I agree the demoshits need to cut the "earmarks" pork spending but hooksaw don't act like your beloved GOP isn't guilty also.

2006 Budget "Earmarks"-
http://www.cagw.org/site/PageServer?pagename=reports_pigbook2006

Quote :

"$1,300,000 for berry research;- Senate appropriator Ted Stevens (R-Alaska)"

berry research lmao. Alaska is frozen over 9 months of the year anyway.

Quote :

"$6,435,000 for wood utilization research in Alaska, Idaho, Maine, Mich., Minn., Miss., N.C., Ore., Tenn., Wash., and W.Va"

wood has been used since man evolved. Is research really needed to find new ways to use it.

Quote :

"$234,000 for the National Wild Turkey Federation."

Quote :

"$92,425,000 for projects in the state of Senate Defense Appropriations Subcommittee Chairman Ted Stevens (R-Alaska), including: $17,000,000 for utility repairs"

Must be those $2000 hammers and $800 toilet seats i always hear about.

Quote :

"$150,000 for the Actors Theater in Louisville, Kentucky, in the district of House appropriator Anne Northup (R-Ky.). "

Quote :

"$2,000,000 added by the Senate for the Underground Railroad Program. This grant program, receiving consistent funding from Congress for the last seven years, was created to research, collect, interpret, and display artifacts from the Underground Railroad."

Quote :

"$100,000 added by the House for the Harpers Ferry Police Department in West Virginia. The population of Harpers Ferry was less than 400 in 2004 and the police force today consists of two full-time and one part-time police officers. This is the same size police force as the fictional town of Mayberry on The Andy Griffith Show. Unfortunately, those are real tax dollars for Harpers Ferry."

Quote :

"$150,000 for the Wasilla Police Department for technology upgrades. Wasilla had an estimated population of 7,700 in 2004. In comparison, Baltimore City, Maryland received a $100,000 earmark for the same purpose and it has a population of more than 600,000. part of $42,650,000 for projects in the state of Senate SSJC Appropriations Subcommittee member Ted Stevens"

I guess that 150K is needed to help catch those drunk eskimos. Ted Stevens has to be the King of Pork as his name shows up Continuously in a variety of "earmarks"

[Edited on December 20, 2007 at 2:25 PM. Reason : aa]

12/20/2007 2:23:05 PM

Quote :

"Jeffrey A. Frankel, professor of economics at the Kennedy School of Government at Harvard and a member of the National Bureau of Economic Research's Business Cycle Dating Committee + Yoram K. Bauman, professor of economics at the University of Washington + Christina Romer, professor of economics at the UC-Berkeley >> Some guy (aka kwsmith2) on the Internet "

Not that credentials should be the major point in any debate but I am a professor of economics in the School of Government at UNC Chapel Hill. So, I am not completely out of my depth here. Maybe only one ">"

http://www.sog.unc.edu/about/directory/kwsmith.html

12/20/2007 2:40:16 PM

Quote :

"$100,000 for the South Carolina International Center for Automotive Research Park Innovation. This program is located at Clemson University and according to the center’s website: “The campus will be built on 400 acres of prime Greenville, S.C., property that fronts Interstate 85 halfway between Charlotte, N.C. and Atlanta, Ga., a corridor that is home to two-thirds of the nation’s motorsports racing teams. There already are 200 automotive-related businesses in South Carolina and another 114 automotive industry suppliers located in the Palmetto State.” Yes, they are racing away with our tax dollars."

VROOM VROOM WE'S NEEDEN DEM MONIES TO BELD ERR NASCAR CARS; GIT ER DUUNNN

12/20/2007 2:43:41 PM

^^^ NB: Many Republicans have been fiscally irresponsible, too. But we currently have a Democrat-led Congress--they get the credit and the blame, I'm afraid. Just like Bush, right?

^^ Well--my hatred for UNC aside--I am impressed. I will allow the ">" reduction.

[Edited on December 20, 2007 at 2:46 PM. Reason : .]

12/20/2007 2:46:01 PM

^^^ HAHAHAHA

[Edited on December 20, 2007 at 2:46 PM. Reason : ]

12/20/2007 2:46:34 PM

Quote :

"I'm afraid. Just like Bush, right"

I'LL give you that one

12/20/2007 2:53:08 PM

^ Weak.

12/20/2007 3:00:00 PM

Quote :

"Republicans and Democrats are equally guilty of tax dollar wasting earmarks. "

12/20/2007 8:41:08 PM

Thanks for the links hooksaw, but keep in mind I am disagreeing with the notion that the US economy is impressive. That much really isn't up for debate. You could convince me that the economy is OK, but that's far from certain. Now let me play devil's advocate:

Economy Logs Brisk 3.9 Percent Growth
http://www.forbes.com/feeds/ap/2007/10/31/ap4286372.html

This was refuted on the very first page of this thread. You still have not provided a good rebuttal to it. You can call the author a pessimist, but I'd like to hear why his analysis of the numbers is wrong. He makes a very strong argument explaining why the numbers are inflated:

http://www.europac.net

Quote :

