstick.

Economic growth is an increase in GDP. 2010 was the first year since the "housing bubble burst" where GDP showed an increase. 2008 was a 0 increase, 2009 was a negative 2% or thereabouts, and 2010 was a +3% or thereabouts. So, just by that indicator, the economy has grown. Slowly, but it is a growth with the fastest growth of the year seen in the fourth quarter - which bodes well for 2011.

The 2 biggest factors for Q4 2010 was foreign trade and consumer spending.

Yes, you still see an influx of Made-In-China - but, the exported products actually out-performed the imported products in 2010 - Exports grew 10% by the end of the 4th Qtr in 2010 while imports decreased by 15%. A giant 25% net.

Consumer spending showed growth in 2010 as well - including residential housing sales and automobile sales. Ford made their biggest profit margin in 2010 since their "tire troubles" in 1999.

This growth is more promising in my opinion. Because, consumer debt is at an all-time-low in 2010. This, in my own analysis, shows that people are buying with "real money" not futures.

So, the value of the dollar is slowly rising. But, I don't think it is rising in the rate that the US government is spending. So yeah. Inflation. Soon.

[prophetofdoom]

I think I understand what you're trying to say... but you are measuring "economic growth" with the wrong yardstick.

Economic growth is an increase in GDP. 2010 was the first year since the "housing bubble burst" where GDP showed an increase. 2008 was a 0 increase, 2009 was a negative 2% or thereabouts, and 2010 was a +3% or thereabouts. So, just by that indicator, the economy has grown. Slowly, but it is a growth with the fastest growth of the year seen in the fourth quarter - which bodes well for 2011.

The 2 biggest factors for Q4 2010 was foreign trade and consumer spending.

Yes, you still see an influx of Made-In-China - but, the exported products actually out-performed the imported products in 2010 - Exports grew 10% by the end of the 4th Qtr in 2010 while imports decreased by 15%. A giant 25% net.

Consumer spending showed growth in 2010 as well - including residential housing sales and automobile sales. Ford made their biggest profit margin in 2010 since their "tire troubles" in 1999.

This growth is more promising in my opinion. Because, consumer debt is at an all-time-low in 2010. This, in my own analysis, shows that people are buying with "real money" not futures.

So, the value of the dollar is slowly rising. But, I don't think it is rising in the rate that the US government is spending. So yeah. Inflation. Soon.

What do you think about the lagging housing market? How to you think that will play into the economic picture?

[Guest]

What do you think about the lagging housing market? How to you think that will play into the economic picture?

Real Estate always plays into an economy that protects private property.

But then, I don't consider today a "lagging" housing market. What I see is an "adjusted" housing market where houses are now reflecting the "true value" of its equity based on market needs.

This is where my thinking differs from a lot of the economists. I look at a primary residence as a liability - not an asset. Therefore, I don't count equity on a primary residence on net worth. Because... I can't use my primary residence to generate cash - unless I BORROW off that equity. The only time it becomes an asset is when I complete the sale of that house and I get more money on it than the amount I put on the new house... because I have to live somewhere (if going into a rental, I have to calculate the amount of rental I have to put into my residence for the length of time I'm renting and not owning).

A lot of people looked at the 90's/00's as a "robust housing market". On paper, Yes... in reality, No. Because, people were just jumping from one house to the next thinking they "gained equity" because they sold their house for more than they bought it for - when in actuality, they owed more on their new house than their old house.

Therefore, the only "real" housing market are those that actually bought houses to live in or invest with (gaining positive cash flow - e.g., rental properties), not to flip to a flipper with. Make sense?

So now, in today's economy, the "housing market" is starting to align to the "real" housing market that I indicated. Therefore, the 3% growth that we saw in residential investments in Q4 of 2010 is very promising especially after the 27% drop in Q3.

[NeuroTypical]

What do you think?

I think my meager savings won't grow at 45% like they did in '09, or even 23% like they did last year. But I think they will continue to grow at maybe a more relaxed 15%.

Squat inflation is over, but I don't see it going past 5%. A repeat of 1974 or 1980 may be on the horizon, but probably not this year.

