WSJ: The Great American Jobs Machine--U.S. has fewer taxes and regulations onerous for employers

Wall Street Journal ^ | August 8, 2005 | Editorial

[OESY]

We would like to take a moment to pause and marvel at the U.S. economy. Friday's Labor Department report of more than 200,000 new jobs in July, and two million over the past year, provides the latest bullish details. But the larger story of American job creation, and its causes, is even more impressive.

First, more Americans have jobs today than at any other time in history. Second, over the past two decades or so, the U.S. has created more than 40 million jobs -- twice as many as Europe and Japan combined. And third, the U.S. has one of the lowest jobless rates of all developed nations.

It was only a year ago that John Kerry was blasting the "jobless recovery." Lou Dobbs was flogging "outsourcing" every night on CNN as a sign of peril for the American workforce. That criticism now looks wildly off base. The 5% jobless rate today is almost a percentage point below what it was during the same stage of the business cycle during the vaunted "Clinton expansion."...

But just when it seemed there was reason to celebrate, a new study by the Federal Reserve Bank of Boston warns that the low U.S. unemployment rate is a "false signal" of prosperity....

Labor economist Diana Furchtgott-Roth of the Hudson Institute has thoroughly refuted the Boston Fed study. She finds that "most non-participants are out of the labor force by choice -- in school, parenting their children, or retired early."....

We are undeniably losing some manufacturing jobs over time (although manufacturing output has risen as a result of new technology and productivity gains).

But those positions are being rapidly replaced with information, technology and service jobs -- most of which pay more than factory work and are less physically grueling....

[Paul Ross]

I know engineers who have started up home improvement companies

Wow! There's a winner!! Rooooooight.

.... started restaurants

Did you know that 60% of all restaurants fail in their first 3 years? Still more in the first five?

... gone into the motel business

Wow. Another winner!

... or do what I do, consultant work in my chosen field.

With the exception of consultants, which is good work "IF YOU CAN GET IT" all the other options you ticked off are complete losers. Subemployment PER SE. These are not the careers these people trained for or wanted. Good bye vacation benefits, retirement, health plans, etc. And oh, yeah, let's not think to hard about the failure rate of start-ups in general... All so that importers can get a fractionally cheaper toaster...at the expense of their fellow citizens who they vilify.

Remember this little document?

U.S. Constitution:
We the People, of the United States of America, in order to form a more perfect union....

[Mase]

Im not doubting you, I am just curious as to what type of high value goods and services.

Here is a link to US exports, by products, for 2000-2004.

US Exports: Goods

Computer software, aircraft, armaments, entertainment, medical equipment, pharmaceuticals (90% of all new pharmaceuticals are created here in the US) agricultural products etc, etc, etc.

As for services, the US is the world leader in banking, other financial services and insurance. Construction is a service and, again, we are the world leader. Other services include transportation, education and professional business services.

Here is a link to an older article that offers a good explanation about service exports:

Service Exports

[Final Authority]

What can I say, you are a loser as are anyone who claims to be educated but can't earn a living.

Read the other posts that agree with me. They agree that you (your kind) are among the losers in life. Get over it and get a job.

[Paul Ross]

Where is the bad news in these?:
GDP growth
Rising wages
Low interest rates
Tame inflation
Manufacturing expansion (26 months in a row)

Actually the latter news item...manufacturing... , even with the cooked numbers, has been declining the last two months. You are a perfect example of the cooked frog. Happily swimming in his pot of water on the stove as the temperature is brought to a boil. Your sides failure to recognize what is going on is of monumental proportions. Which, when the exrement hits the fan, our nation will "truly be hurting" and the side espousing phony Fed numbers will be the reason for the calamity, not the ones who counseled caution.

