Obama hails economy's 3.2% growth rate

[boedicca]

First: The Cap Lock key is your friend. Try using it. Your e.e. cummings style for long posts makes them needlessly uncomfortable to read.

i was going on about the u-6 with pinqy earlier in the thread. you have to understand that the u-5 before 1994 was similar to the u-3 now, and that the bls in the 80s did the same deal with their 7-tier accounting as is done now with 6-tiers. before 94, the tiers above the published rate only published half of the underutilized/alternative demographics like discouraged and marginally attached. reagan's employment situation, for that reason, entailed the same accounting preference to reclassify long-term/excess unemployment. in fact, it did not account for another half of the alt unemployment that the upper rates do now. the comparison is specious on semantic grounds, or in favor of the current, more comprehensive accounting. do you subscribe to a fallacy about CPS1994?

I trust Shadow Stats analysis far more than the governments in terms of statistical consistency. Real unemployment is 22%.

on spending, i would say that the government is not leading by example in terms of credit dependency. all the same, i challenge your assertion that this spending will stunt economic and job growth on the basis that i had earlier: that you are convinced that heavy handed supply-side solutions are the only that work in an economy. that position is wrong. there are merits and pitfalls to supply-side macroeconomics and its alternatives which one must understand to speak credibly on the point. it makes real economic consideration difficult with a strong partisan bias such as yours, and such as what our politicians have.

Net net: We can't solve a looming sovereign debt crisis with More Debt. We are in this crisis because government has spent far beyond its means. Before we flog the productive class even more, it makes sense to exert some fiscal sanity over government spending.

specifically in a contraction, where deflation is indicated as robust and wide-spread in the economy, in our case to the tune of $17,000,000,000,000 or so, inflationary practices are, indeed, welcomed. they prevent stagflation in the money supply like we had in the great depression, or which japan suffered from in the 90s, when the government took insufficient or late action. conservatives (not to be confused with conservative economists) believe that the government should contract their investment in the economy, and leave deflation to work itself out. that, boe, will precipitate a depression by way of the stagflationary devices i'd mentioned. it is safe to say we would not be debating positive news in this thread with that philosophy emplaced.

yes, obama will raise taxes. i dont feel that the indications which you read into moderate and targeted rises in taxation, particularly from the stimulus rates we now have, are substantive. maybe you could elucidate.

Interesting that you raise the deflation spectacle. That is a real threat - and increasing around the world right now.

The Obama tax increases are not moderate - they are enormous, especially in the areas that encourage investment. Capital gains will increase from 15% to 23.8% (including the medicare tax). The tax rate on dividends will increase from 15% to 35% (top rate) - and the double taxation continues.

Even more destructive is the VAT tax. This new tax is being heavily socialized in the media. I saw Bill Gates, Warren Buffett, and Charles Munger on FNC today - all three appeared to view the VAT as inevitable.

All of this spending and tax binging is heading the size of the federal government from the approx. 20% rate of recent decades to over 30% (more than a 50% increase).

If you consider that moderate and targeted, you need a better dictionary.

 

[antagon]

And they DID leave the labor force...they're not working and not looking for work. They're not participating in the labor market, so they're not part of the labor force.

That is spin. People who are long term discouraged workers generally want to be part of the labor force.

It's been the definition since 1941. So fairly well established methodology that the most objective way to know if someone wants a job is whether or not they're looking for one.

And again, Discouraged does NOT mean "long term." It just means the person isn't looking for worth and claims they believe they won't find one. How does someone's belief help us know what the real conditions are? Or that they're honest in their belief? There were still discouraged workers when the UE rate was 3%.

this debate only highlights the nuance by which the survey can moderate the gravity of the published rate. it is possible that in a recession, everyone comes up with brilliant reasons to be discouraged, or more comically, brilliant resolve to join the ranks of the more marginally attached -- or maybe, the rates are reflective of a flexible interpretation which says, 'enough is enough' about the discouraging cloud of gloom an earnest published rate would cast on the employment market. i like the plausibility of the latter perspective.