I predict a slow coming out of the recession for the US, and sort of a continued bottom-walk for everyone else. Unemployment will shrink, but very slowly.

[All bets are off if the green ghostie thing at 1:18 of

really is the fourth horseman of the apocalypse, and not just a fake or a lens flare.]

LM

(average individual)

Edited February 8, 2011 by Loudmouth_Mormon

[Saldrin]

I am not allowed to use four letter words...

[prophetofdoom]

The big problem I see with the economy is the ever widening income gap between rich and poor in the US. That is what I was trying to get at when I talked about the "investment class" (maybe a better term would be capital class). It is easy to find the statistics about the ever widening gap between rich and poor growing. I am by no means a socialist, but, we have to realize that the kind of capitalism in America is "crony capitalism."

It was no coincidence that Goldman Sachs survived the 2008 crash and just happened to have key people within government at the time. Secret combinations are real and there are greedy people out there doing whatever they can to "get gain" as the Book of Mormon says.

[MarginOfError]

The big problem I see with the economy is the ever widening income gap between rich and poor in the US. That is what I was trying to get at when I talked about the "investment class" (maybe a better term would be capital class). It is easy to find the statistics about the ever widening gap between rich and poor growing. I am by no means a socialist, but, we have to realize that the kind of capitalism in America is "crony capitalism."

It was no coincidence that Goldman Sachs survived the 2008 crash and just happened to have key people within government at the time. Secret combinations are real and there are greedy people out there doing whatever they can to "get gain" as the Book of Mormon says.

And I just read a story that briefly discussed the difference between GDP and job creation as economic indicators this morning. The gist being that GDP can grow, but if jobs aren't created, it isn't really a good economy because people are still suffering. The end of the story is that you have to look at more than one indicator to decide if you have a healthy economy.

But here's an interesting analysis that you'll all disagree with

Obama's economic plan: The president is giving the Republicans everything they want—tax cuts for the rich and a domestic spending freeze. - By Eliot Spitzer - Slate Magazine

Edited February 8, 2011 by MarginOfError

[Guest]

And I just read a story that briefly discussed the difference between GDP and job creation as economic indicators this morning. The gist being that GDP can grow, but if jobs are created, it isn't really a good economy because people are still suffering. The end of the story is that you have to look at more than one indicator to decide if you have a healthy economy.

But here's an interesting analysis that you'll all disagree with

Obama's economic plan: The president is giving the Republicans everything they want—tax cuts for the rich and a domestic spending freeze. - By Eliot Spitzer - Slate Magazine

You mean, if jobs aren't created.

When GDP grows - especially the consumer spending sector - and jobs aren't created that usually means we have high inventory - that is, we had excess productivity that is now getting used up (the case for 2010). This is still good.

People's suffering is not really a true indicator of an economy - because, suffering is subjective.

[MarginOfError]

You mean, if jobs aren't created.

you're right...sorry. I fixed the original.

When GDP grows - especially the consumer spending sector - and jobs aren't created that usually means we have high inventory - that is, we had excess productivity that is now getting used up (the case for 2010). This is still good.

People's suffering is not really a true indicator of an economy - because, suffering is subjective.

I didn't intend to use suffering as an indicator.

While it's true that a growing GDP is good, it isn't enough to say "we have a strong economy." You may be able to say the economy is improving, but I wouldn't assign final value to it, if that makes sense.

[prophetofdoom]

And I just read a story that briefly discussed the difference between GDP and job creation as economic indicators this morning. The gist being that GDP can grow, but if jobs are created, it isn't really a good economy because people are still suffering. The end of the story is that you have to look at more than one indicator to decide if you have a healthy economy.

But here's an interesting analysis that you'll all disagree with

Obama's economic plan: The president is giving the Republicans everything they want—tax cuts for the rich and a domestic spending freeze. - By Eliot Spitzer - Slate Magazine

Exactly! However, I think Spitzer is wrong in his assessment about taxes. The big problem for the US is competition with foreign labor. US corporations will continue to show healthy profits, but, they are outsourcing their labor.. which doesn't create jobs here in the US. A lot of capital is going to build up China right now.

