Let's look at some recent numbers:
- 2nd quarter GDP was revised up to 2.5%. (Normally, that would be a so-so number, but considering recent years, it's pretty good.)
- Weekly unemployment claims are at a 5 year low.
- Home prices are up 10-12% year-over-year (comparing 2012 and 2013), according to both the Case-Shiller Index (20 city composite) and CoreLogic.
- Consumer sentiment is pretty good, if not great.
- The American Chemistry Council's new-ish index (which is supposed to predict the overall American economy as a whole) is looking positive for the six to eight months.
Of course, long-term unemployment is still crummy (and will continue to be) and Paul Hodges still thinks we're DOOOOOOOOMED. (Actually, I feel like he's moderating his tone juuust a bit.)
Readers, any thoughts on the direction of the economy? 2013 is almost 75% over, and it's unclear to me what kind of year it has been. I'm thinking positive for 2014, though. I hope I'm right.
It will be interesting to see how well the economy does if sequestration continues and political fighting continues over the debt ceiling. With unemployment still high, incomes stagnant or low, student loans high, and cushions depleted by the great recession, there isn't much of a safety margin left for people in my circle. I hope your positive outlook comes to pass.
ReplyDeleteNot hopeful. Congress is still unable to either come to an agreement or even function coherently, which may lead to a gov't shutdown (probably not likely but possible) but will lead to problems sometime soon (and we seem to lack any ability to deal with or even admit that there are long-term problems). Long-term unemployment is not good, and the replacement jobs are low-paying (in an economy where nothing else has gotten cheaper, really). I don't know how ACA/Obamacare will affect things, but I can't imagine that jobs at the low end will become more livable or the labor situation more sustainable. (I don't share consumer sentiment, apparently).
ReplyDeleteI think 2013 won't be a good year, but probably better than a few years ago. If the gov't closes shop, though, even for a little bit, the year will probably suck (even if you don't like the gov't, that would be a lot of money not spent and with 60% of the economy consumption, that would be a lot of the economy not happening). 2014 would be time to create problems for political gain or ignore those we have, and I don't think that the economy will be good unless the behavior stops, which it won't.
We are going to crash in late 2013 or 2014.
ReplyDeleteEveryone here understands that the "STEM shortage" is propaganda, correct?
Now imagine if the short term career of politicians (here's looking at you Obama) or Fed reserve members depended on people thinking the US economy recovering in the short term. Who has all the power? Who has the media? Who controls the methodology for the measuring the indices for inflation? Do we really think inflation is below 2%? It is definetly becoming more expensive to live in the US.
Unemployment decreases are fueled by full time people getting laid off and replaced by several part time people. Part time workers are not covered by Obamacare, so it is much cheaper to hire 2 part timers rather than 1 full time employee. (Check Indeed trends for part time jobs - it has spiked in the past year. Most good paying science jobs are falling). Furthermore, unemployment extensions are running out for the long term unemployend. They cease to be counted as unemployed when their benefits expire. Unemployment measurements are meaningless. Look at employment as a percentage of the population. That tells a different story.
Home prices are up, but 50-60% of the buyers are investors. Many are foreign investors, who get an extra discount from our deeply weakened dollar. Most buyers are all cash. Think first time homebuyers are fueling home prices? Think again - they are still in the parents' homes without a job in their field. There is not a demand from the 'normal' buyer - home ownership is at an all time low. However many metros are building cheap multi-family attached rental homes - so all the former aspiring middle class will not go homeless. They will get the priveledge of paying rent to Blackstone for the rest of their lives.
Keynesians will not rescue us. There is no good exit from the QE or the US debt. This will end very badly for the US and the world. Bernanke's myth that the Great Depression was caused by not enough stimulus is false. Keynesianism caused the Great Depression, just as it is causing the upcoming one. The doves have destroyed what was left of the US economy.
Move to one of the more stable economies in Asia while you still can.
Hasn't Europe been trying to austere themselves out of recession? How well has that worked out (or not worked out, more likely)?
DeleteEveryone is an economist
DeleteBut I thought Keynes developed his theory after the Great Depression?
DeleteKeynes haters are abound, his theories and models inconvenient when the economy of today just worships investment without any value associated to it (much like the conditions that led to the great depression) I mean, just like that, everyone is a voodoo economist and concerned with the macro flow of money, more than they are concerned with their job. I mean, our labor is worthless, so how I can make this stack of money work for me instead of actually trying to work by the hour and do/build something. So now, I have to sit through leadership seminars as my "leadership" skills will make me a better con artist to have a bigger stack of money/capital to invest, without actually having to DO something. I bet the University would love if I get one of their MBAs.
