There Are Economic Storm Clouds Ahead (Robert Reich)

Business Insider ^ | 56-1-2013 | Robert Reich, Contributor

[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!”

Please.

I can understand the jubilation in the narrow sense that we’ve 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, they’ll buy and invest more – leading to a self-fulfilling prophesy.

But prophesies can’t be self-fulfilling if they’re based on wishful thinking.

The reality is we’re 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 don’t 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. That’s the lowest level of savings since before the Great Recession. You don’t have to be an economic forecaster, or an astrologer, to see this can’t go on.

Yes, home prices are rising. The problem is, they’re 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. We’ve been here before: The Fed is keeping interest rates artificially low, allowing consumers to get low home-equity loans and to borrow against the

(snip)

[Roccus]

For any who may have forgotten how this gnome thinks.

http://www.youtube.com/watch?v=JCp7U1f8lv8

Rangel’s thoughts on the middle class are also interesting.

[ex-snook]

Q. Where are the jobs?

A. Look at what you buy and you will see where they are.

[Huskrrrr]

So we need more Dems in Congress? Right, Shorty?

[nascarnation]

Remember when Rush had his tv show and used to make fun of “shorty” ?

[SVTCobra03]

This might be useful:

http://libertymastermind.us/

[seowulf]

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.

Robert the 1/3 Reich is just another corporatist/fascist like Krugman.

[BfloGuy]

Almost all the forward movement in the economy is now coming from consumers — whose spending is 70 percent of economic activity.

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.

[M Kehoe]

Almost all the forward movement in the economy is now coming from consumers...

Bob forgot to add the Fed and QE infinity.

5.56mm

[LibLieSlayer]

I have read his books and he is all that you say but he is a communist, one world order demon.

LLS

[Bon mots]

^{⬆ Click on the image above to see on the BLS's homepage.}