"Yesterday, as the dollar fell to new record lows and oil and gold prices surged to new highs, Wall Street remained fixated on wholly meaningless government data that managed to report the lowest inflation in the last half century. These bizarre numbers were integral in allowing the Commerce Department to report 3.9% annualized GDP growth in the third quarter, which was heralded by the bulls as evidence that a resilient U.S. economy had shrugged off the problems in the housing and mortgage markets. However, the government’s ability to make “economic growth” magically appear is based purely on statistical finesse. To arrive at this rate, the government had to assume that inflation during the quarter ran at an annualized rate of .8% (that’s less than 1%). That is the lowest rate of inflation used to calculate U.S. GDP since the Eisenhower administration. The consensus estimate for 3rd quarter GDP growth was 3.4%. The reason we beat that number was that the government adjusted the nominal 4.7% gain by a mere .8%. Had the government assumed a higher rate of inflation, say 2.6% (identical to the rate used to deflate second quarter GDP,) the 3rd quarter gain would have been only 2.1%, well shy of the consensus forecast. "

Bernanke: Economy to see more reasonable growth pace
http://www.reuters.com/article/pressReleasesMolt/idUSWAT00841920071108

This is the article - in its entirety:

Quote :

"WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said on Thursday that he expects the economy to recover to a "more reasonable growth pace" by next spring. "We have not calculated a probability of a recession and I would not want to offer that today," Bernanke told the congressional Joint Economic Committee in answering questions after testifying before the panel."

Just to review, the FED chairman:

1) Predicts, not expects, "more reasonable growth" by next spring

2) Has NOT calculated the chance of a recession

First off, the FED chairman did NOT say th economy is doing well. He also knows his job performance is closely tied to the success of the economy. What incentive does he have to predict a gloomy picture? None.


Dollar rallies, cheered by strong US data
http://today.reuters.com/news/articleinvesting.aspx?type=hotStocksNews&storyID=2007-12-13T173020Z_01_N04526731_RTRUKOC_0_US-MARKETS-FOREX.xml

A recent rally by the dollar doesn't change the fact that it has dropped so far in value that the Canadien dollar is now WORTH MORE. Recent trends do not trump long-term trends.


Economists Are Betting A Recession Won't Happen
http://online.wsj.com/article/SB119784514764832443.html?mod=googlenews_wsj

Quote :

""A lot of the underlying resilience of the U.S. economy seems a bit unappreciated," says Citigroup economist Steven Wieting. "It's not clear that this is so large a burden that we can't muddle through this." Predicting the economy's path is especially difficult at turning points, and the economy is sending mixed signals. But here are some reasons why the economy might avoid the ditch:"

This excerpt from the article says the following:

1) Resilience in the economy is underappreciated. This in no way implies the economy is doing well, much less looking impressive

2) The excerpt says the economy might muddle through a recession. So it things MIGHT not suck so bad? That's not a very rosy picture.


Sorry hooksaw, this isn't very convincing.

12/21/2007 12:35:58 PM

^ Some of you would remain unconvinced no matter what evidence I present. Can you not understand that the resiliency of the US economy is in itself "impressive"? Are you incapable of processing that straightforward concept?

12/21/2007 1:15:41 PM

ahh, a full rebuttal and all you can come up with is a one and a half line response which basically boils down to "you don't understand"

12/21/2007 1:18:40 PM

^ Less is often more--you should look into it.

12/21/2007 1:22:38 PM

oh really, LESS IS OFTEN MORE

HUH?

GO FIGURE

12/21/2007 1:25:57 PM

Quote :

"Some of you would remain unconvinced no matter what evidence I present"

Dude that's weak. I already said economics is not my forte', which mean I'm perfectly willing to believe you... if you explain WHY. I've got no incentive to say the economy sucks. I'm not trying to hold Bush, the FED, or anyone else responsible for it. So why would I deliberately take a pessimistic outlook?

I'm sorry but that was a major cop-out.

Quote :

"Can you not understand that the resiliency of the US economy is in itself "impressive"? Are you incapable of processing that straightforward concept?"

If that's your position, fine, but come out and say it. Don't patronize me because you didn't explicitely state it in the first place.

The US economy is resilient, I agree. I have no doubt it will survive the current circumstances, even in the worst forcasts. That does not change the fact that the market it DOWN. The economic numbers may be OK, perhaps even good, but that dosn't change the fact that the general public is feeling the squeeze right now. Mainly because infated prices are driving down buying power.

hooksaw, I'm not arguing with you because I think you're nuts. Others may do this, but I don't. I'm simply saying you're really stretching to call the economy "impressively resilient." Honestly I think you just reworded your position after realizing how categorically wrong you were about it. Sorry man, I've got no reason to give you the benefit of the doubt.

12/21/2007 1:28:07 PM

^ I really don't see what's so hard about this:

1. There are many different arguments going on here started by others: Is there going to be a recession or not? Is the U.S. economy "strong" or not? (Define "strong.") Are the relevant economic numbers accurate one way or another? And so on.