 

[pinqy]

this debate only highlights the nuance by which the survey can moderate the gravity of the published rate. it is possible that in a recession, everyone comes up with brilliant reasons to be discouraged, or more comically, brilliant resolve to join the ranks of the more marginally attached -- or maybe, the rates are reflective of a flexible interpretation which says, 'enough is enough' about the discouraging cloud of gloom an earnest published rate would cast on the employment market. i like the plausibility of the latter perspective.

This is interesting coming from someone who not that many posts ago claimed that "the government only tracks registered persistent long-term unemployed, leaving the majority of people who cease using the government's relatively worthless unemployment resources after their benefit dries out unaccounted for. it was that way in the 80s and it is that way now."

I take it you no longer hold that view?

It IS important to look at the Discouraged and marginally attached and part-time for economic reasons. Also the long term unemployed of the U1 and the people who lost their jobs rather than quit of the U2. But it is inappropriate to put them in the official measure when the purpose of the official measure is to look at the actual Labor Market, rather than opinion of people and/or people who could potentially be part of the Market but are not participating in it.

A Discourage worker is no more part of the labor market or labor force than a full time student, or retiree, or stay at home spouse. None are working (for pay) or looking for work. The effect is the same.

 

[SFC Ollie]

How does one count a person who has run out of unemployment benefits and therefore no longer has any contact with the unemployment system; yet they are still looking for work?

You do not stop looking for work simply because your benefits have run out, if anything you double or triple your efforts.

 

[boedicca]

If the person is actively looking for work, he is included in U3 unemployment. U6 includes short term discouraged workers (i.e., ones who would like to work but have stopped looking because there are no jobs available). It excludes long term discouraged workers. Shadow stats adds them back in.

Alternate Unemployment Charts


The real unemployment rate is 22%.

 

[FA_Q2]

there's a major difference in deficit spending in a recovery effort and growing the debt in the middle of an expansion. that's one contrast between the obama and the bush at the moment, and incidental to the state of the economy and the limited options available to the government, today.

Personally I do not believe this. Bad debt is bad debt. It is akin to you attempting to keep your standard of living the same after you lost your job. That is dumb and modern economics be damned, it is still dumb on the national level. It really boils down to common sense and the lack of it in our government.

 

[boedicca]

Indeed. It's especially offensive to be told to tighten one's belt and pony up more in taxes when the government has been living high on the hog, and one's taxes are justified as being needed to pay of the resulting debt from the spending binge.

 

[Screaming Eagle]

Speaking objectively and not to Obama, does a 3% growth in the economy amount to much when you also have 3% inflation? It seems to me that the two cancel each other out.

 

[antagon]

First: The Cap Lock key is your friend. Try using it. Your e.e. cummings style for long posts makes them needlessly uncomfortable to read.

I'll make a special exception, boe, and depart from my shift-key boycott.

i was going on about the u-6... yap yap, reagan, yap....

I trust Shadow Stats analysis far more than the governments in terms of statistical consistency. Real unemployment is 22%.

I like shadowstats. In the end, high unemployment is relative to periods of low unemployment, and no matter which rating you subscribe to, it is gnarly at the moment. A rate like the shadowstats rate better accounts for the national/international slide toward unemployment. Appreciating that requires studying on some of the prognoses of capitalism with respect to employment, too.

on spending, i would say that the government is not leading by example in terms of credit dependency. all the same, blah blah ..merits...bias...blah...

Net net: We can't solve a looming sovereign debt crisis with More Debt. We are in this crisis because government has spent far beyond its means. Before we flog the productive class even more, it makes sense to exert some fiscal sanity over government spending.

Timing is the only consideration. Right now, I believe the government must put out some dough, and the inflationary repercussions are welcome. I think it is also time to elevate fiscal policy above politics much as the judicial branch is so sequestered. Without doing so, the economic policy tug-of-war is spiraling in one direction which restricts the government's ability to affect rational economic decisions.

specifically in a contraction, blah, blah, ...deflation...blah...

Interesting that you raise the deflation spectacle. That is a real threat - and increasing around the world right now.

I would say that rabid spending among governments with the wherewithal has stemmed it from some absurd levels, and which would possibly knock on some adverse, depressive effects.

