US Economy is hot.

[Almighty Colin]

US GDP up 5 percent over the past four quarters, the fastest growth in 20 years.

Corporate profits up 36.7%. Best in 23 years.

Net cash flow is up 23.6 percent in the past year, also the most in 23 years.

Hopefully the EU starts to get going soon

[Mike AI]

It's Bush's fault!!

[chodadog]

Originally posted by Mike AI@May 27 2004, 07:16 AM
It's Bush's fault!!

I'm no fan of Bush myself, but jesus, a lot of the Bush haters piss me off. Anything bad happens to the economy, and they say it's Bush's fault. Anything good happens, and it's the private sector driving the economy.

[fuckingmoney.com]

Well seeing The Netherlands as it is.......... i might just trade in my peugeot 607 and just move by foot.....

Economy has never been so bad, over 10.000 people lose their jobs each month.......

Still seeing to positive changes

[SykkBoy]

See, more good things holding over from the Clinton years......





;-))))))))

[Almighty Colin]

Originally posted by SykkBoy@May 28 2004, 02:49 AM
See, more good things holding over from the Clinton years......





;-))))))))

Heh :-)

[Opti]

It seems like just weeks ago people were talking about the possibility of a US recession.. it's amazing how fast things can turn around. Not that I am complaining about a effective 10% raise over the last 6-8 weeks on the back of a strenthening greenback.

Colin, do you think public sentiment improves with the economy... or that an economy cant improve without public sentiment behind it?

If the later.. do you think the current positive public sentiment about the economy is sustainable?

I'm glad for the improvements.. but I wonder how much of it is election year engineered sentiment, and I wonder how robust it is.

A US economy jumping around unpredictably would have to be a worst case scenario for everyone imho.. and that is what I feel we might be in for over the next 12 months or more.

[Almighty Colin]

Opti,

I've felt very strong about the US economy the past year and a half.

1. Lots of government spending
2. Lower taxes

Both put more money in play ( Buff will have the rebuke on the negatives ;-) )

Of course, that raises the debt. That's another argument entirely as to what is a sustainable debt ratio but debt/GDP is about 63% which is not a record for the US nor even highest among the G8 countries. It was about 59% when Bush took office. Its higher than it was recently.

The US GDP has increased about $700 billion this year. Of that $700billion, the breakdown is roughly:

1. 63% private consumption expenditures
2. 29% Gross private domestic investment
3. 14% Government expenses
4. -6% Exports

I think the relationship between sentiment and strength of the economy goes both ways. Yeah, I think the economy can get better when sentiment is low expecially given that sentiment measures the feelings of everyone regarding the economy and aggregate unweighted opinion is often wrong.

Take the well-known case of the the stock market, for example. The market often rises off it's low when sentiment is at its lowest (which makes sense since most people extrapolate the present conditions and trends to the near future). People see rising unemployment and think it will continue forever.
People see a one or a two quarter recession and think we're heading into a 21st Century Great Depression.

How often have we heard proclaimed such statements as "the highest x" ever? The "worst y" ever? Usually just at the point when things are their worst (and never really that bad historically to begin with).

I don't know about election year sentiment. I think it's a little easier to scare people into thinking things are bad rather than good and the press seems to find such stories interesting anyway. I think high fuel prices are keeping sentiment from going even higher.

Well, now we're going to get rising interest rates and will likely get less government spending and maybe higher taxes depending on who wins the election. And regardless of which way oil prices go in the near future it seems they will go higher in the coming years as China's fuel usage increases at amazing rates though the rule of thumb is - .1% GDP for every 10% increase in oil prices so it's more of a hindrance than a real negative. I'm less optimistic on 2005 with all that but no one ever knows how long such things take to run their course. It being the dismal science and all. Probably just in time for Kerry, if elected, to inherit a 4th quarter 2005 slowdown for the Republicans to say he ruined the Bush recovery and for the Democrats to say it's really the fault of Bush.



Last edited by Colin at May 28 2004, 06:13 AM

[Opti]

Personally I think sentiment is a larger factor than you appear to.. but its interesting you talk about the deficit! Government spending more than any other single factor creates Grass Roots sentiment and that is where the upturn we are seeing now is being driven from imho.

(bear in mind I am outside looking in and have no way to gauge all the little factors like an American would.. so I would never argue I am right and anyone else is wrong about this.. just an observation)

Probably just in time for Kerry, if elected, to inherit a 4th quarter 2005 slowdown for the Republicans to say he ruined the Bush recovery and for the Democrats to say it's really the fault of Bush.

