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WSJ: So This Is a Weak Economy? - We're on the right path, but need more structural improvements.
Wall Street Journal ^ | June 28, 2005 | DAVID MALPASS

Posted on 06/28/2005 5:14:12 AM PDT by OESY

...The U.S. expansion has been strong and steady despite the warnings of fragility, the repeated claims of a slowdown, and the fear of China (as intense as the Japan fears of the 1980s). U.S. growth has averaged a fast 3.9% pace since the initial 7.4% tax-cut-related growth celebration in the third quarter of 2003. Thanks in large part to smaller businesses, U.S. unemployment has fallen to 5.1%, with wage and salary income growing at a 10% annual rate in the revised fourth-quarter data. Beyond housing, household liquid assets have increased more than both total debt and foreign debt, helping build solid resources for the future. Add to that the nation's biggest unrecorded asset -- a robust system of innovation, market-based capital allocation, and decentralized decision-making.

Yet the litany against the U.S. economy is so ingrained and familiar that few disputed this spring's "slowdown." When strong data on income, employment, consumption and profits showed 3.5% first-quarter GDP growth and a continuation into the second quarter, the headlines shifted to other attacks -- adjustable-rate mortgages, a housing "bubble," the distribution of income -- rather than revising the slowdown story....

Why the urge to look for weakness at every turn? Partly, bad news sells; even in business news, if it bleeds, it leads. Second, some of the search for weakness is pure politics -- the party in the opposition has an interest in criticizing the economy and economic management. In its latest variation, the plan seems to be to paint the U.S. as an unfair, dying economy with insufficient resources to care for the elderly [and]... the poor....

The overarching reason for the consistent underestimation of the economy is a misunderstanding of its strengths and vulnerabilities. U.S. economic success rests on market-based flexibility and self-reliance unmatched in major foreign economies....

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Editorial; Foreign Affairs; Government; News/Current Events; Politics/Elections
KEYWORDS: bush; cary; china; cpi; deflation; dollar; economy; feds; fomc; gdp; glennhubbard; gold; growth; interestrates; nixon; protectionism; smoothawley; tariffs; taxes; trade; tradedeficit
Mr. Malpass is chief economist at Bear Stearns.
1 posted on 06/28/2005 5:14:14 AM PDT by OESY
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To: OESY

I don't know about this, maybe it's just my state (PA), but I there are an awful lot of small businesses closing up shop. Available jobs seem to be in "health care", paying minimum wage. Good paying jobs for the average Joe have long gone (Beth Steel, Agere, which used to be Western Electric).


2 posted on 06/28/2005 5:23:03 AM PDT by Bossy Gillis
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To: Bossy Gillis

Your good paying jobs and the steel industry were killed by the labor unions as were many of America's other industries. Who is in trouble now? Auto industry - controlled by the union. Airlines - controlled by multiple unions. Our education system - union controlled.

Unions are a Communist front and a major money source for the Democrats. The destruction of America as we know it is their aim. They are well on the way to success but we can still reverse their momentum if we carefully monitor the coming elections to prevent election fraud. However, if we don't reverse the trends in the courts elections will be meaningless.


3 posted on 06/28/2005 5:53:45 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: Mind-numbed Robot
An awful lot of small business's are closing.....but remember a lot of small business's open...that is why they are small..they are called start-ups...and they are the engine of our economy. Yes the UNIONS are dying..they are the ones losing their members jobs....I don't like unions so I think its fine...but if I was a union member..I would look closely at what is going on. Stop being so greedy
4 posted on 06/28/2005 6:04:05 AM PDT by Youngman442002
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To: Mind-numbed Robot

I know what you are saying, the entire Northeast is like this. The good paying jobs seem to be in the education field, ie, public school system, they just raise property taxes every year to get their generous salary and benefit packages.


5 posted on 06/28/2005 6:13:03 AM PDT by Bossy Gillis
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To: Youngman442002
An awful lot of small business's are closing.....

Historically only about 5%-10% of new business succeed anyway. The closing of large businesses usually also portend the closing of smaller businesses which serviced those large companies and their employees. Whether that is true of your area and the ones you see closing I don't know but it is a natural process.

6 posted on 06/28/2005 6:26:35 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: Bossy Gillis

The growth industries seem to be government and paid agitators.


7 posted on 06/28/2005 6:28:00 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: Bossy Gillis
take a look at the New England cycle, jobs in textiles left the Boston/New England area at the turn of the century, this was followed by other industries heading south to lower wage non-union areas, like NC and Texas. Now those auto jobs have followed - that is why Toyota, BMW, Mercedes and Hundyi have built their plants in the south.

People are leaving the N.E. too and the politicos don't get that History repeats itself and they are doing nothing to repeat Reagan instead of Marx.

8 posted on 06/28/2005 7:20:24 AM PDT by q_an_a
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To: q_an_a
People are leaving the N.E. too and the politicos don't get that

Very true. But why would pols care....they all have good paying jobs and great benefits. Do expect them to lead??

9 posted on 06/28/2005 7:26:34 AM PDT by 1Old Pro
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