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U.S. job growth in August flat: Is this a prolonged recovery or a double-dip to come?

Discussion in 'Tilted Philosophy, Politics, and Economics' started by Baraka_Guru, Sep 2, 2011.

  1. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    The August job numbers in the U.S. are in, but they don't look good. They were expecting 75,000 new jobs; they got zero. Apparently this is the first time this has happened since 1945.

    Markets have taken a dip around the world as many are wondering about the fate of the U.S. economy.

    What's going on?

    Is this growing pains after a financial meltdown and global recession? Or we headed to another recession?

    What should be done?

    Another round of stimulus? Quantitative easing?

    What can be done about consumer confidence? Consumer demand?

    What do you see as the main sources of the current problems?

    http://www.guardian.co.uk/business/2011/sep/02/us-unemployment-no-job-growth
     
  2. KirStang

    KirStang Something Patriotic.

    I really think it's the lack of predictability--i.e. future changes in taxes, what programs will be cut, etc. The lack of trust in government, the idiotic deadlocks. People keep talking about how we're "out of the recession" but I'm not seeing it. There's no long term plan for recovery, just a lot of short term stop-gap measures.

    If the government can show us "okay, here's what's wrong, here's what we're doing to fix it in the long term, and here's how that will work." That would really demonstrate that the U.S. really is on recovery. Instead, what we have is a lot of wheel spinning and confusing measures by the federal government.
     
  3. Aceventura

    Aceventura Slightly Tilted

    Location:
    North Carolina
    The current administration has created an anti-business environment with stifling levels of uncertainty. Most businesses are in a "wait and see" mode.

    Bohner put it well today -“triple threat’ of higher taxes, stimulus spending and federal regulations is undermining the creation of jobs."
     
  4. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    I don't see how a threat of higher taxes in a low-tax environment, stimulus spending in a down economy, and federal regulations where lax regulations are a problem is "anti-business."

    You make it sound impossible to do business outside of the U.S. Have you looked outside of the U.S.?

    At least KirStang makes more sense by outlining in part the comprehensive problems the economy is facing, rather than propose a facile list of conservative gripes are the problem. Though I would say the lack of predictability he mentions extends beyond the actions of the administration. Well, he did imply that part of the problem isn't just the administration; it's Congress.

    But the unpredictability extends far beyond the actions of the administration. Where the government appears to fail in response to the current climate, business appears to fail in equal measure: both are guilty of a lack of innovation and resilience.

    Since when has government alone been responsible for preventing businesses from profiting? I would say never. The current climate wasn't caused by nor is it going to be solved by the government alone. This is a global issue; not an American one.

    So try again, ace. Blaming the government sounds like an excuse. I thought American businesses were more resourceful than you imply.
     
  5. samcol

    samcol Getting Tilted

    Location:
    indiana
    our economy never needed this stimulus nonsense to get us going in past recessions. the idea of throwing money at every problem just never seems to work. sure it will create a buzz in the economy for a few months or years but we are left in the same spot after the money runs dry.

    we are already in multiple wars so i'm not sure starting a new one would even save this economy.

    maybe they will call it a triple dip recession instead of a depression this round, then quadruple dip etc. we have 40 million standing in bread lines ie food stamps. it feels worse than most recessions that i remember for sure.

    baraka do you deal with multiple businesses in the us? i deal with hundreds and there is a real sense of we dont know what's going to happen next and there's no stability on the governments end. they literally are waiting around doing nothing.
     
  6. cynthetiq

    cynthetiq Administrator Staff Member Donor

    Location:
    New York City
    I know many companies are being very conservative with their spend. We're on a path that we're committed to some projects which is why I got approved for my current budget. Other than that I know we have some growth potential in one area, but that's it. Our revenue dropped because government programs assisting schools ran the course. We now don't have those programs to collect the free money that we got in FY2009 and FY 2010. It inflated our revenues artificially.

    There are some companies that are able to show growth but I'm going to say that they are just like dot.com 1.0, we're seeing many companies hit this fever with not enough revenues and burning through investor money like crazy.
     
