Posted on 06/29/2013 10:29:46 AM PDT by abbyjoseph
While the mainstream economists were quick to believe that the U.S. economy is growing as the key stock indices suggest, I stood by my opinion that it isn’t.
After the first estimates of gross domestic product (GDP) for the U.S. economy came out, a wave of optimism struck and stock markets rallied. It seemed as if everything was headed in the right direction.
Sadly, they were wrong.
In its third and final revision of GDP, the Bureau of Economic Analysis (BEA) reported that the U.S. economy grew at just 1.8% in the first quarter of 2013 from the fourth quarter of 2012—that is 25% lower than its previous (second) estimates, when the BEA said the U.S. economy grew 2.4%, and 28% lower from its first estimate of 2.5%. (Source: Bureau of Economic Analysis, June 26, 2013.)
(Excerpt) Read more at profitconfidential.com ...
Did we ever get out of the last recession?
Wages are falling and the food and fuel prices have increased dramatically, where are the consumers supposed to be getting the money to fuel spending increases?
With grocery prices sky rocketing and gas prices staying at their peak, consumers are tapped out.
Our family has cut up its credit cards and are scrimping and saving to pay off the last one this month. We will not replace them and will buy “cash only” for the duration of this never-ending “recession” that looks to us like a depression.
Consumer spending cannot bring us out of this. This is just the economic equivalent of chasing the dragon. It’s silly, and intellectually lazy, to think that destroying value can make us prosperous.
Some Keynesian (I think) said we could spend our way to prosperity. Guess he's still around.
There’s many a FReeper who things the FED’s printing will get us out of this I was called a ‘Doomer’ by a couple last night on another thread saying the unemployed are just ‘Dead Beats’ and our economy can handle what ever the FED prints:
http://www.freerepublic.com/focus/f-bloggers/3036983/posts
The reason consumer spending won’t get us out of this is, consumer goods are now all made in China.
(duh)
If there was more ammunition available at retailers, consumer spending would increase.
:^)
Let’s import 10 million illiterate peasants.
That’ll really give the economy a boost.
“Did we ever get out of the last recession?”
Exactly. When was that supposed to have happened?
Perhaps enough people have figured out not to spend what you don’t have on what you don’t need.
Wrong question.
Consumers aren't spending because they don't have money. They don't have money because they don't have jobs. They don't have jobs because business has stopped hiring. Business has stopped hiring because government has eliminated business's ability to make a profit. Government has eliminated profit making ability through regulation and taxation. Government profit-killing regulation and taxation is largely unconstitutional.
Government is completely they cause of this mess.
The correct question is; "Unconstitutional Government Regulation and Taxation to Drag Us from Recession to Another Depression?"
Remember, this was exactly cause of the Great Depression. And it took World War II to break us out of that mess!
Why is there a glut of homes far outpacing [real]demand?
Why did commodities prices spike and then proceed to plummet, but consumers' goods prices fell softer?
If it was a failure of the consumer, then you would see consumers' goods prices fall first, and subsequently spread to commodities.
Nancy Pelosi has said that unemployment checks are the biggest boost to the economy, Aside from the that this statement is asinine, it couldn’t possibly work. Since the only real reason the unemployment figures are going down is because people have burned through their benefits and still have no job! So the only possible way her idiocy would work is if we had full unemployment.
Not unless money is earned and spent locally. The way we are doing things now, spending money has no "multiplier effect" on the economy.
So the only possible way her idiocy would work is if we had full unemployment.
Just give her a few more years.
consumers can t spend what they don’t have
Production takes place through time. Businesses combine various complementary factors of production to create more satisfactory configurations. It is this process which, in the teeth of uncertainty, advances output towards the receiving consumers. But to begin it, one does not need spending, one needs savings to remunerate workers even though the output has not been created. Workers are not *ultimately* paid in money, but in the consumers' goods with which they spend their checks on. To provide the real resources with which factories are created -- not the mention the circulating capital which flows through it -- some one had to save those resources. That is to say: those resources had to be channeled away from present want satisfaction to future want satisfaction. Workers also have to be channeled away from providing present satisfaction to provision of future want satisfaction.
To engage in production one needs to have a prior saved output. This was proven by the economist Eugene Bohm-Bawerk in the 1800s. In increasing consumer spending one is, in effect, channeling originary factors and convertible capital goods away from future want satisfaction to present want satisfaction. It is sacrificing greater future productivity for greater present (near future) consumption.
Increasing consumer spending has a tendency to push up profits of those businesses engaged in the production of consumers' goods (present satisfaction), and lowers the profits (relatively) of businesses further away from consumption (future satisfaction) as factors are bid away from them.
Consumers provide valuable feedback via profit and loss, but they do not drive the economy as an engine -- steering would be more appropriate.
The ratio of consumption to savings determines the price structure of the economy. This price structure is known to some as Originary Interest. It reflects the time preference of all economic participants.
Originary Interest also has its corollary in the loan market, viz; the gross market rate of interest.
Why do these people think people will spend just because they have money?
I buy what I need and what money I have has no bearing on how much I buy or spend!
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