My position is made crystal clear in the thread's title: "The Impressive U.S. Economy."

2. Why am I impressed? By the economy's resiliency, of course--and I've made that abundantly clear to anyone with the eyes to see it. Our economy has continued to grow despite several catastrophic events that would have tanked lesser economies (9-11, Iraq, Katrina, and maybe even the housing market problems).

And not only do I think the economy is "reslient," but so do many economic experts and I have included their opinions in this thread. One has but to look.

3. If some here want to argue off on tangents that relate more to their hatred of President Bush and/or me than the thread's topic, that's their problem.

4. I can't help that some here simply refuse to or can't grasp the definition of "resilient"--I mean, I actually posted the definition for them.

5. In any event, "impressive" is subjective.

6. If you one doesn't understand my position now, he or she never, ever will.

[Edited on December 21, 2007 at 1:52 PM. Reason : .]

12/21/2007 1:45:15 PM

Quote :

"Why am I impressed? By the economy's resiliency, of course--and I've made that abundantly clear to anyone with the eyes to see it. Our economy has continued to grow despite several catastrophic events that would have tanked lesser economies (9-11, Iraq, Katrina, and maybe even the housing market problems)."

I get this, and agree with it. I've never been too concerned with the resiliency of the economy. The economy has survived much tougher times than this. I don't think anyone really disputes that sentiment.

The real issue is with the economic and fiscal policies being put in place by the FED and by the government, and whether those policies are working. People point to the inflation and recent economic downturns as a sign that change is needed. I happen to agree with the sentiment. Despite the overall growth of the economy, there's no disputing that the dollar has fallen on hard times. As a result, the working class is getting crunched. It doesn't help that the housing market is tanking (nice for me though, since I'm buying one as we speak), or that healthcare costs are going through the roof.

I guess what I'm saying it this - Yes the economy is OK. It will recover in time, and I have confidence that an economic disaster can be averted even in the worst case scenarios.

However... things really suck for the lower and middle class. The economy sucks for them. They/We don't really care that the numbers still look good. You can always find a way to manipulate numbers to paint a rosier picture. When you look at the economy as a whole, you can't ignore that we're down right now.

12/21/2007 2:55:30 PM

^ Concerning the dollar's value:

Quote :

"You mean by allowing ["lower and middle class"] to keep their jobs due to increased exports?"

Since others have brought in the economies of individual states and this report relates to the economy of North Carolina, I will include it. I have never been a big fan of the unemployment rate as a reliable economic indicator, though--the U.S. unemployment rate is, however, considered a leading economic indicator.

North Carolina Unemployment Rate Drops to 4.7 Percent
Posted: 44 minutes ago

Quote :

"RALEIGH, N.C. — North Carolina's unemployment rate dropped for the second consecutive month to 4.7 percent in November. Statistics released Friday by the state Employment Security Commission said the labor force increased in November by 3,081. Commission Chairman Harry Payne Junior said the numbers were extremely positive [emphasis added]. The unemployment rate hasn't been as low as 4.7 percent since March, when it was at 4.5 percent. The unemployment rate was 4.9 percent in November of 2006 and 4.8 percent this October. The national unemployment rate is also 4.7 percent."

http://www.wral.com/news/state/story/2207797/

[Edited on December 21, 2007 at 3:51 PM. Reason : .]

12/21/2007 3:51:12 PM

^ Yes I understand the economy itself is doing OK, but you're not addressing my main point:

Quote :

"I guess what I'm saying it this - Yes the economy is OK. It will recover in time, and I have confidence that an economic disaster can be averted even in the worst case scenarios. However... things really suck for the lower and middle class. The economy sucks for them. They/We don't really care that the numbers still look good. You can always find a way to manipulate numbers to paint a rosier picture. When you look at the economy as a whole, you can't ignore that we're down right now."

12/24/2007 12:13:08 AM

in ec 202, the professor told us the natural rate of unemployment is 5%...whats it mean when the actual unemployment is below that?

12/24/2007 12:24:25 AM

^ well you gotta pull out your ECE 205 graph displaying the supply v. demand curve so that you can make and educated opinion on how the US gov't should deal w/ the drought crisis in the south east.

12/24/2007 2:01:18 AM

Quote :

"However... things really suck for the lower and middle class."

Well, the underlying statistics say you are mistaken. Real hourly wages have been growing at a strong clip, which means money in the bank accounts of those with hourly wage jobs, or the lower and middle classes.

12/24/2007 9:03:23 AM

Over what time frame? I'm trying to google and verify your claim for you, but it isn't working out for me. Does "real hourly" account for inflation?

12/24/2007 9:56:16 AM

Quote :

"n ec 202, the professor told us the natural rate of unemployment is 5%...whats it mean when the actual unemployment is below that?"

It means that inflation will tend to rise. There is a trade off in the short term between the growth rate of inflation and unemployment. Higher unemployment means lower inflation and vis versa. The natural rate of unemployment is the rate at which inflation does not grow or shrink.

Just to be clear I do mean the growth rate of inflation or the second derivative of prices with respect to time. If that last sentence made no sense then ignore it.