The Obama tax increases are not moderate - they are enormous, especially in the areas that encourage investment. Capital gains will increase from 15% to 23.8% (including the medicare tax). The tax rate on dividends will increase from 15% to 35% (top rate) - and the double taxation continues.

Does capital gains really encourage investment? I see lower dividend and capital gains rates as encouraging profit-taking and propose that profit-taking and investment are converse to one another.

Even more destructive is the VAT tax. This new tax is being heavily socialized in the media. I saw Bill Gates, Warren Buffett, and Charles Munger on FNC today - all three appeared to view the VAT as inevitable.

A VAT like Europe's wont fit our Constitution. That's why its never been done, nor ever will be. Those that believe the US has a VAT in store, have clearly not considered that. There is simply no way; no fine line; no nuance in the Tax/Spend or Commerce Clause to accommodate it, whatsoever. What is easier, is to change our income tax system to function like a (superior) VAT. Reagan started down this path, and except for the Dubya tax regime, other administrations strengthened it.

A VAT is not a sales tax, per sa. Instead it is a system to tax the last dollar spent, rather than every dollar. Income tax taxes the income of suppliers from the iron pits to the frying-pan salesman, however, through deductibility and expensibility, our tax system has introduced the caveat that only the last buck need be taxed (and allowing variety to the extent of application). That is the same way that VAT works, except that it has deference to non-taxable consumer goods, rather than our deference to capital investments. VATs also ding consumption more directly while our system encourages expensible consumption (hence superior, IMHO).

All of this spending and tax binging is heading the size of the federal government from the approx. 20% rate of recent decades to over 30% (more than a 50% increase).

If you consider that moderate and targeted, you need a better dictionary.

The size of government is entirely independent from the rate of tax - look at the last administration. The bulk of the deficit spending now is non-permanent stimulus. I would like to see some commitment to reduce permanent and structural expenditures during the expansion.

We both know Democrats would never dream of doing that. Republicans have shown a talent for conservatism only in the way of tax relief and social agendas, having affected increases in the impact of government finance and the size of bureaucracy at once. That needs to change, then their frailty in government needs to be remedied so they can actually affect a conservative agenda. Maybe I'm asking for too much.

 

[boedicca]

Speaking objectively and not to Obama, does a 3% growth in the economy amount to much when you also have 3% inflation? It seems to me that the two cancel each other out.

It's not enough to create jobs that keep pace with population growth and significantly reduce unemployment.

 

[antagon]

there's a major difference in deficit spending in a recovery effort and growing the debt in the middle of an expansion. that's one contrast between the obama and the bush at the moment, and incidental to the state of the economy and the limited options available to the government, today.

Personally I do not believe this. Bad debt is bad debt. It is akin to you attempting to keep your standard of living the same after you lost your job. That is dumb and modern economics be damned, it is still dumb on the national level. It really boils down to common sense and the lack of it in our government.

do you print your own currency? i think that the federal government's perspective on the situation, starting with blaring differences like that, make analogies to an unemployed joe-the-plumber moot. business owners and asset investors who are able to affect more, but not wholly similar perspective to the government's, see contractions as investment phases.

your 'modern economics be damned' also damns classical economics and is in itself dumb on a national level. be smart: the government is not akin to an unemployed bloke.

 

[boedicca]

[
I'll make a special exception, boe, and depart from my shift-key boycott.

Thank you.

I like shadowstats. In the end, high unemployment is relative to periods of low unemployment, and no matter which rating you subscribe to, it is gnarly at the moment. A rate like the shadowstats rate better accounts for the national/international slide toward unemployment. Appreciating that requires studying on some of the prognoses of capitalism with respect to employment, too.

Complete agreement.

Timing is the only consideration. Right now, I believe the government must put out some dough, and the inflationary repercussions are welcome. I think it is also time to elevate fiscal policy above politics much as the judicial branch is so sequestered. Without doing so, the economic policy tug-of-war is spiraling in one direction which restricts the government's ability to affect rational economic decisions.

I would say that rabid spending among governments with the wherewithal has stemmed it from some absurd levels, and which would possibly knock on some adverse, depressive effects.

No. Timing is not the only consideration. The real consideration is the proper role of government and what % of GDP it should comprise. Instead of having an honest debate in DC, we are being forced into a much expanded government via deficit spending, and then told we have to pay for it after the fact.

