America Duped Into Economic Pessimism

[Tigermike 3,048]

Missing The Boom

Posted 3/10/2006

Economy: With rising incomes, soaring wealth, bigger and better homes, plenty of jobs and low inflation, we may be living in the most prosperous time ever. Yet chances are you don't believe it one bit.

The economy isn't perfect, of course. But it's a long way from bad — a long, long way. We ponder this as a new employment report comes out, showing 243,000 new payroll jobs in February even as the number of people re-entering the labor market swelled by nearly 350,000.

So before the data are spun beyond recognition by others, let's recount the good news: Since May 2003, when President Bush's tax cuts became law, the U.S. has created 4.7 million jobs. Payrolls have now expanded for 30 straight months. The jobless rate, though up a tick at 4.8%, is still near its five-year low.

Worker pay is also on the increase. Average weekly earnings rose 3.5% last month from a year earlier — the best gain in more than four years.

Last summer, we all were fretting about the economic impacts of higher interest rates, surging energy prices and Hurricane Katrina. But over the last year, including the hurricane season, monthly job gains have averaged 197,000 — more than enough to sop up the 130,000 to 150,000 monthly growth in the U.S. labor force.

Based on the continued job growth and powerful gains in retail spending, most analysts now expect GDP to jump at least 4.5% in the first quarter and 3% for all of 2006 — even as the Federal Reserve continues to tighten credit.

In spite of all the great news, Americans remain strangely downbeat. A Gallup Poll taken earlier this year found just 38% who viewed the economy as "excellent" or "good" — down from 46% at the start of the last recession.

Our own IBD/TIPP Polls have shown sharp drops in economic optimism and consumers' six-month outlook. (Results of our March survey are due Tuesday.)

No doubt about it, the economy keeps powering along. Yet many Americans seem to think it's all a mirage and are sold on the idea that these are the worst of times.

Why the gloom? Much of it, no doubt, stems from misreporting by the media. Against the backdrop of surging payrolls, for example, we keep seeing story after story, in print and on TV, about job "losses."

A recent study by the Media Research Center bears this out. It looked at TV news coverage of jobs in 2005 — 151 stories in all — carried on all three major networks.

This, mind you, was a year that saw the creation of 2 million new jobs, the addition of $350 billion to gross domestic product and an increase of $2 trillion in the value of household financial assets.Yet more than half of the networks' job reports focused on losses, not gains — a picture that wasn't just distorted, but wrong.

Americans deserve better. In fact, they may already know better. The same polls, including ours, in which Americans indicate they are down on the economy in general also show they are upbeat about their own financial situation.

This, more than anything else, may indicate that Americans are being influenced too much by mainstream media outlets that would rather be wrong than acknowledge that an economic boom is under way.

http://www.investors.com/editorial/IBDArti...&issue=20060310

[Bottomfeeder 244]

What kind of jobs?

[Tigermike 3,048]

Where do you live and what kind of job are you looking for?

[Bottomfeeder 244]

Six figure income as a CEO of a major southern corporation, so that I can make millions of dollars and give it to the poor as Jesus commanded.

[otterinbham 0]

Well, I think part of the "rich get richer and poor get poorer" canard is based on two essential myths.

1) Incomes have fallen. Currently, economists of every stripe feel that the Consumer Price Index actually has an error of about 1%. Over a period of twenty years, that's a 22% disparity. This argument is especially compelling when one realizes that actual household net worth (the combination of stock ownership, home value, and savings) has doubled over the past 20 years when adjusted for inflation. If people are earning less, this simply would not be possible.

2) Capital Gains Taxes. For some reason I cannot fathom, kneejerk liberals get up in arms over the reduced capital gains tax rate. However, if you look at actual collections of capital gains taxes, a lower rate yields far LARGER collections. For example, 2002 was the last year that the capital gains tax rate was 25%. Capital gains taxes collected totalled $45 billion dollars. However, in 2005, with a capital gains tax rate of 15%, capital gains taxes collected totalled around $85 billion dollars--double the amount collected at the higher rate.

3) Trade deficits are hurting the economy. Well, no. That is based on ones understand of the world economy as a zero-sum game, which it most assuredly not. In fact, the amount of foreign investment in the US far exceeds the trade deficit. This is one reason why the US GDP has grown 100% over the past 13 years, versus a world growth average of only 70%.

4) The industrial sector is shrinking. Again, it depends on what yardsticks you choose to employ. While the number of industrial workers continue to shrink, industrial output in the U.S. continues to grow at a healthy 3%-3.5% annually.

5) Job creation. Over the past ten years, the US has created four times as many jobs as Europe and Japan combined. And, contrary to popular belief, these are mostly not McJobs.