  7. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    For starters, are you saying the U.S. government didn't spend any money in response to past recessions? In the early '80s recession, Reagan bailed out the S&Ls and resorted to deficit spending; in the short-lived early '90s recession, there was the Gulf War and deficit spending; and the early 2000s recession wasn't nearly as bad as was predicted and was milder than the previous ones. This one? It makes the others pale in comparison.

    Next, how is the stimulus "throwing money at every problem"? What part of this stimulus is "throwing money"? The tax benefits? The education and infrastructure spending? The Medicare spending? What? Can you be more critical, please, or are you just an anti-Keynesian?

    I'm not sure it will come to that. It's becoming more evident that a major problem is a liquidity trap. Maybe the quantitative easing is a good idea. It's difficult to say. This is an area I don't know much about. I think, at least, more stimulus spending targeting domestic production should be something taken under consideration. This is why I don't get your stance on the stimulus spending. Is it the type of spending they've been doing? Or is it stimulus spending period? Would you oppose stimulus spending that encouraged domestic production and export?

    I don't deal with businesses in the U.S. I get their issues regarding uncertainty. What I don't get is where their profit motive went. How long are they going to wait around and do nothing? Again, this is why I support specific stimulus spending that will help them with loosening the pursestrings—spending that will mitigate their risk.
     
  8. redux

    redux Very Tilted

    Location:
    Foggy Bottom
    The Recovery Act helped reverse the downward spiral of jobs and contributed to the creation of more than 2 million private sector jobs.

    [​IMG]

    IMO, the problem was that the job creation component of the stimulus program was not big enough, too much of the funds were in the form of tax cuts and expanded (necessary) benefit programs.

    Bush's tax cuts, primarily for the wealthy (trickle down economics), did not stimulate the economy or create jobs and exacerbated the debt problem much more than the stimulus.

    And the Ron Paul approach of "the market will correct itself" if you deregulate everything and make the Bush tax cuts permanent, has no merit at all.
     
  9. ASU2003

    ASU2003 Very Tilted

    Location:
    Where ever I roam
    We are still throwing away too much money on wars, foreign troop deployments, foreign oil, and cheaply made products. We aren't selling inexpensive products or food aid to other countries. The dollar has weakened a lot, but it looks better if the stock market goes up and the dollar gets weaker, than if the stock market (and people's 401k's get cut in half, but the dollar can buy a lot more). And we don't want the crash where the stock market went down, but the dollar got weaker as well.

    Housing is a big issue that the average consumer and family worries about. And if the customers aren't going to shop, companies won't hire more people or expand (they are in sustainability mode right now, which isn't a 'bad' thing if you are on main st.)

    Honestly, everywhere I look in my little world, things are doing pretty good. It isn't what I figured a 'real' recession or depression would be. There were lots of people in Vegas, there is still lots of people driving and spending $3.50/gal for gas. 84% of people are working full-time jobs (91% if you believe official numbers). In my mind, if most people wouldn't have enough money to fill up their gas tank once a month, unemployment is around 25-40%, people aren't eating out (or buying cheap stuff at the grocery store) but are growing their own food... That would be a depression. And unless prices and inflation go through the roof ($20/gal gas, $1 kWh electric, 15% sales tax...) I don't see it happening.
     
  10. Aceventura

    Aceventura Slightly Tilted

    Location:
    North Carolina
    Here is a current example and a hopeful sign that the Administration is beginning to understand trade-offs. The key is to strike balance.

    http://www.investors.com/NewsAndAna...734/Obama-Halts-Smog-Rule-Citing-Economy.aspx

    I did not comment on this.

    I responded to the question. I am a business owner and I know what influences my business decisions. Here is another current example:

    http://www.charlotteobserver.com/2011/09/03/2575180/bofa-shares-slide-8-as-feds-file.html

    I will connect the dots. Bank of America is one of the largest banks in the US. Currently small business has virtually no access to commercial bank loan, lines of credit, etc. Bank of America has been and is still under tremendous pressure to shore up reserves and has to deal with the uncertainty of lawsuits including lawsuits from government agencies. They are not in a position to loan money to help business. Government could give some certainty and make things better they have not.

