Galt's Gulch

Add Comment

FORMATTING HELP

All Comments Hide marked as read Mark all as read

    -
  • Posted by khalling 9 years, 9 months ago
    But as curcuitguy has pointed out - "we 're in an expansion "
    Reply | Mark as read | Best of... | Permalink  
      -
    • Posted by CircuitGuy 9 years, 9 months ago
      "But as curcuitguy has pointed out - "we 're in an expansion ""
      As the data clearly show, we are. Recessions are three consecutive quarters of GDP contraction. Expansions are times like this when we are averaging 2.5%. We're below the historic average for an expansion, so maybe we'll see more growth in 2014 and 2015, or maybe this expansion will be tepid. I don't have a crystal ball. I'm pretty sure the expansion will end in a few years, and we'll have real negative growth and be in a recession.

      The histrionics, though, only stop at the very end of an expansion. Recession of '91's bellyaching went on until the late 90s. That expansion ended in '01, and being in tech I heard an amazing amount of hyperbole about the end of the world. I personally avoided participating in the recession of '08-'09; technology was spared that one. I also sold my house in '04 and rented until '10. Amazingly the '08-'09 bellyaching persists. You can posts a chart showing expansion, and people belittle the notion that the chart shows expansion. I'm thinking it will be three years from now in '17 when people realize we're in an expansion, and a recession will hit.

      I was born in the recession of '75. They had histrionics back then too: http://youtu.be/WINDtlPXmmE

      Eventually producers get out there, find problems to solve, get people to pay for them, and then we can say politician X created y # of jobs.
      Reply | Mark as read | Parent | Best of... | Permalink  
        -
      • Posted by straightlinelogic 9 years, 9 months ago
        One other point before I stop beating this dead horse. The growth we have had has been purchased with debt. Since debt has grown far faster than GDP, however you measure GDP, sooner or later much, if not all that debt, will be unpayable. From an accounting standpoint, debt losses can be recognized immediately or amortized, but no matter what the accounting, such losses have to be recognized. Whatever the government announces as a GDP figure, mentally adjust it downward to recognize future inevitable losses on debt, which are going to be enormous.
        Reply | Mark as read | Parent | Best of... | Permalink  
        • Posted by CircuitGuy 9 years, 9 months ago
          Yes! I wish we would do something about the fiscal deficit _right now_, and that's only b/c going back in time is not an option. I think growth plus political haggling will reduce the deficit as in the late 90s, but we're _really_ playing with fire. I think economic growth and interest rates are going up; so hopefully the growth solves the problem. The problem is actually easily fixed if we act now. It will be hard if we wait for it to become a crisis, which appears to be our policy. Until then we make insignificant changes to fiscal policy and make a big deal out of them.
          Reply | Mark as read | Parent | Best of... | Permalink  
        -
      • Posted by straightlinelogic 9 years, 9 months ago
        Actually recessions are two consecutive quarters of GDP contraction, and with 2.9 percent contraction in the first quarter we are certainly not averaging 2.5 percent growth. Trend growth over the last six years is about 2 percent. While the second quarter wil probably print positive growth, the government over the past decade has done everything in its power to flatter the statistics. Hedonic adjustments to prices minimize price increases, thus increasing so-called "real" growth. Recently the government also decided to include R&D expenditures in GDP growth, and proposals have been made to include black market activities, i.e. drug dealing and prostitution, in GDP. So take those government numbers with a large grain of salt. Lakshman Achuthan of the Economic Cycle Research Institute argues that the second quarter bounce this year will be strictly the dead cat variety, and because of decelerating housing and business investment, we will be in a recession by the end of the year.
        Reply | Mark as read | Parent | Best of... | Permalink  
        • Comment hidden by post owner or admin, or due to low comment or member score. View Comment
        • Posted by Robbie53024 9 years, 9 months ago
          We've been in a recession for the past 6+ years. It's only been by rigging the numbers and vast amounts of borrowing that the technical numbers have been kept out of an officially designated recession. Eventually, all this will collapse and then the pain is going to be even worse - my prediction is that it will be worse than the great depression. The only saving grace may be that we won't also be facing a dust-bowl, so perhaps many will be able to grow their own food, so the level of starvation will be lessened.
          Reply | Mark as read | Parent | Best of... | Permalink  
          -
        • Posted by CircuitGuy 9 years, 9 months ago
          "Trend growth over the last six years is about 2 percent."
          The last six years, though, includes part of the recession of '08-'09. It doesn't matter much, though, b/c it would only be something like 2.5%, which is lower than average, if you started at the end of the recession.

          "While the second quarter wil probably print positive growth, the government over the past decade has done everything in its power to flatter the statistics."
          We can't use the Q1 numbers and then say we don't trust Q2 numbers unless they happen to point to the conclusion we began with before collecting evidence.

          "Recently the government also decided to include R&D expenditures in GDP growth, and proposals have been made to include black market activities, i.e. drug dealing and prostitution, in GDP. "

          I was not aware of the proposals to include black market activities. It's not surprising since a staggering amount of economic activity is under the table. This fact is a problem much bigger than determining the boundaries of the stages of the economic cycle.

          "Lakshman Achuthan of the Economic Cycle Research Institute argues that the second quarter bounce this year will be strictly the dead cat variety, and because of decelerating housing and business investment, we will be in a recession by the end of the year."

          That will be interesting. I have a horrible record of predicting the economic cycle. If there's a recession of '14, I don't understand what monetary and fiscal policies they will respond with. We already have both monetary and fiscal gas pedals down all the way to the floor. Recently I've detected some signs of inflation in my little sector of the economy. So my guess is we're poised for faster expansion, and the Fed's job will be to take away the punch bowl just as the party gets started. My understanding is they should be tightening fiscal policy _right now_. My predictions are probably worse than a coin toss, though, so I have to just wait and see. If I were a betting person and my predictions were better, I'd write some puts for you to purchase. :)
          Reply | Mark as read | Parent | Best of... | Permalink  
  • Comment hidden by post owner or admin, or due to low comment or member score. View Comment
  • Posted by Robbie53024 9 years, 9 months ago
    The gov't blames the 1st qtr downturn on the poor weather, but during a similar cold snap in the 90's there was no such magnitude of downturn - it was more in the area of 0.1% off from prediction.
    Reply | Mark as read | Best of... | Permalink  

FORMATTING HELP

  • Comment hidden. Undo