DeleteEurope and China are hurting now to be stronger later. We are kicking the can down the road of to hyperinflation.
ReplyDeleteSolving Europe's debt problem would be short-term pain/long-term gain, but I'm not sure that they're either solving it well (killing lots of the economy to do it doesn't help, and as we've shown, shifting government back onto the poor and middle classes doesn't make most people have more money to spend. Instead, it just makes the hole most people are in deeper, so in the long run, people won't have more to spend, which doesn't grow the economy, but shrinks it) or solving the debt problems (they need either to be separate rather than in one union, which would probably be bad, or they need to have more central authority for fiscal policy so that countries can't run up bigger debts than they can afford and expect others to pay, authority which no one wants to give).
DeleteIf the US goes into the sewer, China will be in bad shape as well, and eventually expecting people to take fiscal responsibility for their lives without proportionate control over their government will have consequences.
The revisions to GDP will continue until the economy "recovers". Ignore the long-term unemployed, there is a shortage of qualified workers, so they must really suck ;) Damn the torpedoes, full STEM ahead!
ReplyDeleteIt should be noted that the Shiller in the Case-Shiller index has declared the housing market irrational and advised against using housing as an investment. How can housing prices go up +10% every year when wages are stagnant or falling.
I suspect that we're bumping up against global resource limits and may be seeing the end of exponential growth. That would mean that the economy will never "recover" to the type of growth that we've grown accustomed to last century no matter how much quantitative easing or stimulus we throw at it.
On the other hand, technology has picked all the low hanging fruit and automation has increased efficiency at the expense of labor. Now people are surplus. We're all built out, we've saturated the market. Now our biggest innovations are fast food and social media marketing. When historians look back at this era, they'll declare that there was the coal age, the oil age, the nuclear age, the space age, the genomic age, the information age, and finally the #hashtag age. You don't need much labor to keep the @TacoBell account humming.
Meh. Even if we are poor due to bad employment opportunities, it would have been nice if we, as humans, could be "aesthetically pleasing." Where I live Im surrounded be fat-asses all day long. Its one thing to be poor, its another to be surrounded by obese people and poor at the same time.
ReplyDeleteLife sucks.
People have always complained about the economy as long as I can remember, even during the non-recession times. There aren't people selling pencils in the streets so I guess things could be worse.
ReplyDeleteThe real money is in sharpening the pencils.
Deletewww.artisanalpencilsharpening.com
Growth by stimulus is like someone who maxes out their credit cards on Starbucks. While drinking their expensive coffee, they might comment on how others must be doing poorly because they don't drink Starbucks very often. However - those who don't max out their credit cards on Starbucks are fiscally healthy, though with the "pain" of not having the Starbucks experience. Once the Starbucks junky maxes out their credit cards the debt collector comes. The credit cards become no good. No more Starbucks and a lot less of everything else.
ReplyDelete"when the economy of today just worships investment without any value associated to it"
ReplyDeletelike chemistry PhD theses?
Probably, yes ... and ouch. Collectively a great investment for societal knowledge, a poor investment for the individual.
Delete"Collectively a great investment for societal knowledge"
ReplyDeleteI beg to differ. Over educating folks in a field which cannot be utilized comes at great societal cost.
I rather not have my tax dollars wasted on the next "great thing" to grace Chem Comm or Tet Lett. Do we really need all these 'solventless microwave' reactions which have no industrial purpose? Do we really need so many nanotubes?
If a student choses to pursue degree(s) in chemistry but then cannot find a job, society has experienced a high opportunity cost. That individual could have been trained in career which would be profitable to themselves and society's GDP at large. When in a successful career, individuals buy stuff which further adds to the GDP. In an ideal society, each citizen it contributing their maximum value to the GDP. Over educating someone in a non-employable career only leads to high debt and low earning potential.
I don't think we were "over-educated" we were paid in prestige to do the work that society deemed relevant, and then attempting to shift these costs to our future employers. I stopped getting "educated" in the traditional sense of the word my first year of grad school, I haven't taken a course since. I have been since trying to add knowledge to the world. They tell me I am "learning skills" which is true, but these are skills I could have more easily and practically learned at a real job as opposed to an extended postdoc.
DeleteUntil I see a career path(s) that as a collective build GDP, and can create a critical mass of well paying jobs and social mobility into at least middle class income, then I can't just blame "oversupply of STEM" as the sole source of all of our problems. I guess nursing is one profession, especially given the aging US population, but other than that? It's been a nonstop race to the bottom in everything from wages, personal time, and work expectations. Chemistry(and STEM) is just not that special as a career. Chemists might be special in our own quirky ways, but no as a career chemistry is just not that special with regards to value of work.