Economy shows signs of a stall

[UpInArms]

http://www.mercurynews.com/mld/mercurynews/news/local/9343808.htm?1c

The good news Friday was that after weeks of mixed signals, the economic picture started coming into focus. The bad news is that it looks ugly.

<snip>

Coming after a string of other gloomy indicators, the latest employment report forced economists to acknowledge that a U.S. economy that seemed to be accelerating just a couple of months ago now seems to have slipped back into neutral. The result of this creeping pessimism is that economic forecasters are rethinking their outlook for everything from corporate profits to interest rates to even presidential politics.

<snip>

``Three years after the end of the official recession, I think people were expecting more vigorous job growth,'' said Keitaro Matsuda, senior economist at the Union Bank of California. ``The payroll numbers seem to indicate we're still stuck in a jobless recovery.''

<snip>

``This definitely hurts Bush,'' Koesterich said. ``The problem is that you've presided over the first net job destruction since the Depression.''

...more...

and another article worth reading:

http://money.cnn.com/2004/08/06/markets/sun_lookahead/

Through the looking glass
After breaking through new lows for the year, Wall Street faces uncomfortable new realities.

NEW YORK (CNN/Money) - Wall Street will begin next week in a strange new world, one in which some of its old points of reference have changed and the outlook for the economy, corporate earnings, interest rates and the election have abruptly grown cloudier.

<snip>

So far this year, when price floors have been touched, stocks rallied. Now that they've broken through the looking glass, prices could be on a downward trajectory for some time to come, Suttmeier said.

"I think we've clearly returned to a bear market, and stocks are going to be heading lower for the rest of the year," he said.

<snip>

Blood also believes, however, that stocks can move higher once the correction is over, and most analysts still believe the fundamentals of corporate earnings and economic growth are strong enough to keep the end of the world at bay.

...more...

[tabasco]

1. They can only use Enron reporting methods for so long ...

the truth will out !

[PassingFair]

31. The idiots where I work...

think that the economy is in GREAT shape. It must be that the sales force (myself included) is not working hard enough... Fools! I don't know if they're just spouting corporate dogma, or if they really believe the erroneous numbers they get.
I talk to business owners every day. They are HURTING. In some areas, there are more empty buildings than there are in use. Owners are hesitant to buy advertising (I sell directory ads) OR hire. They are hunkering down and appear to be waiting until after the election, or for sales to pick-up, which ever comes first.

[UpInArms]

2. here's a rather interesting editorial on this subject also

http://www.freep.com/voices/editorials/ejobs7_20040807.htm

Job Crawl

Latest jobs stats are nothing for Bush to brag about

Maybe the analysts were way off or maybe the economy is a lot more sluggish than anyone wants to believe. However you spin it, 32,000 is a pathetic number for job creation in a given month.

Campaigning for re-election Friday, President George W. Bush said the July report showed "our economy is continuing to move forward." Yes, but at a crawl. Economists generally see growth of 200,000 to 300,000 jobs a month as a measure of a healthy recovery, and analysts had forecast that Friday's report would show a gain of more than 215,000 jobs.

<snip>

The marginal payroll growth clearly reflects an uncertainty about the economy among the people who create jobs. Adding employees is an expensive proposition, and no company wants to take on new people just to let them go a few months later when business dips.

...more...

[HuckleB]

11. How do these "analysts" keep their jobs?

Meteorologists in the Northwest are more accurate than they are. All the signs that this was going to be a no gain month were there, and, alas, they continue to be there. On what basis did they pretend to think that 215,000 jobs would be created in July? That's simply nonsense.

[AndyTiedye]

25. Economy is Crawling Forward, Leaving the Workers Behind

[Thor_MN]

26. I thought anything under 150K/month reflects job LOSS

So how can they call it moving forward?

[okoboji]

3. ha

so much for "turning the corner" .... it must have been a u-turn

[UpInArms]

4. another related article: Job Troubles Cast Shadow Over Growth

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5902373

NEW YORK (Reuters) - The future looks increasingly dim for U.S. economic growth as high oil prices, spotty consumer demand and fears of terrorism prevent companies from hiring new workers, analysts said on Friday.

From behind their desks in New York and Washington, analysts and policy- makers had forecast that a June slowdown in consumption was a glitch in an otherwise sound recovery.

