If Hillary Clinton is elected, the House Republicans will be sure to try to cause a recession to embarass Clinton--they don't care about America at all.
Remarkably, this article makes no reference to the fact that we add a trillion dollars to the national debt each year, that most of the new jobs we add each year are minimum wage part-time jobs and that labor force participation has rarely been lower. Oh, and we have near-zero interest rates with anemic rates of growth. The majority of the people in this country live paycheck to paycheck. Sorry, Neil, for many people in this country we've been in a recession for a long time and that's why we've had the emergence of Donald Trump.
In reply to Alex, who sounds like he thinks we have been in a recession since 2009. Upon what statistics do you base your observations?
There are not many developed/developing economies with 3 to 4 percent or higher annual growth, And most, if not all, are facing similar issues with automation, trade, aging demographics and so on. So intelligence and wisdom are going to be much more valuable than political and ideological rhetoric in the years ahead.
Globalized economic dependencies will increase despite populist ranting. The greatest challenges for us are infrastructure, coping with the effects of automation and fixing one of the developed world's more inefficient (revenue as a percentage of GDP) tax systems. If conservatives in congress start participating in responsible governance, we can work on these.
Eclectic Pragmatist — http://eclectic-pragmatist.tumblr.com/
Eclectic Pragmatist — https://medium.com/eclectic-pragmatism
Globalized economic dependencies will increase despite populist ranting. The greatest challenges for us are infrastructure, coping with the effects of automation and fixing one of the developed world's more inefficient (revenue as a percentage of GDP) tax systems. If conservatives in congress start participating in responsible governance, we can work on these.
Eclectic Pragmatist — http://eclectic-pragmatist.tumblr.com/
Eclectic Pragmatist — https://medium.com/eclectic-pragmatism
4
True, but there has been at least one recession each decade since NBER has determined a recession has occurred, http://www.nber.org/cycles.html . We have not experienced one this decade, as the "Great Recession" ended June 2009.
Slower growth also could also prevent the economy from over-heating and thus making the expansion persist. There is too much of an obsession with a lot of growth. More moderate growth arguably would be more sustainable. We saw during the last 2 bubbles how things imploded after the economy expanded robustly. Slower and steadier is not necessarily a bad thing.
6
Trump has pledged to spend one trillion dollars on infrastructure rehabilitation. Hillary Clinton has pledged half that. Either way, the near future holds major infrastructural investments that will stimulate the economy and even accelerate growth beyond its sluggish rate. Accelerate because as improved infrastructure becomes available, investment in the USA will look more attractive.
2
Unless a Republican Congress refuses to sepend the money, which could happen with either candidate. The Republican leadership is simply not on board with spending money that could instead be used to lower taxes for their wealthiest donors.
4
In reply to Ivan Light. A boost by either a Democratic or Republican administration is a necessity because our infrastructure is crumbling.
By itself however, infrastructure spending will not lead to long term economic growth in GDP.
By itself however, infrastructure spending will not lead to long term economic growth in GDP.
Perhaps you could just lower your sights a little and focus on the probability of the next Mayoral term facing budget woes. I'm very surprised to learn you don't intuit these rhythms as a sinusoid: having been involved in NYC government since the mid-1970's, it's obvious there's an 11-12 year spacing between the low points in City tax returns and municipal budget health (a different question than how long "expansion" lasts.) The next local crisis is thus due in the next three to four years.
I feel your statistics is a little too pure, i.e., divorced from historical lessons.
I feel your statistics is a little too pure, i.e., divorced from historical lessons.
1
We are in recession. Go to Ohio. Both coasts are living in la-la land.
2
So, no positive changes since 2008 can be noticed in Ohio?
2
The figure in this article does not have any correlation effect - nether between the countries nor within US for the four data points shown here. US had glorious development till 2013 without any recession, no debt and no mortgage on housing etc., when Central Bank was born with its sundry power to control money. It took just 17 years to get a recession that unusually lasted almost a decade - that is not shown here. The periods before and after the recession are equally important for the growth trajectory. The notion of the velocity of money is sometimes forgotten...
With 3rd Qtr GDP at 2.9% this is most unlikely that interest rate hike by 25-50 basis points could engineer a recession unless we are wishing for it. Too much tinkering with monetary policy has done more harm than good. Out of the 3 reasons shown: wrong-footed (or fault-ridden?) central bank, external fault (not a consideration at present) and financial bubble (not likely after a series of stress-test), many would appear to blame the central bank - if there is a near-future recession...
With 3rd Qtr GDP at 2.9% this is most unlikely that interest rate hike by 25-50 basis points could engineer a recession unless we are wishing for it. Too much tinkering with monetary policy has done more harm than good. Out of the 3 reasons shown: wrong-footed (or fault-ridden?) central bank, external fault (not a consideration at present) and financial bubble (not likely after a series of stress-test), many would appear to blame the central bank - if there is a near-future recession...