[TexasTiger 12,998]

Missing The Boom

Posted 3/10/2006

Economy: With rising incomes, soaring wealth, bigger and better homes, plenty of jobs and low inflation, we may be living in the most prosperous time ever. Yet chances are you don't believe it one bit.

The economy isn't perfect, of course. But it's a long way from bad — a long, long way. We ponder this as a new employment report comes out, showing 243,000 new payroll jobs in February even as the number of people re-entering the labor market swelled by nearly 350,000.

So before the data are spun beyond recognition by others, let's recount the good news: Since May 2003, when President Bush's tax cuts became law, the U.S. has created 4.7 million jobs. Payrolls have now expanded for 30 straight months. The jobless rate, though up a tick at 4.8%, is still near its five-year low.

Worker pay is also on the increase. Average weekly earnings rose 3.5% last month from a year earlier — the best gain in more than four years.

Last summer, we all were fretting about the economic impacts of higher interest rates, surging energy prices and Hurricane Katrina. But over the last year, including the hurricane season, monthly job gains have averaged 197,000 — more than enough to sop up the 130,000 to 150,000 monthly growth in the U.S. labor force.

Based on the continued job growth and powerful gains in retail spending, most analysts now expect GDP to jump at least 4.5% in the first quarter and 3% for all of 2006 — even as the Federal Reserve continues to tighten credit.

In spite of all the great news, Americans remain strangely downbeat. A Gallup Poll taken earlier this year found just 38% who viewed the economy as "excellent" or "good" — down from 46% at the start of the last recession.

Our own IBD/TIPP Polls have shown sharp drops in economic optimism and consumers' six-month outlook. (Results of our March survey are due Tuesday.)

No doubt about it, the economy keeps powering along. Yet many Americans seem to think it's all a mirage and are sold on the idea that these are the worst of times.

Why the gloom? Much of it, no doubt, stems from misreporting by the media. Against the backdrop of surging payrolls, for example, we keep seeing story after story, in print and on TV, about job "losses."

A recent study by the Media Research Center bears this out. It looked at TV news coverage of jobs in 2005 — 151 stories in all — carried on all three major networks.

This, mind you, was a year that saw the creation of 2 million new jobs, the addition of $350 billion to gross domestic product and an increase of $2 trillion in the value of household financial assets.Yet more than half of the networks' job reports focused on losses, not gains — a picture that wasn't just distorted, but wrong.

Americans deserve better. In fact, they may already know better. The same polls, including ours, in which Americans indicate they are down on the economy in general also show they are upbeat about their own financial situation.

This, more than anything else, may indicate that Americans are being influenced too much by mainstream media outlets that would rather be wrong than acknowledge that an economic boom is under way.

http://www.investors.com/editorial/IBDArti...&issue=20060310

224679[/snapback]

So if Americans are wary and feeling the pinch in their pocketbooks they are just stupid people who got duped because those with a contrary view can cite statistics?

[AURaptor 1,126]

So if Americans are wary and feeling the pinch in their pocketbooks they are just stupid people who got duped because those with a contrary view can cite statistics?

No, more than likely, they're being told there's a pinch in their pocketbooks, when in fact there isn't .

[TexasTiger 12,998]

So if Americans are wary and feeling the pinch in their pocketbooks they are just stupid people who got duped because those with a contrary view can cite statistics?

No, more than likely, they're being told there's a pinch in their pocketbooks, when in fact there isn't .

224723[/snapback]

They were told GWB was a strong leader, when he fact, he wasn't. Some of us considered them "duped"-- and were told we were insulting their intelligence. So are you insulting their intelligence now?

A while back I posted, without comment, a link to the story about last year being the first since the great depression that Americans spent more than they made. You of course, went ballistic and called it a Bush bash, even though there was no bashing there, just statistics. Still, if people are spending more than they're making, they may have a right to be a little concerned, don't you think?

[otterinbham 0]

Well, it wasn't a Bush bash, but it was pretty poor journalism.

The savings rate is one of the most misleading economic statistics of all, chiefly because while the European measuring system takes equities into account such as stocks and bonds, the American measurements do not. So the savings rate of Americans does not take into account stocks, bonds, money markets, IRAs and 401(k)s. If you start taking THAT into account, then Americans are quite the savers. We just don't care for the 2.5% return of your average savings accounts.

Again, the per capita net worth of Americans, adjusted for inflation, has rised 100% in the past twenty years. If we're not saving money, then how is this possible?

[TexasTiger 12,998]

Well, it wasn't a Bush bash, but it was pretty poor journalism.