Elevating economic policy to a sequestered for life think tank is not the answer. Shielding policy makers for the consequence of their decisions breeds arrogance.

Here's the problem with inflation: The Feds are terrified of it. Given the huge increase in the money supply, interest rates should be much higher (the bond rates for Greece are a harbinger of things to come). Once rates do increase, the interest on the debt will sky rocket, making the budget situation even worse. Spending IS going to increase due to snowballing entitlements. It's a sham that we are piling on more instead of getting the current commitments under control.

Does capital gains really encourage investment? I see lower dividend and capital gains rates as encouraging profit-taking and propose that profit-taking and investment are converse to one another.

That is contrary to human nature. Lower rates encourage risk taking for the longer term. History has proven this.

A VAT like Europe's wont fit our Constitution. That's why its never been done, nor ever will be. Those that believe the US has a VAT in store, have clearly not considered that. There is simply no way; no fine line; no nuance in the Tax/Spend or Commerce Clause to accommodate it, whatsoever. What is easier, is to change our income tax system to function like a (superior) VAT. Reagan started down this path, and except for the Dubya tax regime, other administrations strengthened it.

A VAT is not a sales tax, per sa. Instead it is a system to tax the last dollar spent, rather than every dollar. Income tax taxes the income of suppliers from the iron pits to the frying-pan salesman, however, through deductibility and expensibility, our tax system has introduced the caveat that only the last buck need be taxed (and allowing variety to the extent of application). That is the same way that VAT works, except that it has deference to non-taxable consumer goods, rather than our deference to capital investments. VATs also ding consumption more directly while our system encourages expensible consumption (hence superior, IMHO).

There aren't enough rich people to tax. The VAT is attractive to DC because it is largely a concealed tax - and avoids raising income taxes on the poor and middle class.

The size of government is entirely independent from the rate of tax - look at the last administration. The bulk of the deficit spending now is non-permanent stimulus. I would like to see some commitment to reduce permanent and structural expenditures during the expansion.

We both know Democrats would never dream of doing that. Republicans have shown a talent for conservatism only in the way of tax relief and social agendas, having affected increases in the impact of government finance and the size of bureaucracy at once. That needs to change, then their frailty in government needs to be remedied so they can actually affect a conservative agenda. Maybe I'm asking for too much.

No it's not. The bulk of the spending is a permanent increase in the size of government. Whatever is reduced via the TARP will be more than offset by ObamaCare.

Our only hope is to significantly descope what the Federal government does. Personally, I have no illusion that either party is up to this.

 

[antagon]

this debate only highlights the nuance by which the survey can moderate the gravity of the published rate. it is possible that in a recession, everyone comes up with brilliant reasons to be discouraged, or more comically, brilliant resolve to join the ranks of the more marginally attached -- or maybe, the rates are reflective of a flexible interpretation which says, 'enough is enough' about the discouraging cloud of gloom an earnest published rate would cast on the employment market. i like the plausibility of the latter perspective.

This is interesting coming from someone who not that many posts ago claimed that "the government only tracks registered persistent long-term unemployed, leaving the majority of people who cease using the government's relatively worthless unemployment resources after their benefit dries out unaccounted for. it was that way in the 80s and it is that way now."

I take it you no longer hold that view?

It IS important to look at the Discouraged and marginally attached and part-time for economic reasons. Also the long term unemployed of the U1 and the people who lost their jobs rather than quit of the U2. But it is inappropriate to put them in the official measure when the purpose of the official measure is to look at the actual Labor Market, rather than opinion of people and/or people who could potentially be part of the Market but are not participating in it.

A Discourage worker is no more part of the labor market or labor force than a full time student, or retiree, or stay at home spouse. None are working (for pay) or looking for work. The effect is the same.

i still hold that view; it is a characterization of the U-3 index, and of the persons who fall off it.

however you define them, marginally employed workers shoot up in recessions, and particularly deep, long-term contractions. i believe that this is based on how the government defines them (or subjectively classes them) for the purposes of shining up the show rate.

 

[boedicca]

That's exactly what the government wishes you to think.