Your irrational failure to question obviously dubious numbers, or comprehend the pivotal foundational nature to America her manufactures represent... Every single bloody word you say shows you don't understant what has been happening to manufactures. Even the Gold Bugs are apparently appreciating the phoniness in the official economic numbers...with increasingly apoplectic declarations. Terms which make the standard Free Republic conservative look awfully mild and tame by contrast. So why don't you get out of your cocoon of fantasy, your comfort zone of Greenspanisms, and check out what the rest of the planet is saying:

DOLLAR RALLIES ON TERROR?
By: Bill Bonner, Eric Fry & The Mogambo Guru,
The Daily Reckoning
Monday, 23 February 2004

Dolalr Rallies on Terror?!

We often opine that the world is full of fraud. Today we begin with proof.

Or rather, a few egregious examples - the first brought to you by the Bureau of Labor Statistics, explicated by the New York Post's John Crudele, courtesy of the great Mogambo Guru:

"By now my readers should have a PHD (pretty high disdain) for Capitol Hill math," writes Crudele. "This one, though, is a cake taker. I'll translate: Included in the 112,000 new jobs in January were 76,000 jobs that supposedly exist because people who weren't hired in December couldn't be fired in January. Got that? They didn't get hired in December, or fired in January, so they showed up as new employees in January as a statistical fluke. So, really there were only an abysmally small 36,000 new jobs in January."

In other words, the 76,000 jobs are a fraud. "Weak holiday hiring," wrote the Labor Department in its release, "...meant that there were fewer workers to lay off in January, resulting in seasonally adjusted employment gains for the month." The key words here are 'seasonally adjusted' - meaning that although holiday hiring was weak, government quants went ahead and added imaginary seasonal jobs to the total figures anyway.

Yet...on Friday, the governors of the Federal Reserve, like so many comic book heroes, professed en masse their belief that real "job creation" is on the way. "It's just a matter of time," Fred 'let's-all-join-hands-and-buy-an-SUV' McTeer assuaged the huddled crowd of attendees at an economic education conference in Texas.

"In all likelihood," Alan Greenspan (ranking former member of Time Magazine's Committee to Save the World) soothed a Chamber of Commerce group in Nebraska, "employment will begin to increase more quickly before long as output continues to expand." Ben 'Printing Press' Bernanke messaged reporters in Washington by "expressing" the view that "hiring will strengthen significantly this year..."

Speaking in St. Louis, William Poole suggested that if the U.S. economy expands by 4 to 5 percent in 2004, as the preponderance of the world's talking heads seem to agree it will, then there will be "significant increases" in employment.

Their post-huddle story in a nutshell: If U.S. GDP grows at the expected rate...jobs will appear. Will they, we wonder? Probably. In the U.S.? Not likely. India and China? That would be our guess. But leaving aside the politically juicy issue of "off-shoring" of jobs, let's consider the pedestal on which the faith of the Fed's super-heroes is resting: the growth in GDP figures themselves.

Rather than relying on annualized GDP growth rates, "a more precise measure [of the strength of the recovery]," writes Richard Freeman in the Executive Intelligence Review (also by way of our friend the Guru), "would be to compare debt to the productive portion of GDP."

The "productive portion" of the economy - manufacturing, agriculture, construction, mining, public utilities, and transportation sectors - produces the "actual wealth" from which debt, both personal and national - both being racked up at staggering rates - gets paid off. Yet according to U.S. Commerce Department data, the productive portion of GDP is now less than 30% of total GDP.

Perhaps the real reason new-hires are failing to show 'in the numbers' as quickly as our friends at the Fed would like is masked by using a flawed (or at least easily manipulated) measure of 'U.S. growth.' Recent GDP reports, after all, measure countless paper transactions following an historic burst of government stimulus - rather than real economic activity.

Hmmmn. Just a thought.

To make the case a little more poignant, Freeman sheds light on another little 'adjustment' the government likes to make use of: "The Commerce Department reports the 'manufacturing sector of GDP' in dollar terms, not output terms; and it adjusts it by the notorious 'Quality Adjustment Factor,' which artificially overstates production." Thus, even the officially stated 30% of GDP that is supposed to be the 'productive portion' is just a statistical fluke.