From this statement I am guessing you imagine a post election downturn is likely at some point.. I think it's almost guaranteed.. it would be worse if Kerry wins too is my tip. My reason for thinking this is that the US government must stop spending soon... and when a government stops spending it undermines the communities grass roots sentiment 10 times harder and faster than it rises.

Although I dont think a deficit in itself is anything bad.... and I do think a high level of government spending is usually a good thing.... ramping it up to a level that is not sustainable (as appears to be the case now) is a suicidal move in the long term.. as at some point it has to be cut back.. a good government should always leave enough breathing space to let them scale back as gradually as possible if ever needed.

Anyway... I'm raving now and no certain I am making my point.

Basically I expect volatility "like we have never seen before" ;-) in the US economy over the next 2 years minimum... and it worries me!


Oh yeah... I'm not sure what effect China will have... and maybe Americans are freaking out more about gas prices right now than i realise... But although I have seen the news reports about $2/gallon I have been thinking it appeared Americans are not as spooked by high oil prices as they once were... Again harking back to the sentiment thing.. if this is true, its a very positive thing imho, in that it reduces OPECs power and should help make the growth of chinese oil demand impact less than doomsdayers predict on America.. and ergo.. the world.

The US GDP has increased about $700 billion this year. Of that $700billion, the breakdown is roughly:

1. 63% private consumption expenditures
2. 29% Gross private domestic investment
3. 14% Government expenses
4. -6% Exports

I wonder if any area contributed a disproportionate amount... if one did my bet would be on #3

[Almighty Colin]

Originally posted by Opti@May 28 2004, 06:48 AM
Personally I think sentiment is a larger factor than you appear to

Oh no, I'm not at all saying it's not important. Some time ago I was looking at a chart of sentiment vs. GDP. You could see they were clearly correlated. It was difficult for me to tell for certain which way the causation was but the correlation was obvious.

[Almighty Colin]

Originally posted by Opti@May 28 2004, 06:48 AM
maybe Americans are freaking out more about gas prices right now than i realise... But although I have seen the news reports about $2/gallon I have been thinking it appeared Americans are not as spooked by high oil prices as they once were.

4/8/04

"A recent CNN/USA Today/Gallup poll finds nearly 7 in 10 Americans saying the cost of gasoline represents a crisis or major problem for the United States. In recent years, the public has tended to see rising gas prices as only a short-term phenomenon, but now Americans expect that the higher gas prices are more permanent. Slightly less than half of Americans say that the higher gas prices have caused financial hardship for their households, but a majority believes higher gas prices this summer will lead to hardship for them."

[Almighty Colin]

Originally posted by Opti@May 28 2004, 06:48 AM
From this statement I am guessing you imagine a post election downturn is likely at some point.

I'm not that smart. I just think the probability that we'll continue 4.5% growth next year is not that high with all those factors.

[Opti]

Talk about being right on top of current affairs...

A poll about Oil Prices is on the front page of Gallup.com today


A quick read of their piece ( http://www.gallup.com/content/?ci=11827 ) still suggests to me American's are not anywhere near as concerned about Oil prices as they once might have been.. People may be talking about driving less.. and it making a couple things harder... but i dont see people seriously suggesting Oil prices alone will kill the US economy... or car makers shutting down.. or anythign even similar to the panic of the 70's oil crisis... I wonder if that event scared Americans so much it has taken this long to get over it or forget.

Check this out...

Reasons for Higher Prices

There is no widespread consensus as to why gas prices have risen. Twenty-two percent of Americans speculate that oil companies/big businesses want higher profits and 19% cite the war in Iraq, 9% say OPEC or Saudi Arabia is manipulating the oil supply, 8% attribute the increase to simple supply and demand, and 7% say it's politics.

"9% say OPEC or Saudi Arabia is manipulating the oil supply" <--- this indicates to me Opec are soon to be a spent force.. they have traded on scaring Americans economically for decades!

[Almighty Colin]

Originally posted by Opti@May 28 2004, 07:18 AM
A quick read of their piece still suggests to me American's are not anywhere near as concerned about Oil prices as they once might have been.. People may be talking about driving less.. and it making a couple things harder... but i dont see people seriously suggesting Oil prices alone will kill the US economy... or car makers shutting down.. or anythign even similar to the panic of the 70's oil crisis.

Oh, no no. Nothing like that. When I read "59% expect that higher gas prices will cause them financial hardship this summer" that leads me to believe that - as I said - "high fuel prices are keeping sentiment from going even higher."



Last edited by Colin at May 28 2004, 07:24 AM

[Winetalk.com]

Originally posted by Colin+May 28 2004, 07:15 AM-->