In reality, the amount of discouraged workers is highly indicative of the inability of the government's policies to foster a climate that encourages economic growth and job creation. Excluding the discouraged workers is blaming the victim, imo.

 

[antagon]

No. Timing is not the only consideration. The real consideration is the proper role of government and what % of GDP it should comprise. Instead of having an honest debate in DC, we are being forced into a much expanded government via deficit spending, and then told we have to pay for it after the fact.

I think ideologically attempting to fix outlay to the GDP is disastrous! The government should shrink in this proportion during an expansion and grow in a contraction. Part of that will be inevitable, just like other sovereign entities and individuals will have their share effected by the losers in the bear cycle. The other part should be a deliberate application of government investment to displace scarcity in private investment and the deflation indicated by the contraction. It is a matter of nuance as to the extents, but see it as bad econ to arbitrarily contract government alongside the wider economy. again, this will precipitate a depression.

Elevating economic policy to a sequestered for life think tank is not the answer. Shielding policy makers for the consequence of their decisions breeds arrogance.

That is a good point, and a caveat to what I propose. I find the arrogance of an economist to know what is best for the government, fiscally, to match that of a controller or CFO in any firm so endowed. Isn't having a bunch of lawyers whose arrogance is seeded in popular mandate and making economic decisions on that basis what you are riling about at present?

In light on your perspective here, and your contention that the government should have some ideological restraints, what are your thoughts on Wagner's Law? Isn't a fiduciary body the only mechanism to prevent the populous grip on the largess from catalyzing Wagner's implications?

A BBA could work, but what about when there is value in deficit spending? (we kind of disagree about the existence of such a value, but I'm sure you acknowledge inflation and deflation are opposites.)

That is contrary to human nature. Lower rates encourage risk taking for the longer term. History has proven this.

I don't see the link to longer term there. Because the presumption is that rates on cap gains and divis will go up again, investors pull out investments when they're slashed. It also lowers the maturity bar for institutional investors' algorithms. That's what history I've seen. Furthermore, tangible investment, more likely to depreciate than appreciate, particularly in business capital, is preferred for its connection to job and wealth creation. That is, commerce, not arbitrary risk-taking, is the driving force of the economy, business and the job market. In the light of small businesses, capital gains is moot. If you pay it, fire your tax guy.

There aren't enough rich people to tax. The VAT is attractive to DC because it is largely a concealed tax - and avoids raising income taxes on the poor and middle class.

Yeah, I think that the returns on finding more 'progresivity' in taxation are diminishing rapidly for the obama - economically and politically. Nevertheless: VAT=moot; not going to happen for the reasons I'd espoused. There'll sooner be a hair-brained Fiscal Branch writ in the Constitution before intrastate commerce rights are writ out.

The bulk of the spending is a permanent increase in the size of government. Whatever is reduced via the TARP will be more than offset by ObamaCare.

Far be it from an act of austerity, but ObamaCare strikes me as a measure to tax more than to spend.

Our only hope is to significantly descope what the Federal government does. Personally, I have no illusion that either party is up to this.

You know me. I have no illusion democracy is up to the task, whatsoever.

 

[antagon]

That's exactly what the government wishes you to think.

In reality, the amount of discouraged workers is highly indicative of the inability of the government's policies to foster a climate that encourages economic growth and job creation. Excluding the discouraged workers is blaming the victim, imo.

i bet the government wants us to ignore unemployment altogether, despite an obligation to publish some transparent facts about the economy behind the dollar. next, they'll want to focus us in on the U-3... "uuh nevermind that chart over there... uhh 8%"

when it comes to unemployment, isn't high unemployment a cause for celebration in a capitalist system, so long as the wider economy fairs ok? efficiency, indeed.

it is communism which aims to affect full employment. there's some of that running in the veins of the US economy. that and some socialism appear to be necessary 'evils' to running a capitalist state.

any criticism of the role in government to stimulate employment, must come with swallowing some prickly realities about capitalism, and an advocacy of communist and socialist values in it's stead.