The savings rate is one of the most misleading economic statistics of all, chiefly because while the European measuring system takes equities into account such as stocks and bonds, the American measurements do not. So the savings rate of Americans does not take into account stocks, bonds, money markets, IRAs and 401(k)s. If you start taking THAT into account, then Americans are quite the savers. We just don't care for the 2.5% return of your average savings accounts.

Again, the per capita net worth of Americans, adjusted for inflation, has rised 100% in the past twenty years. If we're not saving money, then how is this possible?

224739[/snapback]

The per capita net worth has gone up significantly. And while the poor aren't exactly getting poorer, the rich have been getter considerably richer for years, expanding the gap between the rich and poor. Per capita rates can rise and the middle class still feel squeezed. The lower middle class especially. Many people don't have alot of margin for error in the living costs and increases in things not easily done without, like energy, can make a big difference for people. I just think that people tend to be the best assessors of their own economic condition.

[otterinbham 0]

Well, it wasn't a Bush bash, but it was pretty poor journalism.

The savings rate is one of the most misleading economic statistics of all, chiefly because while the European measuring system takes equities into account such as stocks and bonds, the American measurements do not. So the savings rate of Americans does not take into account stocks, bonds, money markets, IRAs and 401(k)s. If you start taking THAT into account, then Americans are quite the savers. We just don't care for the 2.5% return of your average savings accounts.

Again, the per capita net worth of Americans, adjusted for inflation, has rised 100% in the past twenty years. If we're not saving money, then how is this possible?

224739[/snapback]

The per capita net worth has gone up significantly. And while the poor aren't exactly getting poorer, the rich have been getter considerably richer for years, expanding the gap between the rich and poor. Per capita rates can rise and the middle class still feel squeezed. The lower middle class especially. Many people don't have alot of margin for error in the living costs and increases in things not easily done without, like energy, can make a big difference for people. I just think that people tend to be the best assessors of their own economic condition.

224746[/snapback]

Well, I respectfully disagree, especially when you make material comparisons with where we were 25 years ago. For example, the average home size has gone from 1,300 square feet to 1,800 square feet. A far higher percentage of kids today are going to college. The highest percentage of Americans in history have investments. Average net worth has doubled in the past 20 years. Pretty much, there has been across the board increases in wealth for Americans of all classes...the problem is that there has been an even greater increase in expectations.

[TexasTiger 12,998]

Well, it wasn't a Bush bash, but it was pretty poor journalism.

The savings rate is one of the most misleading economic statistics of all, chiefly because while the European measuring system takes equities into account such as stocks and bonds, the American measurements do not. So the savings rate of Americans does not take into account stocks, bonds, money markets, IRAs and 401(k)s. If you start taking THAT into account, then Americans are quite the savers. We just don't care for the 2.5% return of your average savings accounts.

Again, the per capita net worth of Americans, adjusted for inflation, has rised 100% in the past twenty years. If we're not saving money, then how is this possible?

224739[/snapback]

The per capita net worth has gone up significantly. And while the poor aren't exactly getting poorer, the rich have been getter considerably richer for years, expanding the gap between the rich and poor. Per capita rates can rise and the middle class still feel squeezed. The lower middle class especially. Many people don't have alot of margin for error in the living costs and increases in things not easily done without, like energy, can make a big difference for people. I just think that people tend to be the best assessors of their own economic condition.

224746[/snapback]

Well, I respectfully disagree, especially when you make material comparisons with where we were 25 years ago. For example, the average home size has gone from 1,300 square feet to 1,800 square feet. A far higher percentage of kids today are going to college. The highest percentage of Americans in history have investments. Average net worth has doubled in the past 20 years. Pretty much, there has been across the board increases in wealth for Americans of all classes...the problem is that there has been an even greater increase in expectations.

224755[/snapback]

I actually don't disagree with a thing you said in your last post. Expectations have changed dramatically. People expect things now-- no delayed gratification. My nephew expects a new SUV-- now. He can't figure out why he doesn't have money for college. Most people spend beyond their means and have little cushion. Yes, more people have investments, mostly through work, but most people don't have alot of cushion.

But that doesn't mean people have been duped into thinking things are worse than they are. The trends you and I mention aren't brand new. They were well in play in the 90's when people felt better about their economic situation. Gas prices were steady for a long time-- now they're not. That's huge for alot of folks.

I would also point out that many of the measures folks point to as "quality of life" indicators are largely material. Yes, homes are much bigger, on average, than in the 1950s-- then again, people tended to plan their lives around one income and Mom was more likely to stay at home-- people ate out less, but stayed home and ate as families. There are a number of reasons people may be genuinely more stressed about their finances- - health care becomes more costly each year-- far more than the rate of inflation or salaries.

