Economic signals still flashing green despite first-quarter slump

So usa today says
Economic signals still flashing green despite first-quarter slump


What do you all think
Anyone willing to put their figurative money on the three quarters being down?

 

Green? Green around the gills maybe. This economy is stumbling like a pig on stilts, and is just waiting for an excuse to go into a tailspin.
You cannot do the wrong things for the wrong reasons continually and expect it to produce organic economic growth.

 

Your prediction?

Your policy perscription?

 

I am extremely involved in medical device, semiconductor and electronics manufacturing.

Everything just seems flat and everyone constantly complains that there is no new business to go after.

Don't think it's dying, but it sure as heck is anywhere near thriving

 

the stock market will shrink around 20% probably in the 1stQ in 2016 or in 4thQ 2015

then it will remain flat for awhile then start to go back up again, weve been breaking stock market record, after stock market record, these gains cant just simply go on forever, as we reach the last few years of this bull market run (or last few months rather) we will see a tighter monetary policy at the fed, and even if they choose to do nothing the bond market will in fact create this situation itself, as it understands exactly what the fed is doing, why there doing and around what time they need to do it, so even if the fed doesn't raise interest rates in the 6 months or so, the bond market will "naturally" raise the interest rates anyway, as bond traders and stock traders tend to dictate trading patterns based on their predictions on what the fed should do, not what it might do.

 

Hardly a dire warning
And if stocks are a measure
Then obama is a golden boy

I do not see any particular economic problems on the horizon
Unless congress gets cute in some disruptive way

 

We've had this cycle of a weak 1st quarter followed by stronger growth the remainder of the year for several years now. So I don't put a lot of weight to the fact that the first quarter was weak once again this year.

 

Revival will happen no matter what government does, it just would happen quicker without government.

The good news that I see is that unemployment ticked up a tenth. That means that more people actually reentered the job market for a change.

 

The recession that began in 2008 was artificially delayed by the massive printing by the Fed which in turn artificially lowered interest rates and inflated asset values, especially equity values. The result was a skewed economy in which the .1% of the population thrived and the 99.9% lost ground. Employment suffered as low paying service sector jobs replaced manufacturing jobs. The older generations had less to spend because of low interest rates which decreased the spending of the most affluent demographic while forcing many to postpone retirement displacing younger workers. This is clearly causing civil unrest and growing resentment against government and the status quo which is driving the realization even by the rich that this is unsustainable. The problem is that the cure involves removing the artificial stimulus and allowing the economy to naturally correct itself. That correction will begin with rising interest rates which will result in increasing loan defaults, the loan defaults will result in falling asset values, and thus falling stock prices. This cycle will result in deflation as in a fiat money system, the default of a loan means that amount of money "disappears" from the economy. The more loans default, the more money disappears and the more asset prices fall because there is less money chasing more goods. Many believe the Fed will step in to save the day, but the big gun the Fed has to stimulate is to print money to lower interest rates. The last recession took a 5% drop in rates to entice enough borrowing to get the deflation under control. The problem is you cannot lower interest rates 5% when they are already at .25%.
The truth is, despite the faith most investors have in the Feds ability and resolve to prevent any kind of serious downturn, the Fed is basically impotent as a result of their current position.

My prescription? Position yourself to best survive the inevitable. When the debt bubble bursts, those people sitting on cash will see the fire sale of their lives. The best time to buy is when the blood is running in the streets...

 

USA Today is now an economic tome? How far the American people have fallen.

People can cherry pick data to argue the economy sucks, or the economy is OK. Nobody except blind politicians claim the economy is good or great. The US economy is treading water, the slow trend in improvement is simply due to the American people adapting to the very bad environment created by the government. People are learning how to tip-toe through the minefield. Its not going to last, its not a robust economy, the next good jolt will turn it all over.

 

There is no improvement.... Because the people of this country are functionally illiterate, they do not know how to interpret data...

If you truly want to know how the economy is doing there is only one economic indicator you need to look at, the velocity of money.

If the velocity of money is going up then the economy is improving, because more money is changing hands, if it is declining the economy is declining because less and less money is changing hands.. It is not rocket science... So what is the velocity of money doing now?? Look and see.

https://www.google.com/url?sa=t&rct...soK4BA&usg=AFQjCNFpZf29oqVhSDK--YSLjWyMwxUeZA

 

That's absolutely correct.

And if people & businesses actually start spending money, and all that cash the Fed & Treasury have been pumping into the system starts moving, the house of cards is going to collapse.