    I am sorry if you don't get what I am saying. I could give literally thousands of these examples, all since Obama has taken office. Government can hinder or promote business (job) growth.

     
  11. Bodkin van Horn

    Bodkin van Horn One of the Four Horsewomyn of the Fempocalypse


    Are you really claiming that the government shouldn't investigate and prosecute large scale corruption and incompetence because doing so is bad for the economy? Come on, man. There are other banks. There are more competent banks. There are banks which aren't currently under investigation for gross incompetence and perhaps outright systematic fraud. All other things being equal, anyone who could get a loan from BofA could get one somewhere else too. The government isn't the problem in BofA situation. I barely feel comfortable using BofA atms.

    ----------------------------------

    Job growth would have been positive if not for the Verizon strike and the reduction in public sector jobs. Oddly enough, the folks spouting off about "job killing" seem all too eager to kill public sector jobs. Probably because they don't actually give two shits about creating jobs. Nope. They're market fundamentalists. By their beliefs, if the economy can thrive without creating a single job (ie if wealthy individuals and corporations can continue to pad their bank accounts), then that's how it ought to be. If the invisible hand doesn't want to create jobs, then we should just trust its wisdom and quit complaining. And if the invisible hand wants to significantly lower the quality of life for the hundreds of millions of middle and lower class folks, well, they should just be happy that there are rugged, brilliant entrepreneurs willing to pay them less than their parents made for working twice as hard. These people's market fundamentalism resembles the beliefs of Christian Scientists who refuse to take their kids to the hospital based on the idea that doing so would defy their god's will, only instead of being irrationally opposed to medical intervention, they're irrationally opposed to economic intervention.

    This isn't to say that economic intervention always works, or never backfires, just that when one is opposed to it in principle then one is not thinking rationally.

    I keep hearing about how hard it is for businesses to do anything with their ridiculously large cash reserves because they're uncertain. What are they uncertain about? I suspect that they would feel a lot more comfortable with gambling if there were more consumer demand, and I suspect that effectively implemented stimulus would have a much greater effect on increasing demand than simply giving wealthy individuals and corporations more money.
     
  12. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    You didn't imply anything about balance in your first comment. Why the change? It sounds contradictory.

    It is implied in your statement that the above-mentioned items are "anti-business"; if they were anti-business, how could business exist outside of the U.S. where these things already exist? Take, for example, Canada. If higher taxes, stimulus spending, and federal regulations undermines business, then how do you explain Canada? While we do have a lower corporate tax rate (equal, if you consider businesses making less than $50,000/year), we have higher personal taxes, our government participated in stimulus spending, and we have a more rigorous regulatory environment across industries. If this is so "anti-business," how do you explain our relatively stable GDP through this recession and strong position for growth beyond it? This isn't the only example.

    My point is that it's easy to blame in a simple way things such as taxes, stimulus spending, and regulation. But without going into detail, it's nearly worthless. Stimulus spending and regulation, for example, can be conducive to a stable business environment. Why would conservatives oppose a stable business environment? They don't. They oppose the method by which it is achieved. They instead worship at the altar of The Market and would rather the economy and, in turn, society be managed and essentially dictated by a free market, which is nonsense. Corporate taxes aside, everything a Tea Partier or libertarian wants is basically more of the same things that have either cause of exacerbated a number of the problems leading to this current recession and its aftermath.

    But considering taxes, I'm not sure if there is a "threat" of increasing corporate taxes. As far as I know, the threat is only amongst top personal earners. Even in Canada we have capital gains taxes and the like, and our top earners are taxed from 39% and to 50%, depending on which province you live in, and there are capital gains taxes on top of that relative to your marginal rate. If that is so anti-business, then why is Canada's GDP growth among the best in the G8? Sure, we're having growth problems like most (our high dollar is hurting exports), but if all these bad, bad things are destoyers of business, how do you explain our relative stability despite on of the worst economic environments since the Great Depression?

    Canada's unemployment is 7.2%, compared to 9.1% in the U.S. We have higher personal taxes (income + consumption), stimulus spending, and rigorous regulation (especially when compared to the U.S.). How do you explain this?