 

[boedicca]

when it comes to unemployment, isn't high unemployment a cause for celebration in a capitalist system, so long as the wider economy fairs ok? efficiency, indeed.

it is communism which aims to affect full employment. there's some of that running in the veins of the US economy. that and some socialism appear to be necessary 'evils' to running a capitalist state.

any criticism of the role in government to stimulate employment, must come with swallowing some prickly realities about capitalism, and an advocacy of communist and socialist values in it's stead.

Uh. No. Capitalism doesn't celebrate high unemployment. (If people are unemployed, they are not going to be customers.) Labor has value. Why would a capitalist want to see labor sit idle? The ideal is one of everyone being productive.

Communism may aim for full employment - but what it achieves via centralized planning is make work under utilization of people's productive abilities.

 

[antagon]

when it comes to unemployment, isn't high unemployment a cause for celebration in a capitalist system, so long as the wider economy fairs ok? efficiency, indeed.

it is communism which aims to affect full employment. there's some of that running in the veins of the US economy. that and some socialism appear to be necessary 'evils' to running a capitalist state.

any criticism of the role in government to stimulate employment, must come with swallowing some prickly realities about capitalism, and an advocacy of communist and socialist values in it's stead.

Uh. No. Capitalism doesn't celebrate high unemployment. (If people are unemployed, they are not going to be customers.) Labor has value. Why would a capitalist want to see labor sit idle? The ideal is one of everyone being productive.

Communism may aim for full employment - but what it achieves via centralized planning is make work under utilization of people's productive abilities.

No?

Where your under-utilization is a judgment of efficiency, capitalism quantifies efficiency in terms of the difference of cash invested and produce. The fewer the man-hours or the lower the wages, the more efficient. The more profitable.

Capitalism biases investment explicitly against labor and toward the means of production in pursuit of higher efficiency. Witness slavery under mercantile capitalism and industrialization, today. This is the reason why every time there is a contraction, fewer and fewer jobs are created despite the economy expanding, and why before new employees are hired, new capital investments are made to realize an increase in efficiency.

Industrialization is coming to a head. While you'll probably blame government policies for the fact, over the next decade, 1/3 or so of the jobs around now, won’t be around. This will fundamentally be due to industrialization. Labor-intensive economies like China and India are, in fact, at a bigger risk than we are in this respect. The window of advantage enjoyed by such less capital-intensive economies will likely close in the next 20 years.

"If people are unemployed, they are not going to be customers." is specifically the conundrum which draws economies to mix communist measures like tax, wage fixing and public employment, and socialist measures like entitlements, government-run military, public health incarceration and public education into solution with our system of capitalism. I don't hire employees with the hope they'll be my customers. That is not systemically capitalist, boe. Only Amway does that.

After all, how capitalist is waiting around ‘looking’ for a job? There is a market, and a job-seeker is contending that they have something to offer. They’ll have someone give them a job to convert that potential? Note the commensurate growth of temp labor, part-time labor, and free-lance labor alongside industrialization.

While I call the bigger picture capitalist, roles of government and individuals with the system are only capitalist in proportions shared with commie and socialist elements. You’re free to call it capitalist if it makes you feel more secure, but the growth of welfare and incarceration rolls since the 80s' first recession(s) we were talking about earlier, tell it like it is.

 

[boedicca]

Antagon engages in static pie thinking. If capital makes labor more efficient, then labor can produce more - causing economic growth.

What good does it do a capitalist to produce products if there are not enough buyers to purchase them?

We don't have a capitalist system, btw. We have a cronyist Big Government version, which is due to the infiltration of the socialist/communist principles you apparently favor (given your belief that Labor and Capital are enemies).

 

[pinqy]

How does one count a person who has run out of unemployment benefits and therefore no longer has any contact with the unemployment system; yet they are still looking for work?

You do not stop looking for work simply because your benefits have run out, if anything you double or triple your efforts.

That's why the government doesn't use unemployment benefits in any way for determining whether or not someone is unemployed.

The Current Population Survey, monthly since 1941, is a household survey of approx 60,000 households a month (yes that is large enough). If someone says they did not work during the reference week, but have looked for work in the last 4 weeks, then they're counted as Unemployed, regardless of how long they've been unemployed, or whether they've ever received or been eligible for benefits or whether they've ever even had a job.