By the way, the natural rate is probably more like 4.65%.

12/24/2007 10:08:27 AM

Some latest forecasts of recession here is Kasriel at Northern Trust. His index has never crossed 60% without an insuing recession. You can also see how the probabilities rise as we get closer to the recession, so as a human being you can see something the computer cannot which is the "forecast" of the the forecast.




Also here is the significantly less accurate but more pessimistic forecast from Merill.




And lastly the real long term interest rate has turned negative. Not a great sign.




On the other side, however, those who bemoan that real wage have fallen when adjusted for the CPI should not that real returns on financial capital are negative. So its hard to argue class warfare on this one.


Update: Blogger wont let me steal the Karsiel chart so just check out this link
http://bp2.blogger.com/_pMscxxELHEg/R2xzv1X1lkI/AAAAAAAABWk/-6o3bO9kBs0/s1600-h/KasrielRecession.jpg

[Edited on December 24, 2007 at 10:21 AM. Reason : blogger]

12/24/2007 10:18:55 AM

Oh, sorry Chance. If you ever want statistics on the United States in the future I usually use http://www.bls.gov

12/24/2007 10:22:53 AM

oddly enough Mexico has a lower unemployment rate then the US

12/24/2007 12:10:34 PM

Something is strange about that graph because the US unemployment rate in 2006 was less than 5%. At a minimum the legend is not right.

By the way, it wouldn't shock me if Mexico's natural rate of unemployment was lower than the US because my understanding is that there are less labor market regulations in Mexico which tend to increase unemployment ever thing else being equal.

12/24/2007 1:31:32 PM

I knew there was something wrong with that graph:
From the CIA world factbook:
"3.2% plus underemployment of perhaps 25% (2006 est.)"

"unemployment" itself does not measure between countries or even regions very well because there is no telling how much of the population would like to have a job but gave up looking long ago.

12/24/2007 1:46:35 PM

In any event, the unemployment rate is a lagging indicator. And though it is considered a leading economic indicator, it should not to be viewed only as a snapshot.

For example, a glance at the current unemployment rate does not account for the discouraged worker effect on the numbers. In addition, the unemployment rate can also rise in a good economy due to workers transitioning from their jobs to other jobs.

Probably the best use of the current unemployment numbers is to compare them with historical data, such as the numbers for this time last year, and to examine whether or not the unemployment rate remains high over many months to indicate a weakening trend in the job market. As one can clearly see, the numbers at issue have not remained high.

12/27/2007 1:43:07 AM

How is Egypt's and Nigeria's unemployment so low?

12/27/2007 1:46:29 AM

http://www.jpost.com/servlet/Satellite?pagename=JPost%2FJPArticle%2FShowFull&cid=1196847394459

Quote :

"Global Agenda: What lies in store By Pinhas Landau December 24, 2007 "What we are witnessing is essentially the breakdown of our modern day banking system, a complex of levered lending so hard to understand that Fed Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August." The quote is from Bill Gross's Investment Outlook, available on the PIMCO site. For those who don't know, Bill Gross is CEO of PIMCO, the largest manager of bond funds in the world. More importantly, he is highly respected, not least for his ability to write investment letters that explain complex topics and ideas to non-professionals in language they can understand. Naturally, an outlook written in December contains a forecast for the coming year, and Gross has never been afraid to stick his neck out and give his views. In this case, his concluding sentence is to "stand by for a tumultuous 2008 as the market struggles to move from the shadows back into the sunlight of sounder banking and financial management, accompanied by Fed Funds levels at 3% or lower." Not everyone agrees that Fed funds will fall from 4.5% today to 3% or less next year. Gross's assessment of Fed policy puts him in what is now the majority camp, which believes that the need to prevent or mitigate the impending recession will force interest rates much lower, despite the inflationary threat now becoming apparent. However, that's not what is interesting about his analysis. It's the opening quote, not the closing prediction, that is truly remarkable - not where we might be going, but where we are now. It is advisable to read and re-read that opening quote and then ask yourself if you have absorbed and internalized the seemingly straightforward words in it. Gross says, as a matter of fact rather than conjecture or speculation, that the banking system is breaking down. Had he written that in December 2006, his colleagues would have had no option but to force him to quit and probably would have advised his family to get him the best doctors and treatment that his considerable wealth allowed. In any remotely normal circumstances, you can't just write about "breakdown of the banking system" as if it was an iPod or some other new toy. Banking systems, the blood vessels and oxygen of a modern economy, don't simply breakdown, and if we are indeed witnessing that happening we should be horrified, petrified and aghast. Some of us are. Most professionals, no doubt including Gross, find what they are witnessing beyond belief. For instance, this week the European Central Bank (ECB) pumped into the European monetary system no less than $500 billion in one shot. This is a truly mind-boggling amount of money, and such a move was not merely unprecedented but also unimaginable in size - until now. The sheer amount of money is incontrovertible evidence that the banking system - in this case that of Europe, but ultimately all the national and regional systems are interlinked - is in the most terrible state. But what is far worse is that this injection was not meant to solve any basic problem, merely to keep the banks functioning and willing to lend to each other through the critical year-end period. The first week of January is the time horizon of the global financial system now. If it survives until then, it will figure out what to do next. What is worst of all is that this monstrous monetary move achieved only partial success. The inter-bank euro lending rate, which at 4.95% compared to an official rate of 4% had reflected the massive premium banks were demanding to lend to each other - so great is the lack of confidence in the markets today - fell by an unprecedented 50 basis points, or half a percentage point, to 4.45%. But that was still 45 points above the official level: half a trillion dollars had done half the job. But even the ECB is not a bottomless pit, and half a trillion dollars was its whole play. It may now have shot its bolt. The other extraordinary statement that Gross tosses off matter-of-factly in that opening quote is that the banking system, which he describes as breaking down before our eyes, has become so complicated that the head of the American central bank doesn't understand it any more and needs help from the kids who run hedge funds, who created the "financial weapons of mass destruction" that have led them and the world into this mess, and who flourished because of the deliberate policy of the Fed and other central banks to allow them to do what they liked, with no supervision and virtually no accountability. The Fed Chairman is often described as "the second most powerful man in America." No prizes for guessing who the number one is. Yet President Bush, soon to arrive here to sort out the Middle East, has not had coaching from hedge fund managers to help him understand what's going on - nor would it help much, in his case. That's why he told a Rotary Club audience in Fredericksburg, Virginia this week that "this economy's pretty good," and "there's definitely some storm clouds and concerns but the underpinning is good." Indeed, opined the president, "If I were an investor, I would be looking at the basic fundamentals of the economy. The fundamentals of this nation are strong." Unfortunately for the American people, and the rest of the world, most investors are not convinced of that. They certainly don't believe Bush, Bernanke or anyone else in authority because along with the breakdown in the banking system, which, after all, is based on trust and mutual belief, we are witnessing an even more fundamental collapse in confidence in all the pillars of the establishment - notably the political and financial elites. A recent article in Fortune magazine highlighted how the big investment houses are still pumping out optimistic music in their macro and corporate research, even as they themselves rack up losses running into tens of billions of dollars. But no one believes them any more. Although no one knows what lies in store, everyone now knows what they have been consuming these last few years has been an endless store of lies, stretching from Wall Street to Washington."