 

Spending what money? If the people had money they would spend it. That's what they do. The debt to income ratio is about 105%. They are maxed out, and yet the velocity of money is falling which shows that income is falling also. Despite all the BS the media pumps, the economy is tanking.

 

The economy is stagnant and unstable, I wouldn't say its tanking right now.

Refer to this:
https://www.stlouisfed.org/on-the-e...elocity-tell-us-about-low-inflation-in-the-us

Here's the main point (the charts are in the link to the article):

During the first and second quarters of 2014, the velocity of the monetary base2 was at 4.4, its slowest pace on record. This means that every dollar in the monetary base was spent only 4.4 times in the economy during the past year, down from 17.2 just prior to the recession. This implies that the unprecedented monetary base increase driven by the Fed’s large money injections through its large-scale asset purchase programs has failed to cause at least a one-for-one proportional increase in nominal GDP. Thus, it is precisely the sharp decline in velocity that has offset the sharp increase in money supply, leading to the almost no change in nominal GDP (either P or Q).

So why did the monetary base increase not cause a proportionate increase in either the general price level or GDP? The answer lies in the private sector’s dramatic increase in their willingness to hoard money instead of spend it. Such an unprecedented increase in money demand has slowed down the velocity of money, as the figure below shows.

And why then would people suddenly decide to hoard money instead of spend it? A possible answer lies in the combination of two issues:
•A glooming economy after the financial crisis
•The dramatic decrease in interest rates that has forced investors to readjust their portfolios toward liquid money and away from interest-bearing assets such as government bonds​

The gamble is that if/when the economy truly starts to improve and people and business start spending their hoarded cash, the fed/treasury can pull the money supply down fast enough to keep inflation in check. There is always a lag in measuring inflation and pulling money out of the economy, I doubt this gamble will work. That means the failed government actions they claimed will "save" the economy will kill the economy if the economy truly recovers. Its a lose-lose for the American people.

 

A quote from your article; "If for some reason the money velocity declines rapidly during an expansionary monetary policy period, it can offset the increase in money supply and even lead to deflation instead of inflation".

I would say that depicts the current situation fairly accurately. When people are spending more that 100% of their income and the velocity of money is falling even though we just had the largest monetary expansion in history, it shows none of that expansion is "tickling down to the masses". Furthermore it makes no sense whatsoever to say people are hoarding cash when they are spending more than they earn.
The fall in the velocity of money is because there has been a drastic fall in incomes since 2007 and the Fed / Government are lying their asses off about it.

 

M2 stock has risen almost 50% since the Great Recession started. GDP would have to be growing at somewhere around 10% for velocity to keep up with that kind of expansion of M2.

 

Not all people are spending more than they earn. Signs of deflation include dropping prices, prices are not dropping. I would say the economy wants to enter deflation but the fed/treasury is desperately trying to avoid that from happening. Inflation (which is higher than the govt claims) and artificially low interest rates are 2 big items keeping the govt afloat. Deflation is bad for debtors, and the US government is the biggest debtor of all time.

 

The “Obama Economy” Just Set Another Record That Republicans Won’t Like Hearing About June 11, 2015 By Allen Clifton



For years all Republicans have done is fabricate one lie about President Obama after another. From doubts about his citizenship to death panels to his apparent plan to invade Texas, there really doesn’t seem to be a depth to which many Republicans will not stoop when it comes to fear-mongering against this president. But the area that’s been universal when it comes to all aspects of the Republican party, not just the extreme right, is trying to attack the “Obama economy.” It’s basically become a monthly tradition after the newest jobs report is released to head on over to House Speaker John Boehner’s Twitter account to see how he’ll try to put some sort of negative spin on the almost always positive reports. Even now, coming off the best economic year since the Clinton Administration, Republicans continue to claim that President Obama has been a failure. In fact, they’re so desperate to bash the “Obama economy” that they’ve taken up to pretending to care about income inequality, even though the gap between the “haves” and “have nots” has been growing at a record pace since the Reagan Administration.