But a meager increase in employment for July points to a very different reality, suggesting a slowdown in the world's largest economy is much more pervasive.

"Everyone and their brother was saying the soft patch would soon dissipate and that the economy would soon reaccelerate," said Lakshman Achuthan, managing director at the Economic Cycle Research Institute, an independent research firm in New York.

"This jobs report clearly undermines that theory."

...more...

[TahitiNut]

5. "fundamentals of corporate earnings and economic growth"

This encapsulates the delusion these idiots suffer under. The economy, especially after the rape by the corporatists over the last 25 years and rampant pillage of the Busholini Cabal, has systemic deficiencies. They continue to look at a meager growth in GDP (ignoring declines) and all-time record corporate profits (profiteering) and fail to recognize the accelerating inequity in income distribution. The system rapes labor.

Labor's share of the national income has declined to new lows and corporate profits have increased to all-time highs. The wealthy are being even more enriched on the backs of labor.




The Gini Index, measuring equitable income distribution, is at all-time highs above 0.45, placing the US firmly in the banana republic class.

[NorthernSpy]

14. great post!

Well put, TahitiNut!

:toast:

[calimary]

18. Hot Diggity-Dog, TahitiNut - You are the Grand Wazoo of the Graph.

You always seem to come up with something really interesting, relevant, well-sourced, credible, and visually-friendly. What a terrific resource you provide! The numbers don't lie. Neither do the lines on the graphs. The clear trends they show are unmistakable, and undebatable.

[Eloriel]

27. What happened in 2001

to account for the sharp divergence? Was there one thing, or just a series of things? Can someone enumerate the change(s)?

[TahitiNut]

28. Post-2001 economic and tax "reforms"

Remember, what you mostly see are the lines diverging after 2001 ... after the Federal Fiscal Year 2002 began in October of 2001 and after the post 9/11 "policies" and tax cuts.

When corporations lay off people and retain more of the earnings (of that labor) due to far, far more favorable tax policies, then you see the lion's share being kept bu corporations. So, the initial zig-zag is attibutable to the massive layoffs and unemployment that hit in 2001. No job = no employee compensation.

But the corporations continued to profit! This was NEVER a "supply-side" (lack of productive capacity) issue. Unless there's a need for greater productive capacity, there's really no need for capital investment. So, what we've seen is increasing amounts of money flowing to (being realized by) the wealthiest and reduced incentives for them to (hire others and) deduct employment expenses to lower taxes at historically low rates.

On top of it, we're engaged in military adventurism and creating war profiteers without the kind of profiteering taxes we enacted in WW2 and Korea and Vietnam.

Here're a couple of graphics that (I believe) make the trends clearer. The first indicates how wealth (which can only be created by labor) is increasingly shifted to corporations (i.e. ownership class). The second shows how Federal corporate tax policies offer a disincentive to hiring.

[Ready4Change]

6. It's BEEN stalled.

Headline should read "Economists admit: Economy has been stalled for a while."

[DaveSZ]

7. "Turnin' the corner..."

That's the roundest damn corner I've ever seen.

[mom cat]

24. Good point. It's looking more like a U turn.

[arwalden]

8. "Shows Signs" ??? Really??? It's just showing "signs"? --- AMAZING!

[HuckleB]

9. It showed "signs" as it sputtered in June and July. It's now stalled.

And stuck on the side of the road.

Thanks, Georgie.

[54anickel]

10. Watch for the spin next week from Greenspin - This is all good,

we want "steady as she goes" growth, not boom and bust cycles. Same spin he used when we hit the "soft patch". He'll continue to claim inflationary forces are transitory, continue with measured paced, recovery, blah, blah, blah.:eyes:

[area51]

12. The economy

The economy has "... slipped back into neutral."

How optimistic, when the economy has basically been going in reverse, as we've never had a recovery. It hasn't been this difficult for people to get jobs since the 1st Great Depression.

[emc]

13. stock market went south

If people dont think the economy is stalled, they ought to check out the market---it went south and is still going south---Knowing that Bush hasent got the intelligence to use the market for his investments, ---since most investors are aware of his inside trading the last go around, it dosent appeal to him to get his accountant involved in what most americans use to stay ahead---and put their confidence in------

[TahitiNut]

16. The 'market' is NOT the 'economy'.

If anything, the 'market' is used as an excuse to confiscate ever greater portions of the value of labor in a corporation, particularly after a merger or acquisition. Employees are compensated for less than 35% of the value of their labor in the average S&P500 corporation .. with the rest going to the 'ownership class.'