"There it is in one compact sentence," excoriates the Mogambo, "proof that the government is a pack of lying weasels!" Mogambo unpacks his outburst...below.

The Daily Reckoning PRESENTS : Mogambo on Monday! This week our hero is rudely interrupted while trying desperately to mind his own business...

GREENSPAN'S FOLLIES
by the Mogambo Guru

Last week, we were graced with the sight of Sir Alan Greenspan himself on TV testifying before Congress, which mainly consisted of Congresspersons demonstrating that they are either clueless, or that they couldn't care less, since they are there at the testimony apparently only as a welcome respite from their regular duties of spending us into the poorhouse, and passing more and laws that make living in America more and more unpalatable and uneconomic.

Now, to tell you truth, I did not hear much of the testimony, as I usually get so angry at the vapidity of the questions or the glib evasiveness of Greenspan's answers, or the outright lying, or his saying that he does not want to discuss this in public and how the questioner ought to drop by his office so they can close the door and that Greenspan can tell him how things really work, or maybe he would prefer to have some of Ashcroft's Patriot Act armed- and-armored agents drop by the Congressperson's house, late one night, so that THEY could explain it to him, if you catch his drift, and so I usually just stop watching the damn show, and missed most of the testimony. Almost all. I hate it.

But Mr. Eavis says he watched the testimony, and Mr. Eavis is the Senior Columnist for theStreet.com, and he wrote a nice piece about Greenspan's testimony, which he entitled "Probing Greenspan's Easy-Money Madness." With a title like that you know he is probably as dyspeptic as I am about the whole thing. He writes, "But one line in Greenspan's testimony Wednesday shows that he is unfazed by the soaring debt levels of the U.S. He said: 'All told, our accommodative monetary policy stance to date does not seem to have generated excessive volumes of liquidity or credit.'"

If Mr. Eavis says that this is what Greenspan said, then I have no reason to doubt him. So I'm going to believe him, especially since Greenspan has already proved that he is unreliable, and will lie to me just for the sake of lying, as far as I can tell, like when I finally get through to him on the phone, and as soon as he hears my voice he says "This is a no Mr. Greeniespan. Him gone. Me clean office plenty fine, chop chop" and then he hangs up, but I know it was him. He isn't fooling anybody.

But I can see how he figures that he IS fooling me, since he does it every six months in front of Congress, who are supposed to be so bright and trustworthy and educated and upholding the Constitution.

Anyway, I'll tell you what was spooky. One day last week, I am just minding my own business, going through the motions of the normal routine, when suddenly the meaning of when Greenspan said becomes clear to me in all its glaring treachery...and the next thing I know, I'm running down the street screaming in fear, and banging on the doors of neighbors, and when they make the mistake of opening the door in response to my repeated knocking, and ringing of the doorbell, and kicking the side of their house, and peering in the windows and yelling "Hello? Hello? I can see you in there! Why won't you answer the door?" then when they do finally open the door, then I'm grabbing them by their necks and screaming in their faces, yelling that "Alan Greenspan has just testified that he sees no evidence of excess liquidity! Do you know what this means? Do you?"

By this time my voice has risen an octave and gradually working to higher and higher decibels, and in my unfathomable rage I'm spraying their faces with flying specks of spittle. "Do you understand me?" I'm screeching. "Do you have any idea of the profound and horrific consequences of a chairman of the central bank to say that he sees no evidence of excess liquidity?"

Never mind that Greenspan's denial gives Mr. Ben Bernanke, he of the printing press, a green light to print up even more money out of thin air that will find its way into all sorts of nasty speculative bubbles. Never mind that it means that even more bad credit will be given over to debtors who will never pay it back, like the government. Never mind that the future value of the Greenback - which wasn't looking all that rosy to start with, especially sharing the first syllable of its nickname with the most profligate U.S. Fed Chairman in history, as it does - now appears to be vanishing into nothingness.