1
The fact that the economic expansion of the Netherlands, Canada, and Australia lasted so long speaks to the differences between our economies and the complexity of them. To suggest that we will transform our economy in the next few years to mirror the Netherlands is a little like saying at the age of 25, "hey that guy is 6.5", maybe in the next few years I'll grow 7 inches and be 6.5" also. Your data only convinces me that the opposite of your thesis is true -- between 2016 and 2019 there's a very high probability we'll have a recession.
1
The time to a recession depends on factors like how much public and private debt expands, and external factors. Australia had grown debt slower in the 90s than elsewhere and it then took off. China then saved our economy when the GFC hit, as they were purchasing large quantities of minerals and there was large investment in mining infrastructure. Mineral prices are down, infrastructure investment is down and all that is preventing a recession is a housing bubble. Things are not looking good.
I expect that the Netherlands was similarly saved by Both Sea oil. Amazing was external flows into the economy will do.
I expect that the Netherlands was similarly saved by Both Sea oil. Amazing was external flows into the economy will do.
The first thing one learns in an economics class is the law of supply and demand.
When the demand for affordable homes dried up, those buyers who expected to profit from selling at a higher price than they paid lost their buying power. It was not the banks that caused it, it was those who thought their credit would never end. The same was true of the 1929 crash, except it was stocks, and a banking system that could not survive a run. In 2008 the Fed prevented a run. It is called a bail out, but it was actually a save the economy. Too much credit by people who could not afford it.
It appears frequently those predicting a recession, are mostly hedge fund managers. They are short, and want you to sell driving down the price, that is how they profit. 'Today credit is harder to come by but a warning sign will be cheap credit and buying sprees of goods that are not liquid such as cars, boats, entertainment centers, homes that take more than a third of one's income to pay for and keep up.
At present that is not happening. the market is up due to low bond yields. Those will have to increase if the sellers want buyers, which will cause stock prices to fall a bit. But yields are still in the 3% range, among the good ones. As usual the get rich quick type will drive up the price of pop stocks, and they will bust, but not enough to cause a recession.
When the demand for affordable homes dried up, those buyers who expected to profit from selling at a higher price than they paid lost their buying power. It was not the banks that caused it, it was those who thought their credit would never end. The same was true of the 1929 crash, except it was stocks, and a banking system that could not survive a run. In 2008 the Fed prevented a run. It is called a bail out, but it was actually a save the economy. Too much credit by people who could not afford it.
It appears frequently those predicting a recession, are mostly hedge fund managers. They are short, and want you to sell driving down the price, that is how they profit. 'Today credit is harder to come by but a warning sign will be cheap credit and buying sprees of goods that are not liquid such as cars, boats, entertainment centers, homes that take more than a third of one's income to pay for and keep up.
At present that is not happening. the market is up due to low bond yields. Those will have to increase if the sellers want buyers, which will cause stock prices to fall a bit. But yields are still in the 3% range, among the good ones. As usual the get rich quick type will drive up the price of pop stocks, and they will bust, but not enough to cause a recession.
2
Even though we people should be aware of the recession of the United States, it does not necessarily follow that the economic situation drastically turns downward. But the new president, whoever elected, should take the proper measure not to fall into a great depression.
The economic situation of the United States is not solely the concern of the americans; it affects the worldwide scale.
I hope the next president's wise policy.
The economic situation of the United States is not solely the concern of the americans; it affects the worldwide scale.
I hope the next president's wise policy.
3
It will depend on a wise CONGRESS even more than the President. They control the budget, laws and taxation.
1
Sir John Templeton said, "Bull markets (and the economic expansions that accompany them) are born on pessimism, grow on skepticism, mature on optimism and die on euphoria."
We are hardly anywhere near euphoria.
We are hardly anywhere near euphoria.
14
We have not adequately recovered from the last recession thanks to Republicans putting politics before the helping the citizens of the country. Another recession in the near term would be a disaster for all but the 1%. They make out like bandits no matter what the economy does.
11
The faulty thinking comes from economists' language when they conceptualize an economic *cycle*. Cycles imply regularity. Might it be better simply to talk of economic expansions, and theorize about the conditions that bring them to an end, but not as "cycles"?
5
70% of the growth in the country comes from internal spending. The big question is what are people spending it on, and how are they getting their money?
People need to remember the only true $1 in GDP comes when a foreigner buys an American good, any other dollar unless it is an American worker working in private industry for private based companies. That doesn't mean that people don't contributed; however, it means their weight of the contribution is based upon the value of their work in terms of hard and real goods and services.
We as a country, are a net importer of goods and services. The less we make, the less our money is really worth in terms of goods and more a factor of the perceived attractiveness of the market and size of the economy.