12/27/2007 8:24:28 AM

Pimco hires Greenspan as consultant: report

Quote :

"SAN FRANCISCO (Reuters) - Allianz AG's (ALVG.DE: Quote, Profile, Research) Pacific Investment Management Co. has signed up former U.S. Federal Reserve chairman Alan Greenspan as a consultant on economic issues, the Wall Street Journal said on Tuesday. The deal signed this week calls for Greenspan to hold quarterly strategy sessions with Pimco executives, and to correspond with them up to twice a week through conference calls and e-mail, the newspaper said on its Web site. The paper also quoted Greenspan as saying he will also make private comments to Pimco about interest-rate policy, something he has not done since leaving the Fed in January 2006. It did not say how much Pimco, the world's biggest bond fund manager, will pay Greenspan for his services, and a Pimco spokesman could not be immediately reached for comment."

http://www.reuters.com/article/businessNews/idUSN1546703720070516

12/27/2007 9:20:41 AM

What does that have to do with the "impressive" U.S. Economy?

12/27/2007 9:38:41 AM

Robert B. Reich
Marketplace, December 5, 2007

Quote :

"It's the Economy, Stupid -- but Not Just the Current Slowdown. According to new polls, the economy is the number 1 issue for American voters. But that's not just because the economy is slowing and mortgages are harder to come by. The real reason is middle-class families have exhausted the coping mechanisms they've used for over three decades to get by on median wages that are barely higher than they were in 1970, adjusted for inflation. Male wages today are actually lower than they were then; the income of a young man in his 30s is now 12 percent below that of a man his age three decades ago. The first coping mechanism was moving more women into paid work. The percent of working mothers with school-age children has almost doubled since 1970 -- from 38 percent to about 70 percent. Some parents are now even doing 24-hour shifts, one on child duty while the other works. I call these families DINS - double income, no sex. When families couldn't paddle any harder, we started paddling longer. The typical American now works two weeks more each year than 30 years ago. Compared to any other advanced nation we're veritable workaholics, putting in 350 more hours a year than the average European, more even than the notoriously industrious Japanese. As the tide of economic necessity continued to rise, we turned to the third coping mechanism. We began taking equity out of our homes, big time. But now that home prices are sinking for the first time in decades, this final coping mechanism no longer keeps us afloat. As Moody's reported last week, defaults on home equity loans have surged to the highest level this decade. In short, it's the economy, stupid. But not just the current slowdown. The underlying problem began around 1970. And any presidential candidate seeking to address it will have to think bigger than stimulating the economy with tax cuts or spending increases. The fact is, most Americans are still not prospering in the high-tech, global economy that emerged three decades ago. Almost all the benefits of economic growth since then have gone to a relatively small number of people at the very top. The candidate who acknowledges this and comes up with ways to truly spread prosperity will have a good chance of winning over America's large and largely-anxious middle class. "

http://www.robertreich.org/reich/20071205.asp

12/27/2007 7:57:44 PM

5 Myths About the Poor Middle Class

Quote :