The problem isn't US workers lacking education.. we have a glut of college graduates. We need more entrepreneurs getting out school.. not trained employees.

[Guest]

you're right...sorry. I fixed the original.

I didn't intend to use suffering as an indicator.

While it's true that a growing GDP is good, it isn't enough to say "we have a strong economy." You may be able to say the economy is improving, but I wouldn't assign final value to it, if that makes sense.

Correct. All we are saying is that the economy is "growing" or, in other words, getting "better".

[Guest]

Exactly! However, I think Spitzer is wrong in his assessment about taxes. The big problem for the US is competition with foreign labor. US corporations will continue to show healthy profits, but, they are outsourcing their labor.. which doesn't create jobs here in the US. A lot of capital is going to build up China right now.

The problem isn't US workers lacking education.. we have a glut of college graduates. We need more entrepreneurs getting out school.. not trained employees.

Prophet, this may seem like a no-brainer at first glance, but this is really not as simple as portrayed. Yes, you are correct that there is a point when corporate taxes get too high to afford domestic labor. But, outsourcing labor is not all bad.

Let's take India as a popular example. With the advent of advanced telecommunications, call centers and software development are now very affordable to outsource to India. For a programmer like myself - this was bad news. But, when I look at it in the bigger picture, I realize that outsourcing keep prices down. Therefore, it can act as a shelter between raised taxes (hopefully used to reduce the government deficits) and cost of goods. The net effect is:

1.) American households maintain their lifestyle and continue to purchase goods because prices remain low - keeping the economy going.

2.) Indian households increase their lifestyle and start purchasing high-end goods - a lot of which are imported from highly industrialized countries like the USA.

Therefore, when I hear "outsourcing", I see McDonalds, Subway, and Taco Bell in my little hometown in Cebu competing with the Filipino-owned Jollibee. And I see Filipinos running around in Nike shoes.

[Blackmarch]

The economy is the major issue in politics at the moment. The official unemployment number given through the BLS is at 9%. However, many economists say this number is very skewed. I found this chart (Alternate Unemployment Charts) with figures from 15% to 20% unemployment if you factor in long term discouraged workers not being counted and those working part time but cannot find full time employment.

My forecast is a worsening recession with more industrial base being transferred to China. We also will continue to see food prices rise and the price of other commodities increase with the Federal Reserve's quantitative easing programs.

The growth we have seen recently in the economy is the growth of the investment class, not average individuals (in my opinion).

What do you think?

inflation is going to keep increasing at an uncomfortable rate...

[HoosierGuy]

Secret combinations are real and there are greedy people out there doing whatever they can to "get gain" as the Book of Mormon says.

One of the problems is there are secret (and not so secret) combinations that are hurting America but half the country supports those same combinations that harm them. We are moving into a feudalist society. The Wall Street/Money Leaders in charge keep the public divided from the good goals in life by spitting out their hate talk day after day, night after night. China largely owns this country now. Why people are not out in the streets protesting like the Egyptians and trying to demand change is bewildering.

[HoosierGuy]

Exactly! However, I think Spitzer is wrong in his assessment about taxes. The big problem for the US is competition with foreign labor. US corporations will continue to show healthy profits, but, they are outsourcing their labor.. which doesn't create jobs here in the US. A lot of capital is going to build up China right now.

The problem isn't US workers lacking education.. we have a glut of college graduates.

The local news did a story on a job fair held at the local university. One of the business at the job fair, a business that was hiring one hundred new employees, was an AT&T call center. How about that - college graduates doing call center work for $8.50 an hour. Pathetic. What was worse was that during this same broadcast there was talk of all the new fast food restaurant being built by one company - an company this is well known for hiring non union workers. They showed a small clip of some house being built and the workers had on black clothing with round black hats - they were AMISH! Amazing they went from employing U.S. citizens to illegal aliens to the Amish who don't care one iota about receiving healthcare benefits or pensions or anything else.

[Guest]

One of the problems is there are secret (and not so secret) combinations that are hurting America but half the country supports those same combinations that harm them. We are moving into a feudalist society. The Wall Street/Money Leaders in charge keep the public divided from the good goals in life by spitting out their hate talk day after day, night after night. China largely owns this country now. Why people are not out in the streets protesting like the Egyptians and trying to demand change is bewildering.