We as a country have been having to spend more and more on internal social services, which generate at best zero GDP growth. It does build goodwill (health of the citizens, and the safety aspects and fairness of executing business is a good thing which should allow creation of goods), but it does not make GDP.
We have built currently a quagmire of regulations and with ACA are capping our ability to spend internally. Secondly, falling birth rates and not enough Gen X/Y/Z to support the Baby Boomers, more taxation will be required to maintain entitlements (depressing spending further).
So how can we grow with the possibility of taxes, no spending, and no new "workers" for the future? 50K is all we get now per the fed.
People need to remember the only true $1 in GDP comes when a foreigner buys an American good, any other dollar unless it is an American worker working in private industry for private based companies. That doesn't mean that people don't contributed; however, it means their weight of the contribution is based upon the value of their work in terms of hard and real goods and services.
We as a country, are a net importer of goods and services. The less we make, the less our money is really worth in terms of goods and more a factor of the perceived attractiveness of the market and size of the economy.
We as a country have been having to spend more and more on internal social services, which generate at best zero GDP growth. It does build goodwill (health of the citizens, and the safety aspects and fairness of executing business is a good thing which should allow creation of goods), but it does not make GDP.
We have built currently a quagmire of regulations and with ACA are capping our ability to spend internally. Secondly, falling birth rates and not enough Gen X/Y/Z to support the Baby Boomers, more taxation will be required to maintain entitlements (depressing spending further).
So how can we grow with the possibility of taxes, no spending, and no new "workers" for the future? 50K is all we get now per the fed.
2
High taxes, especially on stratospheic incomes, are not the end of civilization. In fact, they build civilization. The ancient Roman Republic lasted 500 years, and a big part of their success was their investment in public works, service and government.
To put their idea in modern terms: The penthouse of a building is dangerously insecure if the foundation and lower levels are crumbling from neglect. Who has the most resources to maintain those things and the highest stake in their sturdiness? Those at the top. With no Marxist theory or concept of human rights, the Romans saw the utility in spending on public goods.
To put their idea in modern terms: The penthouse of a building is dangerously insecure if the foundation and lower levels are crumbling from neglect. Who has the most resources to maintain those things and the highest stake in their sturdiness? Those at the top. With no Marxist theory or concept of human rights, the Romans saw the utility in spending on public goods.
1
True, yet, despite all these good things, time and again history confirms and the Romans were just another example, that in a continuous attempt to maintain spheres of influence beyond their borders and feed a voracious military/industrial complex, fighting endless wars ultimately bankrupts and destroys empires. Sound familiar?
1
I agree that empires eventually collapse under their own weight.
However, I was making a point about taxes. Even the Roman Empire lasted 400 years AFTER the 500-year Republic -- because even the batcrap craziest Roman emperors were not so stupid as to wage war without raising taxes! It took George W. Bush, Cheney and Rumsfeld to outdo the worst Roman emperors in folly.
However, I was making a point about taxes. Even the Roman Empire lasted 400 years AFTER the 500-year Republic -- because even the batcrap craziest Roman emperors were not so stupid as to wage war without raising taxes! It took George W. Bush, Cheney and Rumsfeld to outdo the worst Roman emperors in folly.
1
I've been working-on some new products. So, I don't think Hillary will face a Recession. Now, some people might go out-of-business because a superior product (mine) replaces their inferior product. And, those people might experience a Depression of some sort... bank account negativity, face frowns... etcetera. PS. My ideas were made in the USA !!
I wish the U.S. had an "Alibaba" website for making things in the U.S. If you have a product idea, there are multiple bidders in China who will work with you on producing it. Here, there's nothing like it, no central site, where ideas and production can easily meet.
As a macroeconomist, I would say that the long expansion phenomenon has to do with a change in the structure of the US. We have moved from an industrial manufacturing economy, where businesses spent heavily on expensive machinery and equipment and did so with episodic irregularity, to a service sector economy, where businesses use much less capital and, what they do buy, they turn over more frequently like a consumer turns over hi/her wardrobe. Without the big booms in spending, we will not have the big busts in economic activity.
2
What do Macroeconomists think about derivatives? Satyajit Das estimates there are over $700 trillion in derivatives contracts on the market. That means the entire economy is leveraged 12 or 13 to 1.
Macroeconomists failed to see the 2008 collapse because they haven't updated your formulas to account for globalization and failure to reinvest money into the American economy.
Thus, the economic multiplier of consumer spending needs to be reduced to account for $700billion in trade deficits every year.
We're now importing Chinese made cars. www.wsj.com/amp/articles/americans-embrace-a-made-in-china-buick-suv-147...
Do you still think everything is okey-dokey?
Macroeconomists failed to see the 2008 collapse because they haven't updated your formulas to account for globalization and failure to reinvest money into the American economy.