"1. The middle class's standard of living stagnated while the dot-com boom made the super rich even richer. Not really. In fact, the U.S. economy hands out wealth far more evenly. Per capita gross domestic product has increased by more than 65 percent since 1979 -- growth that translates to $26,000 per household. If all that money had gone to the richest 10th of the population, it would now hold more than 60 percent of the national income. That's nearly twice as much as the super rich actually have, according to the best census surveys available. To be fair, demographic changes have sparked many misunderstandings about the economic health of the middle class. For example, Americans today are more likely to live in single-adult households than they were 30 years ago. Adjust incomes to take into account this shift, along with increasing employer contributions to retirement savings and to health insurance premiums, and you find that the real middle-class median income has risen 33 percent, or $18,000, since 1979. Of course, that's a third less than the $26,000 that those households would have gotten if the growth had been distributed equally. But the middle class didn't stand still, either."

http://www.washingtonpost.com/wp-dyn/content/article/2007/12/21/AR2007122101556.html
People are not upset about losing out in the modern economy, they are upset because they have been told by the likes of Robert B. Reich that they are losing out in the modern economy. Such assertions are simply not true and honest statistics prove it.

12/28/2007 1:45:55 AM

By shifting the argument from median wages to household income it masks the effects, economic and otherwise, of putting more mothers in the workforce, and working longer hours.

When you only talk household income it paints a rosier picture. Of course you can have a higher standard of living if you put more of the household in the workforce, working longer hours. But that doesn't mean your life is getting easier. Gains in household income affect familiy wellbeing (so much for family values).

You've actually proven Reich's argument that both of those things were necessary to combat the 12% reduction in median wages.

I'll listen if you make your argument with median wages, which measures benefit per person, rather than household income, which can be affected by a range of things.

[Edited on December 28, 2007 at 10:53 AM. Reason : *~<80]

12/28/2007 10:52:06 AM

Quote :

"People are not upset about losing out in the modern economy, they are upset because they have been told by the likes of Robert B. Reich that they are losing out in the modern economy. Such assertions are simply not true and honest statistics prove it."

yeah, I find this about as compelling as the leftist argument that advertisers can convince people to buy whatever they want and thus capitalism is fundamentally corrupt. There are lots of people hawking lots of ideas. The ones that take off, take off because the resonant with people.

Something is happening, I think thats clear. We can't quite find it in the stats but when the patient tells your they feel sicker everyday, I don't think its a good idea to write that complaint off just because the tests come back negative. Something is happening, we just have to find out what it is.

12/28/2007 2:08:51 PM

Fine, we will use your statistics. An excellent discussion of this issue can be found at the Federal Reserve Bank of Minneapolis:
http://www.minneapolisfed.org/pubs/region/07-09/wages.cfm

I will come back later and provide snippits for the click-adverse.

12/28/2007 5:31:40 PM

^ It's really not that hard to figure out. I'm not an isolationist, but the global economy has pitted American wages against the lowest wages in the world. It's no wonder real wages have gone down in the U.S.. Business profits are up, and the stock market is up - and why whouldn't they be?

The only loser is the American worker, even at record levels of productivity. There used to be an unwriten rule that when productivity goes up wages should go up. But that's been thrown out the window.

I don't know the solution. I just know you can't piss in people's hands and then try to tell them it's raining.

12/28/2007 5:34:36 PM

Feel free to read the entire report as it is very well written and should be understandable by most here. But they are kind enough to include section recaps:

Quote :

"Using the PCE deflator for all series therefore changes the growth rates noticeably. Average hourly earnings now increase by 10 percent rather than declining by 4 percent. Median hourly wage rises 20 percent rather than 12 percent. Almost a third of the difference in growth rates between the national labor income series and the two microeconomic wage series vanishes simply by using the same measure of inflation. Including benefits in the microeconomic wage series further reduces the discrepancy between the growth rates of these series and the national labor income per hour series. Including estimated benefits adds 6 percentage points to the growth rate of average hourly earnings and 8 percentage points to the growth rate of the median hourly wage. [to recap,] Just two adjustments—using the same price index and including benefits—have greatly diminished the growth rate differences between the microeconomic and macroeconomic series. Rather than falling by 4 percent over the past 30 years, average hourly earnings have actually risen by 16 percent. Growth in the median hourly wage went from 12 percent to a more respectable 28 percent. Still, the growth rate for each of the micro series remains noticeably below the 39 percent growth rate in national labor income per hour. This is especially true for average hourly earnings. I've established that wages for the median worker went up by 20 percent between 1975 and 2005, while wages plus benefits increased by around 28 percent. How did the workers above or below the median fare? The wage figures computed by the EPI, which exclude the substantial growth in benefits, indicate they did fairly well. The 40th and 60th percentiles of hourly wage rates rose by 18 percent and 21 percent, respectively. As indicated in the preceding section, the wage gains are much larger at higher wage rates. Large gains at the top end of the wage distribution might seem to be accompanied by flat wages at the bottom, but that is not the case. Wage gains at the lower end of the distribution held up fairly well. Wage growth rates at the 10th and 20th percentiles were only slightly below the median growth rates, increasing by 17 percent and 18 percent, respectively. While these data confirm that wage inequality increased since 1975, they also confirm that a broad swath of middle America experienced notable hourly wage gains."

http://www.minneapolisfed.org/pubs/region/07-09/wages.cfm

[Edited on December 28, 2007 at 10:05 PM. Reason : lnk]

12/28/2007 10:05:39 PM

I read the whole report. It was interesting.