    No, I'm not quite sure what you're getting at. Are you saying an adequate and balanced regulation should have preceded today to avoid much of the current economic fallout—but that knee-jerk regulatory initiatives are particularly painful because of the fact that the economy is already suffering from lax regulation?
     
  13. Aceventura

    Aceventura Slightly Tilted

    Location:
    North Carolina
    There is no change in my view. We have been exchanging posts for some time - I consistently state that I am not an anarchist, I believe there is a role for government. It seems to me that it should go without explicitly staying that a balance between government and free market capitalism is required to maximize economic efficiency with in a system.

    The problem is in our points of view not actual data.

    I believe the US economy is fundamentally strong.
    I believe recessions are a normal part of economic cycles.
    I believe economic anomalies are self-correcting.
    I believe government can make economic conditions marginally better or worse.
    I believe real economic growth occurs on the margins. This happens to be where government policy has its biggest impact.
    Economic growth is currently being hindered by government. I believe this is based on recent and expected policies affecting business.
    If government policy is and is anticipated to be consistent, as I assume it is in Canada, business would adapt to those condition - as I stated free market economies are "self-correcting". So for example if there was a 100% marginal income tax rate, a free market economy would work around it, and grow - but it would take time for the adjustment. and, like I said - government needs to strike a balance in order to maximize tax revenues - and 100% tax rates would not be in "balance", nor would a 0% tax rate .

    Although there are few words above, I am saying quite a bit. Perhaps I should stop or slow down because my guess is, based on our different points of view I may need to expand on some of the above points
    --- merged: Sep 5, 2011 1:58 AM ---
    No.
     
  14. Derwood

    Derwood Slightly Tilted

    Location:
    Columbus, OH
    When all the wealth is going to fewer and fewer of the citizens, demand goes down. Instead of having 1,000 people who can afford one TV each, you have 5 people who can afford 200 TV's each, and 995 who can't afford any. Those 5 people aren't going to buy 200 TV's, so demand for TV's is down.

    Extrapolate this over all businesses and you see the problem. A family of four who has 100x the wealth of the average citizen isn't spending 100x as much on needs and services.

    When will people stop talking about Supply Side Economics and start talking about Demand Side Economics?
     
  15. Bodkin van Horn

    Bodkin van Horn One of the Four Horsewomyn of the Fempocalypse

    So then please tell me in plain English why you brought up BofA. Because you seemed to be implying that BofA wasn't giving loans out to small business because they couldn't be sure whether the government was going to sue them for incompetence and corruption. And that somehow this was an example of the type of economic uncertainty that is prohibiting the hiring of new employees.
     
  16. Aceventura

    Aceventura Slightly Tilted

    Location:
    North Carolina
    The economy is growing according to GDP. Demand has not gone down. Many companies are making records in revenue and profits - another indicator demand has not gone down. We say we are in a recession because that is what it "feels" like, but technically speaking we are not in a recession. I am as guilty as anyone with using the term loosely. The problem is real economic growth is not fast enough. Business will hire people and invest anticipating future demand, they don't wait for it. Government has created an environment of uncertainty, business is in a holding pattern. Once this "fog" goes away economic growth will spike and then go back to normal levels. Unfortunately this may not happen until business knows Obama will not be re-elected.

    TV's are trivial in the context of our economy and has more to do with housing than employment. Every house built is going to generate 2 or three new TV sales. Other than that, people just replace TV's as they become un-repairable or obsolete. The key was for government to set proper policy to help end the housing correction ASAP. Our government implemented policy that prolonged the housing correction.

    To further understand the impact of housing and the economy, look at organic population growth and household data. Our economy needs about one million new household every year (I looked at the data about a year ago and I am going by memory), however housing starts is way below that number, partly due to over-building in some areas between 2000 and 2006. This imbalance has to correct and it will correct eventually regardless of government policy. However government policy may impact what those new hous-holds look like and how many TV's each house has.
    --- merged: Sep 6, 2011 6:47 PM ---
    Banks are heavily regulated by government.
    Government policy encouraged sub-prime lending.
    Government agencies (Fannie/Freddie) openly participated in the sub-prime market and basically created the "secondary market" in derivatives.
    Government gave billions in bailout funds to banks like BoA. Picking winners and losers.
    Government told banks to fix an arbitrary reserve problem.
    It has been about 5 years since the start of the housing correction. Yet the issues of liability according to you and the government has not been settled.