No...this sort of deceit is all too close to another of Greenspan's favorite lies, and let me give you the scoop on that idiocy, namely that inflation is low. But it is too easy to attack Mr. Greenspan on these counts, as they can be successfully dismissed by anybody in the whole freaking country who has spent money, as the prices of everything are up, and many of them spectacularly so. So we have proved that he is a clueless weasel about liquidity and inflation.

But there is another one of Greenspan's follies that just won't go away, and it has as much credence as Greenspan's ridiculous insistence that inflation is low, and that is the whole productivity thing.

So let's attack him about this productivity thing. But we are again stopped at the front door of the Fed by some tough-looking security guards, so we turn around and decide that we will confine ourselves to attacking him verbally, and by that I mean in writing, so you can see how confused I am in my anger. But even in my current bewildered state, I obviously have a lot more on the ball than this Greenspan fella.

Anyway, suppose you, as a successful capitalist swine, hire a hundred guys to make a hundred widgets, and sell the widgets for a dollar apiece, and thus GDP is $100. So far, so good. Then a few days pass, and we wake up with a blinding headache in a strange, seedy little hotel on the outskirts of town with a one-eyed woman who says her name is Darla, and when we frantically call in to the office, we find that you raised the price to two dollars, and you also figured out a way to make widgets with only fifty employees! The hike in price, unfortunately, reduces widget sales by 25%. But GDP jumps to $150! And because you fired half the employees, labor costs plummeted, and the next thing you know Alan Greenspan jumps on an airplane and flies down to visit your factory and give you an award as Proud Poobah of Productivity, which you deserve because productivity has soared. In the old days, it took a hundred guys to make a hundred widgets. Now it takes only fifty guys to make seventy-five widgets, and you doubled the price to more than make up for it. You're a genius!

But unemployment is up by 50%, total sales volume is down, and inflation has soared to 100%. Only a Fed chairman as clueless as Alan Greenspan could possibly only see the upside in this.

And so we have successfully debunked Greenspan's insistence that productivity is a miraculous tonic for the economy, that inflation is "low," and that the volumes of liquidity and credit in the U.S. system are "not excessive."

Is there any lie Sir Alan has left untold?

Regards,

The Mogambo Guru for The Daily Reckoning

P.S. I went to the Treasury website for the public debt, publicdebt.treas.gov, and saw that the debt is $7.025 trillion, a new all-time record. Just for laughs I scroll down to the bottom, and the list ends 9/30/87, when the debt was $2.350 trillion. That is, oddly enough, approximately the date that Greenspan took over the Federal Reserve.

So, under this guy Greenspan, we have gone into debt to the tune of another $4.675 trillion. One lousy Fed chairman has tripled our debt in seventeen lousy years. I am appalled and disgusted. Ugh.

Editor's note: Richard Daughty is general partner and C.O.O. for Smith Consultant Group, serving the financial and medical communities, and the editor of the Mogambo Guru economic newsletter, an avocational exercise the better to heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning, and other fine publications.

[Paul Ross]

Get over yourself. I am more gainfully employed than you will apparently ever be, Wally.

[Paul Ross]

What can I say, you are a loser

Proof that you are as I described: "All so that importers can get a fractionally cheaper toaster...at the expense of their fellow citizens who they vilify."

[winodog]

Thats impressive.

[Mase]

Which, when the exrement hits the fan, our nation will "truly be hurting" and the side espousing phony Fed numbers will be the reason for the calamity, not the ones who counseled caution.

Trying to pin down just when this 'calamity' might happen is the haystack needle with you doom 'n gloomer, protectionist, isolationist, alarmists. At least you didn't link us to the tipping point unclear article.

My guess is that you've been preaching the end is nigh for as long as you've been on FR. Just when will this all add up to disaster? Can you narrow it down some? Is it six-months? A year? Two years? Sometime between now and 2025?