The long and short, according to them, is that there was wage growth - maybe up to 1% per year - but a third of it was eaten up by healthcare cost (read benefits). And the rest may or may not have showed up, depending on how you measure inflation.

I don't know enough to determine if their "Basket of goods" method is best for evaluating what comes in v.s. what goes out ....

Even with their best case senario, you could double your standard of living, in one hundred years ...

12/28/2007 11:04:26 PM

That is right BoBo, 1% per year. And that is not their best case scenario, it is their best guess or most likely answer in their opinion.

Either way, productivity growth is very difficult to achieve once you are at the cutting edge. That 1% per year is the long term average for the past several centuries, after all.

However, your last statement is making an obvious mistake: you are mistaking quantity for quality. That 1% per year is the measure of absolute stuff, it does not in any way take into account changes in what the term "stuff" stands for. In 1975 your output gained you a color tube television; in 2006 the same output gained you a large high-definition flat-screen television which is undeniably superior. This is why many economists argue that GDP deflators drastically over-state inflation by only looking at price changes and ignoring improvements in product quality.

Similarly, living standards are often a one-off shot from production as most things we make only need to be made once. For example, a house does not need to be rebuilt every year, just parts of it. My aunt still has a refrigerator from the 1970s. My parents have a microwave from the 1980s. Similarly, as goods are produced each year for the rich, last years model gets filtered down by second-hand to other members of society at dramatically reduced prices. These transactions are not in any-way recognized by GDP and wage statistics, as they only reflect the production of new stuff while material living standards are dictated by all stuff, new and old. To be blunt, we could dramatically increase GDP and productivity if we cut every corner and started making TVs, refrigerators, houses, and cars that would need to be junked every year, with obviously delitereous effects upon overall living standards.

This is why many economists believe such statistics are bunk. If you want to detect changes in your living standard your only hope is to test them directly and ignore wage data. For example, surveys of those classified by the government as "living in poverty" show that material well being as measured in "stuff" improved markedly just in one decade:
Item 1992 2002
Refrigerator 98.70% 99.20%
Dryer 68.50% 77.10%
Stove 98.00% 98.30%
Stereo system 57.30% 72.55%
Color TV 94.70% 98.20%
Computer 18.60% 59.30%
Auto, truck, van 85.10% 85.70%
Dishwasher 48.70% 58.10%
Microwave 76.80% 93.20%
Garbage disposal 37.30% 47.00%
VCR 68.10% 86.90%
Freezer 32.80% 30.80%
Washer 75.00% 80.00%
http://articles.moneycentral.msn.com/Investing/Extra/PovertyNowComesWithAColorTV.aspx

[Edited on December 29, 2007 at 1:07 AM. Reason : final points]

12/29/2007 12:49:01 AM

Living standards as a metric is irrelevant.

The only thing that matters is how the public perceives their personal economic situation.

See: Russia, US Consumer.

12/29/2007 5:50:02 PM

They said it was about 1% a year, if you include you include the additional benefits that got eaten up by increased heath care costs (which you don't see in standard of living), and their choice of the best case senario for inflation. To me it's not very impressive.

Again, the squeeze is indicated by the fact that more mothers are having to enter the workforce and people are working more hours:

Quote :

"National labor income per person rose 75 percent over this period, much more than the 39 percent increase in income per hour. The difference is attributable to a rise in the fraction of people working—women in particular—and to an increase in annual hours per worker, mostly in weeks worked per year."

(This comes from your article.)

Your table of more goods is also indicative of the increase in household income - due to having to work longer hours, and put more people in the workforce.

As far as comparing a color TV with an HD set, it's anachronistic. The person getting the color TV in 1975 was just as excited about it as the person getting the HD set today. The satisfaction level is the same. It's a specious argument.

12/29/2007 9:45:10 PM

yikes

http://news.yahoo.com/s/nm/20071221/us_nm/usa_housing_social_dc

12/30/2007 1:09:04 AM

BoBo, I agree that 1% does not sound like much; but this is the best mankind has ever managed, so what do you suggest? If it helps you feel better, almost all of the productivity growth of the past 30 years took place just within the past 15 years and is still improving at over 2% per year the last time I saw the data.