We've experienced about 10 years of inflated investment dollars. (Remember, the definition of 'inflation' is too much money chasing too few goods.) By pursuing (semi-)supply-side policies of creating ever more investment capital, that capital went into the markets and drove up the PPS ... to the point that P/E's were above 30. Companies then pursued strategies of realizing shareholder equity ... screwing the workers.

[calimary]

19. Well, the REALLY telling signal in this is - how many people do you hear

spewing the gospel of privatizing Social Security in moments like these? Yeah, sure. Let's all throw our pensions to the whims of Wall Street, 'eh? Notice how you don't hear ANY of those people out talking at present. They know they'd be laughed off the stage amidst a shower of flying eggs and tomatoes, but they'll be back. They're laying low now, waiting for a more fortuitous time to bring up the subject again - hoping people will forget how risky and volatile the market can be. But they WILL be back pushing that crap again, hoping you - AND Grandma - will have forgotten...

[KoKo]

23. And there will be great pressure for folks who have pensions who are

now getting ready for retirement to take "cash buyouts" which are not a good deal in the end. But, the companies will whine that things are so bad for them with their profits eroding that they cannot afford the expense of long term pension pay outs.

The rest of us with our 401-K's will be told to hang on and sit tight. "It will all come back..."they will say. How long before it all comes back? Given what some of us are reading that doesn't come from CNBC, it will be a loooong time... And, some will have to cash out of the 401-K's soon because there will be nothing left after the home-equity's are used up and the house has be be repossessed...while they wait for the jobs to come back.

It's a pretty gloomy scenario which can only be turned around with big tax hikes on the over $200.000 crowd and re-instituting taxes on Corporations, closing loopholds for "offshoring accounts" and a total rehaul of our SEC Regulations. We can do this...and save ourselves decades of misery. I hope Kerry sees this and has advisors who will do a Teddy Roosevelt and clean this damned mess up that goes back to the "stock market bubble," and Reagan, Poppy and Clinton administrations give aways to the Corporations at the expense of the American people.

[opihimoimoi]

15. They will attempt to fix with lowering interest rates once more.

But this alone will not move confidence upward. Good policies and decisions will. These have been missing from Bushes equations since day one... leading to this horrific mess...

a net loss of jobs and the DOW heading South for the 8000 mark once again...when it should really be about 18000 to 20000 had Bill Clinton remained in office.

But the Bush continues the "fah cahd" in faking his way through... hoping for a miricle that may or may not emerge.

He is reduced to guessing and using nefarious means to win...hardly qualities of a wise leader

[PROGRESSIVE1]

17. Well gee, what about those "tax cuts"?

Where's your miracle Mr. Bush???

:eyes:

[tsm11]

20. Hey TahitiNut

I was looking for one of those charts that I remembered seeing along with the two you just posted... dealing with the tax burden distribution of labor/corporations. Couldn't find it on google... happen to have a link for the original source of those graphs you posted?

thanks!

[tsm11]

21. ooops... heh

um, just noticed the url right on the image... gracias!

[TahitiNut]

29. National Income data are available from the BEA at

http://www.bea.gov/bea/dn/nipaweb/SelectTable.asp?Popular=Y

(BEA = Bureau of Economic Analysis)


"Table 1.12. National Income by Type of Income" is particularly interesting.

[Demeter]

22. Tell The Truth, For Once

There was no ambiguity--the data said that things were bad, and there was no way Bush's program was going to make it better. Bush's program was guaranteed to make it worse. Once the lies, fraud and overly optimistic estimates were cleared away by relentless reality, even the biggest bulls could see the bullshit.

This isn't a correction, it's a meltdown.

The only way to stop the annihilation is to reverse everything Bush has done to the economy, and can Alan Greenspan. Also, undo all the Constitutional damage Ashcroft inflicted on everyone, and impeach the Supremes. It is more than cleaning house and senate, it's gutting to the foundation and building anew, to ensure that termites can't eat away at the foundations of this once great nation again.

[newbie2be]

30. Can we now use this against Bush?

Instead of running on the Viet Nam ticket we should use this as a launching pad.