According to you, GDP calculations are a fraud, wage growth is a myth, inflation is at 5.7% even though the 10-year bond is yielding 4.25%. You think we don't make anything here anymore yet we continue to set records for manufacturing output.

You live in a very grim world which is the polar opposite of most American's. Just because economics is the dismal science doesn't mean you have to be gloomy, Eeyore.

[Reaganghost]

"The bond market doesn't see it."

My guess is that when the Asians quit buying treasuries, the bond market will see a lot more than they are seeing now. When the price of bonds drop, stock market investors will start seeing things differently as well.

And when the dollar starts sliding again, maybe you will be able to see it, too.

"Do you see something they don't?"

As a matter of fact, I do. Do you remember that one day Enron was the world's most admired company and that a month later, its off-balance sheet liabilities began to be revealed and two days later, Enron was virtually worthless? Gokhale and Smetters calculated the off balance sheet unfunded liabilities of Social Security and Medicare. Depending on the growth rates that were assumed, the net present value of those unfunded liabilities was estimated at somewhere between $34 and $77 trillion dollars with their best estimate being around $55 trillion. And for each year that we fail to deal with the problem, the estimate is that the unfunded liabilities will increase at an annual rate of $1.5 trillion. If the off balance sheet liabilities are included, that $49 trillion net worth you were describing vanishes or is even negative. Countries and economies that are doing things right do not have negative cash flows and zero or negative net worths.

The Comptroller of the Currency has already concluded that no nation in history has ever had sufficient economic growth to cover the unfunded liabilities as estimated by Gokhale-Smetters. The United States is faced with three choices: bankruptcy, hyperinflation or selling the public lands of the West to liquidate the liabilities that cannot be funded from income. At present rates, without the unfunded liabilities, the people of the United States are spending $2 billion dollars a day more than they earn. If you factor in the $1.5 trillion, we are actually consuming $6 billion a day more than we produce. And by 2012, it will rise to more than $10 billion a day. Why, in no time at all, we'll all be rich.

Borrowing to increase productivity can raise income. What do you see? Does this graph look like borrowing to increase consumption or borrowing to increase income?

[ex-snook]

" ...the average annual payroll per employee in Manhattan during 2003 was $73,032."

Too bad it takes at least 150K/year to live there. ;)"

Hey doubt many of these 'average' people live in Manhattan. They hit the trains out at 5 or earlier. Now the people who clean up or clerk the offices they live in Manhattan and they pull those averages down quite a bit.

[Paul Ross]

You think we don't make anything here anymore yet we continue to set records for manufacturing output.

Okay. Put up. Right now. Put up, or go run for the tall grass.

Show me, without ANY DOLLAR NUMBERS ...but only UNIT-PRODUCTION NUMBERS that we make more cars in the U.S. More planes. More computers. More widgits.

I, and virtually EVERYBODY HERE AT FREE REPUBLIC knows your side can't do it. Or at least, won't.

You would have done it before now if you could with a corrupt CATO, not to mention John Snow and Robert Zoellick striving mightily to spin national discussion of the issue.

Everything is based on company dollar sales...not actual U.S.-located production activity. The facts show that non-defense U.S.-production is declining...even with DOD procurement included!... not growing:

And while wanting to believe the Executive branch, note what the CBO reports:

The manufacturing sector of the U.S. economy has experienced substantial job losses over the past several years. In January 2004, the number of such jobs stood at 14.3 million, down by 3.0 million jobs, or 17.5 percent, since July 2000 and about 5.2 million since the historical peak in 1979. Employment in manufacturing was its lowest since July 1950 (see Figure 1).

Figure 1.

Manufacturing Employment

(Millions of jobs)

Sources: Congressional Budget Office; Department of Labor, Bureau of Labor Statistics.