Not only that, but the years just prior to the 2008 economic collapse (2005, 2006, 2007 and 200 we saw the worst levels of income inequality since the years before the Great Depression. It’s a fact that shouldn’t be discounted: the two biggest crashes in our nation’s history followed some of the worst years for income inequality in our nation’s history. But let’s keep giving more money to the rich, right? Well, another “record” of sorts has been set by the Obama administration that Republicans aren’t going to like: U.S. job openings are at their highest level since 2000. This shows that the economy is getting stronger, companies are turning solid profits, demand is growing and they’re predicting more of the same in the future. Now, is all of this good news? Not exactly. One issue facing employers isn’t finding workers, it’s finding qualified workers for the jobs that are available. Many of these jobs have a high skill level requirement and there aren’t enough Americans with those skills to fill them. In fact, that’s a problem some economists have said could hurt this country in the not so distant future. That’s a big reason we probably need to work on education reforms to help Americans get a quality education in fields that need positions filled. It might also be spun that people are choosing to live off government programs rather than find work. I’m sure that’s true for some, but that’s the ignorant “go-to” rhetoric for Republicans even though welfare abusers make up the overwhelming minority – not the majority. Then I can already hear Republicans saying that most of these jobs are low-paying, or part-time, which is why people don’t want them. There are two ways to break that nonsense down. First, the claim about part-time jobs has already been debunked, so that’s an outright lie. Then when it comes to low-paying jobs, considering that the rich are doing great right now, if that’s the route Republicans want to go then they’re admitting that trickle-down economics is a scam and cutting taxes has nothing to do with increasing wages.


I’m sure many Republicans who come across this information will find some way to twist it in any way they possibly can just so that they can continue to avoid admitting the truth: Obama has been a highly successful president.

On his watch we’ve had: A record streak for job creation. The best economic year since the Clinton era. Record stock levels. Unemployment is at 5.5%.

Those are just a few of the extremely positive economic numbers we’ve seen during Obama’s presidency, and on the heels of one of the worst economic crashes in nearly a century. Republicans can continue to deny reality all they want, but history will show that this president will have been one of the most economically successful presidents in our nation’s history.





http://www.forwardprogressives.com/...another-record-republicans-wont-like-hearing/






Funny how when the USA lost tens of thousands of jobs every month under Bush this was called "success".

 

Not all people are doing anything... on average the consumer is spending 105% of income. Prices are dropping, and as in early deflationary cycles it begins in commodities. Industrial raw material prices have plunged over recent months. The price of crude oil tumbled . Iron ore prices have plummeted, so has copper. The Baltic Shipping Index recently fell to the lowest level since 1986.

The reason the price of raw materials is falling is the lack of demand. That lack of demand for raw materials is the canary in the coal mine in any economy. The area we see the greatest deflation is in the disposable income of the working class. That is the real driving factor behind the current economic stagnation. The US government and the banking industry fears deflation, but their ability to stop it is limited. For the most part, they used every trick in their bag in 2008, and in reality, have nothing to fight deflation with, with the exception of waging large scale war. Perhaps that is the reason for the multi national belligerence we have seen of late.

 

So how do you reconcile the defeat of TPP by the democrats, when Obama has been trying to strong-arm congress to pass yet another piece of legislation he will not even let them read, and has been analyzed as something which will cost many American jobs, to profit big pharmaceutical corporations? The democrats in congress are basically saying that Obama is teeming up with the republicans to screw the American public... so who do you side with?

 

Bwahahahahahaha.

Spin the data anyway you like. But the gist of your post here are LIES, LIES, and more LIES.

Job creation? What about private sector job creation? Not good. Unemployment? What about all those who have given up and no longer are counted? Record stock market? You do know what artificial means, don't you? And on and on.

Most economically successful presidents in history?

 

You and I basically agree. The only real difference is that you see the economy as starting to fall off the edge, I see it as teetering on the edge. Maybe its started the fall and you are correct.

 

http://www.latimes.com/business/la-fi-federal-reserve-interest-rate-20150617-story.html

 

[video=youtube;7FvewhNUF3s]https://www.youtube.com/watch?v=7FvewhNUF3s[/video]

 

A couple of comments;

First, and this is from the perspective of an old person, but I've got everything I need in life. Sure some of the stuff will wear out before I die and will be replaced. But my consumption is way down from 20-30 years ago. I have closets of shoes and clothes. I have cars. I have toys. We dine out and vacation etc. We can afford to buy more, replace more, but it's simply not necessary to do at the same velocity as we did 20-30 years ago.

Second, thank goodness in a perverted way that we actually do have a throw-away society. That we don't fix anything or take care of things and we just buy more. And IMO most of the quality of products is crap and stuff breaks or stops working all the time. If we had quality products, and if we took care of them, and if we fixed them when not working, consumption would be trillion$ less than it is.

Lastly, thinking about your medical devices, semiconductors, and electronic manufacturing, as well as nearly every product within my eye sight at this moment, most all of it is manufactured outside of the USA! Huge portions of our economy don't produce things and instead mostly provide services like Google or Facebook, and those who sell consumer products like Microsoft or Apple, etc. procure most of it from offshore...