Economy Doing Better, But People Don't Believe It

Posted by empedocles 5 years, 2 months ago to Economics
23 comments | Share | Flag

I think this is the difference between beliefs and data.

People don't believe it:

http://www.cnbc.com/id/101953791
SOURCE URL: http://www.cnbc.com/id/101952523


Add Comment

FORMATTING HELP

All Comments Hide marked as read Mark all as read

  • Posted by khalling 5 years, 2 months ago
    1. the data is continually revised
    2.look at quarter 1 and quarter 2 data. You go from -2.9% to +4.3% in one quarter? possible, not likely
    3. they refuse to adjust properly for real GDP
    4. median household income is still 8% lower than it was before the recession.
    5.costs are rising(inflation) as the value of the dollar decreases
    6.Most of the sectors experiencing growth are government related sectors. They get the QE first. So that does not translate into real wealth creation.
    7.the author of the article is a founder of msnbc and public radio's Marketplace. spoonfed charts and data from the government.
    where is straightlinelogic when these things get posted? straight!
    Reply | Mark as read | Best of... | Permalink  
    • Posted by  $  straightlinelogic 5 years, 2 months ago
      The largest contributor to the GDP was the category private investment, and most of that is inventory build. If inventories don't sell, they must be liquidated, and virtually every retailer this last earning reportings season noted disappointing final demand and retail sales and projected more of the same going forward. Private investment will then reverse in coming quarters.

      The GDP numbers are in fact suspect, as economists from both sides of the political divide argue when the other party is in power. The real GDP number is the nominal GDP adjusted by the GDP deflator, a price index. Constructing and implementing the deflator is not an exact science, and the government has every incentive to fudge the deflator down (reduced transfer payments that are tied to price indexes, lower inflation numbers often translate into lower bond yields and our government is the biggest debtor on the planet, better reported real growth, etc). Hedonic adjustment is a controversial practice that supposedly adjusts the deflator based on quality improvements in goods and services, but which probably flatters the deflator. Finally, the government recently started adding research and development costs to GDP. (In Europe, some countries are debating adding criminal and black market activities to GDP.)

      There is no denying that this is the weakest "recovery" in many decades. The improvement in the unemployment rate has been driven primarily by a large drop in the labor force particpation rate. Food stamp participation, on the other hand, is at a record high. Real incomes are still below where they were before the financial crisis, which may explain why so many do not "feel" that there has been a recovery. Multiple quantative easings would have been unnecessary had the recovery been of the usual strength. As so many have noted, most of this recovery's beneficial effects have been concentrated on the wealthiest, in the form of asset price appreciation.

      Obamacare, rising tax and regulatory burdens, and ever mounting debt service will continue to retard economic growth. Any decent financial crisis would knock us right back into another severe recession, and probably a depression. It's been almost six years since the last one; gross debt levels are even higher than they were then; the Too Big To Fail financial institutions are even bigger and more concentrated with financial risk; so we are probably due.
      Reply | Mark as read | Parent | Best of... | Permalink  
    • Posted by Bobhummel 5 years, 2 months ago
      When the government controls the collection of statistical data, they can control the release of the statistical data. They release "good" economic news with great fanfare in the MSM, then quietly revise the data down 3 weeks later. At best, the MSM wonks are "surprised" by stats that show how poorly our economy is doing versus the world.
      The "walls street fat cats" who are paying $32K apiece to eat BBQ with the golfer-in-chief this weekend are happy to be vilified by BHO as long as they get access to QE money from Fed at nearly zero interest.
      The rest of us can just eat cake.
      Cheers.
      Reply | Mark as read | Parent | Best of... | Permalink  
    • Posted by 5 years, 2 months ago
      This is after a Q2 revision.

      What data do you propose we use? Or are you judging the economy on gut feel?
      Reply | Mark as read | Parent | Best of... | Permalink  
      • Posted by dbhalling 5 years, 2 months ago
        Well lets see the employment numbers were manipulated just before the election.
        We know that the inflation numbers are being manipulated, because of the product substitution idea.
        We know the GDP numbers are being manipulated because last year they decided to count all R&D costs as economic growth.
        We know that the actual number of hours worked has declined.
        We know that many full time jobs went away and were replaced more part time jobs.
        If the emperor said he was wearing clothes, but you did see any, would you trust his statement or your judgement
        Reply | Mark as read | Parent | Best of... | Permalink  
  • Posted by CircuitGuy 5 years, 2 months ago
    It reminds me of the recession of '91. People were still talking about it as late as '97, well into the next expansion. Some of these people who appear to be denying the data are really just expressing long-term pessimism about the US economy. If you press them, they'd have to admit that '97 was an expansion, but they think there are long-term problems that aren't being fixed. Sometimes the problems are real and other times it's a form of psychological depression. For the latter group, when people have to lower their prices and cut wages in a recession, they really can't stand it. Then when people start raising their prices w/o losing sales and employees start going to other jobs if you don't give them raises, the same people can't stand it just the same.

    It shouldn't all be dismissed as depression though. It's not illogical to say, "This road has its ups and downs, but I really don't like some aspects of where we're going."
    Reply | Mark as read | Best of... | Permalink  
    • Posted by khalling 5 years, 2 months ago
      You make interesting points but without addressing any of the arguments regarding GDP numbers and their calculations. I notice you never address these economic arguments directly. Why not?
      Reply | Mark as read | Parent | Best of... | Permalink  
      • Posted by CircuitGuy 5 years, 2 months ago
        "You make interesting points but without addressing any of the arguments regarding GDP numbers and their calculations. I notice you never address these economic arguments directly."
        I don't know the nuts and bolts of GDP calculation. StraightlineLogic rightly points out that much of our economy is underground to avoid laws and taxes. That is a bigger deal than determining the boundaries of each expansion / recession cycle.

        Why does determining the boundaries of the economic cycle matter? We know the economic cycle marches forward; the pendulum swings back and forth. Does determining the dates when the slope changes between negative/positive matter at all?
        Reply | Mark as read | Parent | Best of... | Permalink  

FORMATTING HELP

  • Comment hidden. Undo