And clearly not unrelated, is the predatory pattern of Pacific Rim manufactures exports to the U.S., not to mention China:

The United States' Trade Balance with China, 1989 to 2002 (In billions of dollars)

BTW: I have yet to meet a free trader who was as light-hearted and joyful to be around as the average economic conservative. The dismal science doesn't get me down. Whereas just look at your standard model glass-half-full spin-meister: Alan Greenspan. THERE is a load of laughs and a bundle of joy! LOL!

So, shall we play pin the tail on you again, donkey?

[hubbubhubbub]

Mogambo Rocks!

[RFT1]

The WSJ is every bit the rag the NYT is. As for unemployment, the metric on how unemployment is defined(same for inflation) has been changed to make the number a couple of percentage points lower than it should be.

[snowsislander]

The United States' Trade Balance with China, 1989 to 2002 (In billions of dollars):

For what it is worth, that downtrend is continuing. Here are the numbers from 2003-2005 (from http://www.census.gov/foreign-trade/balance/c5700.html):

---

Trade with China : 2005

NOTE: All figures are in millions of U.S. dollars.

Month	Exports	Imports	Balance
January 2005	2,609.2	17,863.7	-15,254.5
February 2005	3,082.4	16,953.6	-13,871.2
March 2005	3,305.4	16,209.5	-12,904.2
April 2005	3,405.1	18,119.7	-14,714.6
May 2005	3,296.1	19,050.3	-15,754.2
TOTAL	15,698.2	88,196.9	-72,498.7

• 'TOTAL' may not add due to rounding.
• Table reflects only those months for which there was trade.
• CONTACT: Data Dissemination Branch, U.S. Census Bureau, (301) 763-2311
• SOURCE: U.S. Census Bureau, Foreign Trade Division, Data Dissemination Branch, Washignton, D.C. 20233

---

Trade with China : 2004

NOTE: All figures are in millions of U.S. dollars.

Month	Exports	Imports	Balance
January 2004	2,629.0	14,089.0	-11,460.0
February 2004	2,979.4	11,267.1	-8,287.8
March 2004	3,374.6	13,800.1	-10,425.5
April 2004	2,734.6	14,744.8	-12,010.2
May 2004	2,874.2	15,067.1	-12,193.0
June 2004	2,790.8	16,887.8	-14,097.0
July 2004	2,667.9	17,562.1	-14,894.2
August 2004	2,674.9	18,067.9	-15,393.0
September 2004	2,861.5	18,386.9	-15,525.5
October 2004	2,946.7	19,718.2	-16,771.4
November 2004	2,964.5	19,679.0	-16,714.5
December 2004	3,246.0	17,412.0	-14,166.0
TOTAL	34,744.1	196,682.0	-161,938.0

• 'TOTAL' may not add due to rounding.
• Table reflects only those months for which there was trade.
• CONTACT: Data Dissemination Branch, U.S. Census Bureau, (301) 763-2311
• SOURCE: U.S. Census Bureau, Foreign Trade Division, Data Dissemination Branch, Washignton, D.C. 20233

---

Trade with China : 2003

NOTE: All figures are in millions of U.S. dollars.

Month	Exports	Imports	Balance
January 2003	2,069.8	11,403.5	-9,333.7
February 2003	2,048.7	9,629.6	-7,581.0
March 2003	2,423.1	10,110.0	-7,686.9
April 2003	2,121.9	11,521.9	-9,399.9
May 2003	1,984.3	11,884.7	-9,900.4
June 2003	2,119.6	12,127.3	-10,007.7
July 2003	2,067.4	13,438.6	-11,371.2
August 2003	2,034.4	13,764.9	-11,730.4
September 2003	2,091.0	14,747.5	-12,656.5
October 2003	2,778.3	16,458.3	-13,680.0
November 2003	3,319.7	14,156.9	-10,837.3
December 2003	3,309.6	13,192.8	-9,883.2
TOTAL	28,367.9	152,436.1	-124,068.2

• 'TOTAL' may not add due to rounding.
• Table reflects only those months for which there was trade.
• CONTACT: Data Dissemination Branch, U.S. Census Bureau, (301) 763-2311
• SOURCE: U.S. Census Bureau, Foreign Trade Division, Data Dissemination Branch, Washignton, D.C. 20233

---

[A. Pole]

In my circle of family, friends, acquaintances, etc. [...] I think that sums things up pretty well.