Hoosier, I was really hoping you don't chime in on this thread. I was hoping it remains a non-biased study on the economy.

China does not own this country. You can research it up and down and side to side if you want. The same "spitting out hate talk" is coming straight from you too.

And yes, people are out there demanding change. One of them are called Tea Party Protesters. Unfortunately, you don't want to acknowledge it because you don't agree with them.

[Guest]

The local news did a story on a job fair held at the local university. One of the business at the job fair, a business that was hiring one hundred new employees, was an AT&T call center. How about that - college graduates doing call center work for $8.50 an hour. Pathetic. What was worse was that during this same broadcast there was talk of all the new fast food restaurant being built by one company - an company this is well known for hiring non union workers. They showed a small clip of some house being built and the workers had on black clothing with round black hats - they were AMISH! Amazing they went from employing U.S. citizens to illegal aliens to the Amish who don't care one iota about receiving healthcare benefits or pensions or anything else.

In case you don't know, Amish are American citizens known for their excellent skills in carpentry and amazing work ethic... qualities that builders look for in their employees.

Also, college graduates make as much money as the job they are doing are worth. You forgot to mention that some college graduate made over a billion dollars on the first year out of college - like Eduardo Saverin, for example. Oh, and several college drop-outs made over a billion dollars too - Mark Zuckenberg is one of them. And there are THOUSANDS of other college grads out there making between $60K to $60M their first year out the gate. People are paid what they are worth, my man. College graduate or not.

Edited February 11, 2011 by anatess

[NeuroTypical]

But, when I look at it in the bigger picture, I realize that outsourcing keep prices down.

Well, maybe. I work for a high-tech manufacturing firm. We have an R&D center here, and one in Asia. When we look at the budget, some things are very clear to us:

* When developing a new product, we know we can have 4 US engineers do it in a month, or have 8 Asian engineers do it for 3 months, and 1 US engineer for a week to fix everything at the end. Yes, this amounts for maybe a 5-10% overall cost savings, because Asia is so dang cheap.

* Asia gets 3X or 5X the raises we get. You notice how nobody outsources to Japan for cheap labor any more? It's because the Japanese engineers make as much as their US counterparts. India, Singapore, Malaysia - every year that goes by narrows the payment gap.

LM

[Guest]

Well, maybe. I work for a high-tech manufacturing firm. We have an R&D center here, and one in Asia. When we look at the budget, some things are very clear to us:

* When developing a new product, we know we can have 4 US engineers do it in a month, or have 8 Asian engineers do it for 3 months, and 1 US engineer for a week to fix everything at the end. Yes, this amounts for maybe a 5-10% overall cost savings, because Asia is so dang cheap.

* Asia gets 3X or 5X the raises we get. You notice how nobody outsources to Japan for cheap labor any more? It's because the Japanese engineers make as much as their US counterparts. India, Singapore, Malaysia - every year that goes by narrows the payment gap.

LM

LM, this post is a non-sequitur to the comment quoted.

[FunkyTown]

In case you don't know, Amish are American citizens known for their excellent skills in carpentry and amazing work ethic... qualities that builders look for in their employees.

I'm... Quite frankly shocked that someone could be upset that people are hiring the Amish as carpenters and workers.

Hoosier - Just so I can understand what you meant by this, are you suggesting:

A) The Amish shouldn't ever be deigned to be hired.

B) Anyone who hires the Amish are terrible people.

C) If you're Amish, you couldn't possibly know anything about Carpentry.

D) Some fourth thing that isn't somehow covered by the first three?

If you can very carefully explain your position on why it's bad to hire the Amish, I would love to hear. I don't want to argue with something you haven't said, but I've got to say... If your argument is that it's somehow wrong to hire someone who expresses their right to freedom of religion if you're a corporation, I will be shocked.

Saying Amish don't care about health care is... Can you quote source? Show me where the Amish have said 'Oh, we'll do work for companies... But to heck with benefits. Benefits are of the devil.'

I just think we might be overanalyzing something and looking for righteous indignation where there shouldn't be any.