Following your reasoning, it is your next statement that stumbles. That more mothers are entering the workforce is indicative of many things, none of which seems to me to be indicative of any squeeze. Real labor productivity may not be increasing fast, but it is not falling neither. As such, mothers going to work increases the number of hours worked per household and thus household income (since wages per hour worked is not falling). To suggest mothers "needed" to go to work is rediculous, since usually their entire salary goes towards luxuries such as a second and third car, trips, more housing, and entertainment.

Quote :

"Your table of more goods is also indicative of the increase in household income - due to having to work longer hours, and put more people in the workforce."

Yes it is. But you are implying that they had to work more. Or what? Women did not need to go to work and men did not need to start working longer hours. They would have been poorer than if they did go to work, but they would have still been richer than their parents (better fed with more stuff). Since men invariably earn more than women, more women going to work has actually reduced real labor productivity, so that 1% average over 30 years would have probably been much higher, perhaps 2%.

Quote :

"As far as comparing a color TV with an HD set, it's anachronistic. The person getting the color TV in 1975 was just as excited about it as the person getting the HD set today. The satisfaction level is the same. It's a specious argument."

Apples to oranges. I was discussing standard of living, not consumption satisfaction.

12/30/2007 2:13:25 AM

We will just have to agree to disagree.

Even your article says that a significant portion of that 1% are benefits never make it into the paycheck - increasing healthcare costs. That doesn't give you more spending money, it's just another reason to get someone else out in the workforce to get benefits. And as I say, even that 1% assumes their best case for inflation.

I also don't believe that people decide to pay for childcare (very expensive), and work longer hours per year (even more than the japanese), just for fun. I think it speaks for itself. You say they do it for more luxuries. I say, with the cost of daycare and the effects on family life, it's a tough decision, and that they do it because they feel a real need.

One last thing, if productivity is rising at 2% why are they having to jump through hoops to try and show 1% (partially non-spendable) wage increases? I will tell you why, because the global economy has pitted American wages against the lowest in the world - which was my argument in the first place. Of course those lower wages come back as cheaper consumer goods, but that's a different story.

12/30/2007 1:32:05 PM

Quote :

"And as I say, even that 1% assumes their best case for inflation."

And as I say, that is their best guess for inflation. If you want their best or worst case then ask them for it as I don't have access to it.

Quote :

"I also don't believe that people decide to pay for childcare (very expensive), and work longer hours per year (even more than the japanese), just for fun. I think it speaks for itself. You say they do it for more luxuries. I say, with the cost of daycare and the effects on family life, it's a tough decision, and that they do it because they feel a real need."

It obviously does not speak for itself if two rational people come to the same information and draw radically different conclusions. And I did not say they were doing it for fun. I said they were doing it because doing so gets them what the believe they want out of life. While many people probably do enjoy their job, and many women when polled say working makes them feel better about themselves as more independent and more capable of contributing to the family.

Quote :

"One last thing, if productivity is rising at 2% why are they having to jump through hoops to try and show 1% (partially non-spendable) wage increases?"

Economists have struggled to explain why labor productivity dropped to near zero in the early 1970s and held there until the late 1980s. Economists at the time concluded technology had simply gone as far as it could go. This theory was put to rest when labor productivity shot up in the 1990s and then even higher in the 2000s. Many economists have attempted to explain this phenomenon, one of which I prefer, which is the inflation distraction theory. In the late 1960s we see inflation begin to creap well above historical norms. Shortly there after, productivity falls to near zero. By the 1970s inflation is extensive until the 1980s when inflation, with immense hardship, is finally extinguished. Shortly there after, productivity growth regains positive territory. The theory suggests that high inflation is sufficiently disruptive that it makes productivity enhancements unlikely as inflation does not just drive prices up, it also injects instability (greater up and down).

Quote :

"I will tell you why, because the global economy has pitted American wages against the lowest in the world - which was my argument in the first place. "

As productivity growth resumed in the mid 1990s, it would seem that you have no leg to stand on as it was in the 1990s that the modern age of globalization began, with the creation of NAFTA and expansion of the WTO. In the 2000s, as the WTO has expanded to include China and other low wage countries U.S. domestic labor productivity accelerated further. There is no doubt that our workers are competing with foreign workers, but so far most of the competition has resulted in increasing foreign wages closer to America's, not the reverse.

12/31/2007 2:01:31 AM

A cursory look at the condition of working class America says that things aren't going well. When you ask people how they are doing on average working class American's say that things aren't going well.

Now it is undoubtly the case that when complaints are raised people attempt to tease facts from the data that the data don't support. Productivity is rising. Average wages are doing well. Median wages are not as clear but don't seem that bad. Hedonic measures of consumption seem to be purring along nicely.

This means there is something we are missing. Data analysis for data analysis sake is pointless. We measure things because we think the measurements are important in informing us about the quality of people's lives. To the extent that they don't, we need new objects of measurement.

To the extent we turn a deaf ear to growing concerns about the welfare of the working class we do the profession a great disservice.

12/31/2007 8:15:57 PM

A cursory look at the conditions of working class America says things have never gone well. If you for some reason remember a golden age when everyone prospered and workers were happy with their lot in life then you are dreaming.

1/1/2008 2:19:41 AM