Boring nerds for a boring economy
"Living within our means" conflicts sharply with Bonddad's increasingly ludicrous proclamation of the end of the recession. It means a replacement economy, in which the new normal is stagnation.Bonddad's vast economic knowledge should enable him to grasp the impact of a massive credit contraction on the consumer economy, unless, of course, this knowledge conflicts with his cheerful insistence on the return of the good times.
Dear Bob --Let's see how you have been wrong just in the last few weeks.1.) People are not disappearing from the work force. In fact -- a proper understanding of the statistics -- indicates people are in fact retiring. This means the first wave of baby boomer retirements is on us.2.) SSDI cannot hide people from the unemployment roles because that would be a violation of the law. As SS law states in its definition of disability:"(A) inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; or "3.) The credit contraction actually means the amount of debt in the system is decreasing. People now have more financial room to breath.4.) treasury revenues actually increased over the last two months, in direct contradiction to your assertions.In other words:You know nothing about statistics.You know nothing about economics. You know nothing about the law.A well-developed person would actually have a sense of shame, meaning after a failure rate that high (as in 100%) they would stop because they realize they look stupid to other people. But not you -- no -- you're just bound and determined to prove beyond a shadow of a doubt that you're an idiot. At this point the prosecution should rest. You've proved it -- you're stupid.As a result, I'm banning you from this site. Other commenters have demonstrated knowledge. You've demonstrated none. Please find another location to prove your stupidity.
Also, there does not appear to be a massive contraction of consumer credit. There appears to be a near-plateau in consumer credit, with perhaps a gentle decline, which, given the unusual high level of consumer debt service, seems to show an outbreak of good sense.Bonddad scores again.George
thanks for making me laugh with your response above bonddad, good way to start the weekend!
Someone can be wrong. Someone can also disagree. There's also no law against being wrong AND disagreeing. Heck, there's nothing wrong with being wrong, in disagreement and stupid.But then there's disrespectful; that's something else. Am I correct?
There is plenty wrong with being stupid, continuing to pretend that you have knowledge when confronted by the sheer weight of the evidence that you in fact do not know what you are doing.Case in point. I do not litigate. Hence, I don't know the first thing about the Texas rules of civil trials. More importantly -- I don't pretend to know; I don't talk to litigators as an equal. I state up front that they have probably forgotten more than I know about procedure, evidence and the like. If I'm out and I hear trial lawyers telling war stories, I don't jump in like I have anything to offer -- because I don't. That's the difference.
The problem you should recognize with reduced consumer use of debt for spending is that this country's over-built capacity for retail is entirely dependent on it. That translates into the larger retailers closing non-performing stores. That also leads to less traffic coming to the strip malls/shopping centers where these retailers were. This causes businesses such as restaurants and local and regional small retailers and franchisees to lose the traffic that they depended on to stay in business. And the problem cascades from there.Wages have not kept up with prices for 35 years. That gap had been filled with ever increasing use of credit. Unless the consumer returns to their old high-debt driven spending sprees none of the lost business is coming back.All the evidence suggests that the consumer has not been coming back for quite a long time now. Take out autos and gasoline from retail sales and see what that show you. Add in that retail sales are up mainly due to rising prices rather than higher unit sales then you find that inventories are likely still too high, less employees are needed to actually produce goods for sale, and less imported goods are brought in, transported, and stocked. That means that 75 percent of the retail economy (that's ex auto and gas) is tightening further in the vise of this recession. We are already seeing consumers squeeze down spending in food. That is not a harbinger of good things to come. And it likely isn't a blip either since holiday meals and New Year's eve parties etc. should have been a boost as it is in most years in food purchases rather than a decline.So even in a recession of the magnitude we are experiencing still (calling an end would be ridiculous) you find the consumer still being squeezed. In 2009 where wages were down 1.6 percent and prices were up 2.7 and core inflation was 1.8 percent. Industrial output was up only because of higher utility demand last month. If you have a consumer losing ground at 3.4% against just the basics and still losing even more ground when you add in higher fuel prices - that are going to $3.00 a gallon or more - there is simply no way the consumer will lead the country out of this recession.The statistics are showing that the consumer is further entrenching. There is no pent up consumer demand waiting to be unleashed. The consumer has already shrunk to the new consumer normal. The is very little demand for more consumer credit and little appetite to use existing lines. We have more foreclosures coming next year than this year. More personal bankruptcies coming next year than this year. The consumer confidence numbers coming out in a week or two will once again bear this out.
MR --Good points. Here are my responses.1.) I use personal consumption expenditures rather than retail sales - retail sales being a subset of PCEs. Real PCEs have bottomed and are now increasing. See the charts in Beige Book, Part I on the front page.However, also note that December's retail sales numbers were in direct contrast to the numbers reported by the actual firms -- both retail and auto sales. I don't know how this will resolved at the statistical level, but the two directly contradict each other. The overall economy is used to 3%-4% Q/Q increases in PCEs whereas I think the new norm will be 1%-2%. There have been several people who have commented about the "new consumer." arguing (I believe correctly) that the "new consumer" is far more price and budget conscious. So far the numbers and anecdotal evidence bear this out.2.) Industrial production was up because of utility output last month. However, notice that this number has increased consistently since mid-2008. Also note the regional manufacturing surveys, incredibly strong ISM reading and increase in exports confirm an increase in overall IP. In short, manufacturing is coming back from extremely low levels.3.) My "prediction" for overall economic growth in the 1%-2% range coming from a variety of fronts -- inventory restocking, mild consumer spending increases and government stimulus efforts (which will continue through next year). What the US must get use to is we will be the caboose whereas Asia will be the driver.
A not unpredictable story in 2010 will be increased protectionism in OECD countries and economic philosophies to justify it.
There is additional evidence that Bonddad's suggestion that people are retiring -- several threads back, but still wisely said -- is right:Quoting from AnecdotalEconomics.Blogspot.Com"Through the first two months of the 2010 fiscal year, Social Security Retirement, Survivor and Disability benefit payments have surged 10 percent to $113.7 billion compared with $103.5 billion over the first two months of FY2009, while tax receipts fell a half-percent to $96.9 billion in FY2010 versus $97.3 billion in FY2009."The surge in Social Security payments is coupled -- same source --with a 20% surge in applications to start taking Social Security payments -- at age 62, if I follow correctly. (And, by the way, the Social Security payout data ought to provide direct evidence on retirements).
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