Skip to comments.There Are Economic Storm Clouds Ahead (Robert Reich)
Posted on 06/01/2013 7:17:20 AM PDT by blam
There Are Economic Storm Clouds Ahead
Robert Reich, Contributor
Jun. 1, 2013, 9:43 AM
Economic forecasters exist to make astrologers look good. But the recent jubilance is enough to make even weather forecasters blush. Just look at the bull market! Look at home prices! Look at consumer confidence!
I can understand the jubilation in the narrow sense that weve been down so long everything looks up. Plus, professional economists tend to cheerlead because they believe that if consumers and businesses think the future will be great, theyll buy and invest more leading to a self-fulfilling prophesy.
But prophesies cant be self-fulfilling if theyre based on wishful thinking.
The reality is were still in the doldrums, and the most recent data gives cause for serious worry.
Almost all the forward movement in the economy is now coming from consumers whose spending is 70 percent of economic activity. But wages are still going nowhere, which means consumer spending will slow because consumers just dont have the money to spend.
On Thursday the Commerce Department reported that consumer spending rose 3.4 percent in the first quarter of this year. But the personal savings rate dropped to 2.3 percent from 5.3 percent in the last quarter of 2012. Thats the lowest level of savings since before the Great Recession. You dont have to be an economic forecaster, or an astrologer, to see this cant go on.
Yes, home prices are rising. The problem is, theyre beginning to rise above their long-run historical average. (Before the housing crash they were were way, way above the long-run average.) So watch your wallets. Weve been here before: The Fed is keeping interest rates artificially low, allowing consumers to get low home-equity loans and to borrow against the
(Excerpt) Read more at robertreich.org ...
"NEW HAVEN The spin-doctors are hard at work talking up Americas subpar economic recovery. All eyes are on households. Thanks to falling unemployment, rising home values, and record stock prices, an emerging consensus of forecasters, market participants, and policymakers has now concluded that the American consumer is finally back."
"Dont believe it"
There was an interesting business news segment about a month ago....where an analyst laid out the biggest issue. There are way too many people buying homes still...without any down payment. If the interest rates are ever moved....even half-a-point...it’ll create a tidal wave that only requires six months before recession kicks in, and another banking crisis.
After watching that, I’m pretty convinced that this ‘recovery’ period that we think is in progress right now....is mostly fake.
"The strong housing data is taken as proof that the economy has turned around and that a recovery is under way. Cooler heads may simply see how government policies have channeled money into real estate in order to reflate a bubble that has been collapsing for the last five years. Although the money is entering the market through slightly different paths than it did in 2005 and 2006, its effects on housing, and the broader economy, are the same as they were before the bubble burst. When the inevitable happens again, the ensuing damage will be eerily familiar."
If everything is cool, why did the markets exhibit panic yesterday?
——But wages are still going nowhere-——
That is the reason for the piece. All the rest is packaging.
To suceed there must be a higher rate of inflation and that must include or be led by wage inflation.
It’s not the interest rate move that will do it. Most mortgate owners can absorb a percent or two move as long as they still have a job. It’s the offshoring of our jobs. Refusal to do anything about China’s undermining of our industries.
Is he setting the groundwork to move the rats off the sinking USS Obama for the Hillary .
Or does he realize the Obama is getting dangerously close to the fuhrer status and sees the need to start deflating him?
What does this little creep do for a living? Wasn’t he discredited during the Clinton years? I have to go to work every day to pay bills. What the hell does this annoying little cretin do for a living?
He’s a professor at Berkeley.
His massive salary is funded by unlimited taxpayer subsidized student loans.
He’s part of the “big education” cycle to fund Democrats.
Wake up people.
We need to be industrial. We have been giving away the very things which made us a strong America.
Bring back US jobs, and industry.
Reich was labor secretary in the administration that signed the NAFTA and CAFTA treaties and paved the way for China to joint the WTO. Poppa Bush, Clinton, and Bush Jr. pursued aggressively the free trade and money printing policies that destroyed the US manufacturing sector, has nearly destroyed the middle class, ensured the rise of China as a major power, enriched the Wall Street bankers and speculators, and created today’s economic mess. Reich was part of the problem, just like Rubin, Paulson, Bernanke, Greenspan, Geithner. None of them will be part of the solution. They have a vested interest in the status quo.
I'll bet the little weasel doesn't teach one class in a week. And when he goes on speaking tours, who picks him up and puts him in his booster seat?
Whatever is happening in the housing market now...it is a Dead Cat Bounce.
Best news for America yet when that evil little dwarf says the economy is about to tank. The twerp is usually wrong.
Reich is the midget towel boy in Obama’s bathhouse
robert reicccchhhhhhhhhhh is a communist and is responsible for much of our current economic debacle. reicccccchhhhhhhhhhhhh thinks we need to spend about 10 trillion more.
He was a LARGE part of clintoons economic team and he advises obama all of the time.
For any who may have forgotten how this gnome thinks.
Rangel’s thoughts on the middle class are also interesting.
Q. Where are the jobs?
A. Look at what you buy and you will see where they are.
So we need more Dems in Congress? Right, Shorty?
Remember when Rush had his tv show and used to make fun of “shorty” ?
Robert the 1/3 Reich is just another corporatist/fascist like Krugman.
Oh, for Pete's sake. That is such an ignorant statement.
Consumer spending is 70% of the GDP equation because the GDP equation was designed specifically to illustrate Keynesian economic principles [and I use the word "principles" lightly]. GDP completely ignores business-to-business spending which comprises a larger share of the money spent in the economy than consumer spending.
Hard to believe but that's by design. Truth be known, business spending comprises roughly 40% of the economy in good times and consumer spending somewhat like 30%. The Keynesians claim that including business spending would be "double-counting". They're wrong. We're screwed.
Bob forgot to add the Fed and QE infinity.
I have read his books and he is all that you say but he is a communist, one world order demon.