[otterinbham 0]

And I don't disagree with you on that. Yet perception is reality. Because while the dollar cost of gasoline is higher than it's ever been, it is nowhere near its high price when inflation is factored in. For example, if the gas prices of the late 70s early 80s were adjusted for inflation, the price would be over 4 dollars a gallon.

I think the chief issue is that people are spending at a frantic pace. My wife and have a combined income approaching $180,000–A fact I only divulge here for the purpose of discussion. My wife drives a ten-year old car. We live in a modest, 1900 square foot house. Outside of a mortage of around $1400 and a care payment, we have no debt. We get our videos from the library and we buy in bulk from Sams. Unless you think we're complete tightwads, we try to have one bang-up vacation a year, and send our three-kids to private schools because it's worth the investment. And if we can't buy something without borrowing, we do without.

That being said, we have lots of friends with comparable incomes who live in much more expensive neighborhoods, buy new cars every three to four years, own lake houses and have big-screen televisions (the hallmark of having more money than sense, if you ask me). Several have come within a whisker of foreclosure, and one couple has had to repeatedly borrow money from their parents. Ask any one of them and they'll talk about feeling the stress of economic pinch...When really what's happening is they are relying on material things for happiness rather than living within what should be their considerable means.

And that, my friend, is really at work today. Everybody wants to have the fantasy world...And whine if they can't get it.

[TexasTiger 12,998]

And I don't disagree with you on that. Yet perception is reality. Because while the dollar cost of gasoline is higher than it's ever been, it is nowhere near its high price when inflation is factored in. For example, if the gas prices of the late 70s early 80s were adjusted for inflation, the price would be over 4 dollars a gallon.

I think the chief issue is that people are spending at a frantic pace. My wife and have a combined income approaching $180,000–A fact I only divulge here for the purpose of discussion. My wife drives a ten-year old car. We live in a modest, 1900 square foot house. Outside of a mortage of around $1400 and a care payment, we have no debt. We get our videos from the library and we buy in bulk from Sams. Unless you think we're complete tightwads, we try to have one bang-up vacation a year, and send our three-kids to private schools because it's worth the investment. And if we can't buy something without borrowing, we do without.

That being said, we have lots of friends with comparable incomes who live in much more expensive neighborhoods, buy new cars every three to four years, own lake houses and have big-screen televisions (the hallmark of having more money than sense, if you ask me). Several have come within a whisker of foreclosure, and one couple has had to repeatedly borrow money from their parents. Ask any one of them and they'll talk about feeling the stress of economic pinch...When really what's happening is they are relying on material things for happiness rather than living within what should be their considerable means.

And that, my friend, is really at work today. Everybody wants to have the fantasy world...And whine if they can't get it.

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That illustrates one of our nation's problems pretty well. When I was looking to buy a home, the mortgage broker said, "You can afford $X." I smiled and said, "No. I qualify for $X. I can afford $Y."

You spend your money on what matters most. I do, too. Most people don't seem to know the difference.

Unfortunately, our government spends money like the friends you mention, not like you, and not like me.

[AURaptor 1,126]

They were told GWB was a strong leader, when he fact, he wasn't. Some of us considered them "duped"-- and were told we were insulting their intelligence. So are you insulting their intelligence now?

A while back I posted, without comment, a link to the story about last year being the first since the great depression that Americans spent more than they made. You of course, went ballistic and called it a Bush bash, even though there was no bashing there, just statistics. Still, if people are spending more than they're making, they may have a right to be a little concerned, don't you think?

It's a fact that Bush isn't a strong leader ? :huh: Sounds more like an opinion than a fact.

With the economy doing well, there's always some statistic that can be brought up to claim this or that. Point is, there never is 100% bad or good news, just a varying amount of each. With over 95% employment, low interest rates, etc...it's curious to see what the doom and gloom crowd will come up with next. We were told by the Dems all through the '04 election that we were suffering through the worst economy in the past 50 years, worse than The Great Depression, hell, ..things haven't been so bad since Adam and Eve were tossed out of Eden! Not only was all that total bunk, not only did it ignore the horrifc state of the economy during the 70's , it was a giant slap in the face of our parents and grandparents who DID suffer through this country's toughest time. It's one thing to not have any message of your own, as is clear w/ the Democrats, but to distort history and lie about the present, ....that's flat out un-American.

So, you can excuse some if they don't jump out of their seats every time the Left wing cries wolf in regards to how bad the economy we've got. Many of us have chosen to not participate in the Left's imaginary bad economy.

[Bottomfeeder 244]

Why is the Fed going to start hiding the M-3?

[TexasTiger 12,998]

It's a fact that Bush isn't a strong leader ? :huh: Sounds more like an opinion than a fact.

224915[/snapback]

Nah, it's pretty much established fact at this point.