    If the government gives the banks billions in bailout funds and access to no interest capital - why is the government (through agencies) suing the banks?
    If the government wants to strengthen the reserves structure of the banks why sue for billions?
    If the government wants banks to loan money and forgive loans why sue?
    Etc.
    Etc.

    What the hell does the government want? Our government is doing nothing bust sending mixed signals. And why is it taking so f'ing long? Our government is clueless if you ask me, they need to just get out of the way. the more I think about this the more pissed I get, so forgive me - I need to think about something else for a while.
     
  17. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    So, guys, the economy will get better once Obama gets out of the way, because American businesses are worried about uncertainty and are either incapable of or unwilling to adapt. Or something....

    But they're making lots of money because demand is already strong....and stuff..... :confused:

    I know this at least: reducing unemployment is good; it guarantees demand. If only Obama would stop prolonging unemployment, we'd all be fine.
     
  18. Bodkin van Horn

    Bodkin van Horn One of the Four Horsewomyn of the Fempocalypse

    Yes, as they should be.

    So did bank policy, and rating agency policy, and insurance policy, and etc

    I think insurance companies were the ones creating the derivatives. Fannie and Freddie bought packages of (allegedly fraudulently represented) subprime loans from the banks. These aren't derivatives.

    I won't say that the government is blameless here, but the government wasn't responsible for the banks making subprime loans. You don't need a finance degree to be appalled at some of the ridiculously permissive policies the banks were using to hand out loans. No one made banks hand out loans without verifying income. No one made them robosign mortgage papers en masse. Banks are not victims in this situation.

    I won't say that this process wasn't riddled with problems.

    And? So?

    Gee, I wonder why it's taken so long?

    Apparently, they suspect BofA of committing fraud. Also, apparently they suspect a whole slew of other banks of committing fraud with respect to the packaging and selling of structured securities. Does that not seem like a sufficient reason to take legal action to you?

    You lost me here. The only mixed signals I can see come from the fact that the government let banks pretty much do whatever the hell they wanted and it blew up in everybody's face and now the government is only letting banks do, like, 90% of whatever the hell they want.
     
  19. Aceventura

    Aceventura Slightly Tilted

    Location:
    North Carolina
    The economy will get better with or without Obama. The question is about Obama helping or hurting the recovery. How could I have made that clearer?

    I am detecting sarcasm or something like it. But if it is your belief that the US economy is less than what it was 5, 10, 15, 25, years ago - you need to take another look at the numbers yourself rather than depending on the cliche driven narrative in the media or from whatever your source is.
    --- merged: Sep 6, 2011 9:26 PM ---
    Banks who took on excessive risk should have been allowed to fail. If true failure had been allowed I speculate the correction would have run its course by now.

    Banks who took on sub-prime risk should have been able to price for it. Regulation may have prevented proper pricing.

    Those who invested in derivatives, assume their own risks and should not look to others to do their due diligence. If banks failed to properly underwrite mortgage risk, it is up to investors in those mortgage based derivatives to know the risks they assume. Those who lack the sophistication should avoid investments they don't understand.

    Going over this issue in any detail will take us off topic. I have been accused of taking us off topic frequently - it is your call and the call of others or perhaps start a new thread.

    I agree bank are not victims. People who can't get loans to start businesses are being harmed. People who would be hired by small businesses are being harmed. I just think a government interested in job creation whould get these issues resolved sooner rather than later. as I suggest, we need some clarity, some certainty. Lawsuits 5 years after the fact is not helpful. the housing market is still fragile and can still get significatly worse. BoA is one of the largest holders of mortgages. I would rather see them focus their resources of dealing with the glut of forclosures and potencial forclosures to help stabalize the housing market rather than wasting time on silly lawsuits.
     
  20. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    No, nothing like that. I was just a bit thrown off by your apparent contradiction. Would you care to comment on it? It could very well be clearer.