You egocentrism is extreme. You think that your own circle and especially you yourself represent the whole world.

[Alberta's Child]

You think that your own circle and especially you yourself represent the whole world.

I was not trying to imply that my circle of acquaintances is indicative of the nation as a whole. I simply wanted to point out that a whole bunch of these folks have been complaining about "unemployment" and "job losses" for as long as I can remember, and not a single one of them is unemployed. In fact, it occurs to me as I type this that the ones who complain the loudest have never been unemployed in their lives.

And oddly enough, the ones who have gone through some very rough stretches in the past don't complain at all -- they just go out and figure out what it takes to get things done.

[Mase]

My guess is that when the Asians quit buying treasuries, the bond market will see a lot more than they are seeing now

So you think China and Japan are all of a sudden going to change from export driven economies by stimulating domestic consumption? I hope you're right. In the meantime though, what do you think they'll be doing with all those dollars we send them for cheap stuff at Wal-Mart, cars and electronics? Where else will they invest those dollars? What will the Chinese buy to maintain the Yuan peg?

When the price of bonds drop, stock market investors will start seeing things differently as well.

Are you saying that when bond prices fall the stock market always follows? What will cause the bond market to drop, rising interest rates? Are higher interest rates going to hurt both the bond and stock markets? How do you know?

And when the dollar starts sliding again, maybe you will be able to see it, too.

The dollar will start sliding again vs. what other currency, the Euro? In dollar terms the Euro was first offered at about $1.17. It then dropped as low as 80 cents, shot up as high as almost $1.40, and is now around $1.21. Or, are you talking about other currencies?

From Kudlow:
The dollar, in actuality, isn’t really weak. A broader dollar index of 26 currencies published by the Federal Reserve paints a much stronger picture. Since February 2002, the dollar has fallen 14 percent from a greatly overvalued position that deflated the U.S. economy into recession. However, over the last 10 years, this broad-dollar index is basically unchanged. The dollar is at nearly the same point today as it was in 1994. During this period the average inflation rate in the U.S. was 1.8 percent.

Larry Kudlow

You are correct when you state that household net worth is $49 trillion dollars. If the government defaults on it's unfunded liabilities or raises my taxes to pay for it, how does that affect household net worth? It doesn't. How does it affect the value of the dollar? Again, it doesn't.

That chart you posted only considers liabilities and not assets. If I only counted my liabilities and not my assets, I'd be losing sleep too.

As clearly pointed out by expat_panama here (post #278) the federal debt as a percentage of family wealth has shrunk substantially since 1994.

Thanks again for the chart but within the proper context it really isn't as scary as you want to make it. Maybe you'll start sleeping better now.

[Toddsterpatriot]

Actually the latter news item...manufacturing... , even with the cooked numbers, has been declining the last two months.

According to what source?

[Toddsterpatriot]

Depending on the growth rates that were assumed, the net present value of those unfunded liabilities was estimated at somewhere between $34 and $77 trillion dollars with their best estimate being around $55 trillion. And for each year that we fail to deal with the problem, the estimate is that the unfunded liabilities will increase at an annual rate of $1.5 trillion. If the off balance sheet liabilities are included, that $49 trillion net worth you were describing vanishes or is even negative.

Sounds like you don't understand the difference between external debt and unfunded liabilities. Or how either one impacts household net worth.

At present rates, without the unfunded liabilities, the people of the United States are spending $2 billion dollars a day more than they earn.

You don't understand this either. America's GDP is $12 trillion a year. How do you figure we're spending more than we earn? We are spending money we've earned. The foreign holders of these dollars we've spent need to do something with their dollars. They've decided to invest them in our debt and equity securities. Doesn't mean we haven't earned the money we've spent.

Maybe read a book on economics? You'll make fewer embarrassing mistakes in your posts. Or not.

[Mase]

Okay. Put up. Right now. Put up, or go run for the tall grass.

Economic Eeyores are never intimidating.

First of all, manufacturing employment has been shrinking worldwide.

U.S. manufacturing jobs are down by 2.45 million in the past three years [200-2003]. The zero-sum view of the world imagines that these jobs went somewhere else—specifically that American jobs were exported to a country with lower wages.

However, America is not alone in experiencing declines in manufacturing jobs. U.S. manufacturing employment declined by 11 percent between 1995 and 2002, which is identical to the average world decline according to a study by Alliance Capital Management.[22] Contrary to the myth, China’s losses were even sharper: 15 percent of its industrial jobs over the same period.

The real culprits for declining numbers of manufacturing jobs in all countries are increasing productivity, capital investment, and technological innovation. Although manufacturing jobs have declined in America over the past decade, U.S. manufacturing output has jumped by 38 percent. Today, the U.S. manufacturing sector produces more than the entire Chinese economy.

The False Crisis of Outsourcing

without ANY DOLLAR NUMBERS ...but only UNIT-PRODUCTION NUMBERS

Thank goodness for solid conservative economists like Bruce Bartlett to refute your conclusions.

"Falling manufacturing employment in the United States has led to a widespread impression that the industrial sector of our economy is declining. Critics of free trade on both the left and right are proposing more trade protection to keep out foreign goods - or at least to save American jobs.

The truth is that U.S. manufacturing is doing quite well in every way except in the number of people it employs. Furthermore, few economists would judge the health or sickness of any industry based solely on employment. By that standard, agriculture has been the sickest industry of all for decades because employment has declined - although farm productivity rose dramatically in the past century. Industrial health is better measured by output, productivity, profitability and wages.

In contrast to employment, industrial production has remained relatively strong. The Federal Reserve Board's industrial production index - which covers industrial sector output, capacity and capacity utilization - has fluctuated only slightly since 1998, despite a recession in the meantime.

Considering total goods production (including things like mining and agriculture in addition to manufacturing), real goods production as a share of real (inflation-adjusted) Gross Domestic Product (GDP) is close to its all-time high.

• In the second quarter of 2003, real goods production was 39.2 percent of real GDP; the highest annual figure ever recorded was 40 percent in 2000. See the Figure.

• By contrast, in the "good old days" of the 1940s, 1950s and 1960s, the United States actually produced far fewer goods as a share of total output, reaching 35.5 percent in the midst of World War II.

Looking at manufacturing alone, over the long term one finds it has also grown. In 2001, in inflation-adjusted terms it was 16.2 percent of GDP, which is higher than it was during the recession of 1991 (16 percent).

It is critical to adjust the figures for inflation in order to make a valid comparison. The price of many goods such as computers has fallen sharply. Since GDP data are calculated in money rather than volume terms, failure to account for price changes gives a distorted picture. For example, suppose the output of a product rose by 10 percent in terms of units while falling 10 percent in price due to higher productivity. Using nominal dollar figures makes it appear there was no increase in output. Using real data captures the increase.

American workers are still the most productive in the world.

U.S. workers produced an average of $71,600 in output (in 1999 dollars), followed in a not-so-close second by Belgium, where each worker produced $64,100.

Japanese workers - renowned for their productivity - each produced just $51,600 and Korean workers produced even less: $34,600.

Conclusion:
In short, U.S. manufacturing is very healthy. There is absolutely no evidence whatsoever that we are becoming a nation of "hamburger flippers." The United States is producing more "things" than we have in almost every year for which we have data. The decline in employment is a good thing because it signals that manufacturing productivity is very high and that manufacturers can afford high-wage U.S. workers while still competing with low-wage workers in the developing world.

Bruce Bartlett: The State of US Manufacturing

Apparently, manufacturing output is up almost 50% since 1992
Source