Thus, the economic multiplier of consumer spending needs to be reduced to account for $700billion in trade deficits every year.
We're now importing Chinese made cars. www.wsj.com/amp/articles/americans-embrace-a-made-in-china-buick-suv-147...
Do you still think everything is okey-dokey?
1
Recession? I just hope we do not have an entire economic collapse with the government repeatedly printing money, keeping interest rates low, an escalating 20 trillion dollar debt, Clinton taxing corporations and every high earner/entrepreneur who hires employees and keeps things going. Clinton has no business savvy; this is one of her major shortcomings.
1
It's the consumer, i.e. the worker, that keeps things going, not businesses; Without demand, the businessperson is powerless;
Demand is what makes the economy, not supply;
Interest rates are low because the rise in GDP is low;
US debt is $18.5T, not $20T.
Joseph in Missoula
Demand is what makes the economy, not supply;
Interest rates are low because the rise in GDP is low;
US debt is $18.5T, not $20T.
Joseph in Missoula
2
I had a small business. I didn't hire people if my taxes went down. I hired them when demand increased. Hiring and low taxes are not intrinsically related to each other. Back in the '50's and '60's, taxes were much higher, but employment was not a huge problem. Executives did not demand stratospheric salaries. Because giant bonuses would have been taxed so much, they plowed money into building the company for long-term returns, not skimming a quock buck and walking away. It also gave them an incentive to invest in local communities to feed demand for their products.
2
According to JP Morgan the US GDP in Q3 was 3.8%. Why isn't this being reported by more MSM? All in for Trump and this ruins his lies?
1
Perhaps because the Federal Reserve Bank of Atlanta put out a report today stating that Q3 GDP is 2.1%?
https://frbatlanta.org/cqer/research/gdpnow/?panel=1
https://frbatlanta.org/cqer/research/gdpnow/?panel=1
1
"We’re also a year closer to the destruction of the earth by the sun, or to a Cleveland Browns Super Bowl title."
Seems like Mr. Irwin may be predicting the earth's destruction before a championship for the Cleveland Browns. At least they have the Cavaliers and the Indians.
Seems like Mr. Irwin may be predicting the earth's destruction before a championship for the Cleveland Browns. At least they have the Cavaliers and the Indians.
9
During the Great Depression we were less prosperous than we are today. Yet we put people to work and grew the economy.
Why not borrow and invest in a better future by solving our problems here at home? Take care of our veterans. Eliminate homelessness, poverty and inequality. Create a healthcare system for all comparable to the best in Europe and Canada. Rebuild our education system to be the best in the world.
Prioritize people, planet and peace here in the U.S.A. first, please.
Why not borrow and invest in a better future by solving our problems here at home? Take care of our veterans. Eliminate homelessness, poverty and inequality. Create a healthcare system for all comparable to the best in Europe and Canada. Rebuild our education system to be the best in the world.
Prioritize people, planet and peace here in the U.S.A. first, please.
22
It’s not clear that something specific (like wham!) always kills an expansion, although that happens. The regularity of the business cycle does allow for decay from old age.
1
It would seem that the US economy has two vulnerabilities not shared with many other OECD (developed) countries.
1) Since the Great Recession, large US businesses have had access to very cheap credit markets for their borrowing needs. As a result of this very cheap credit, share buybacks have become a primary method for meeting EPS growth goals and related P/E targets. With unprecedented low interest expense charges levied by these credit markets, it has been easy for management to leverage this cheap debt into increases in EPS' ratios and higher stock valuations, via share buybacks. This cheap debt has also powered very high Merger and Acquisition activity which too acts to boost companies' equity market valuations. If the Fed is able to enact a planned series of interest rate increases, then the supply of this cheap debt will become more expensive with lower market valuations likely.
2) The US has a regime of very low gasoline taxes and thus continuing vulnerability to very volatile oil markets. Instead of using a higher gas tax as a price signaling mechanism, to more efficiently ration and decrease dependence on this misvalued product, the recent decline in gas prices was used to temporarily fuel consumer spending to propel the noted tepid GDP growth.
3) As noted, other unanticipated known unknowns, as well as unanticipated unknown unknowns, could easily arise to upset market expectations with material negative economic consequences.
[JJL; TH 10/27/2016 1:54 pm]
1) Since the Great Recession, large US businesses have had access to very cheap credit markets for their borrowing needs. As a result of this very cheap credit, share buybacks have become a primary method for meeting EPS growth goals and related P/E targets. With unprecedented low interest expense charges levied by these credit markets, it has been easy for management to leverage this cheap debt into increases in EPS' ratios and higher stock valuations, via share buybacks. This cheap debt has also powered very high Merger and Acquisition activity which too acts to boost companies' equity market valuations. If the Fed is able to enact a planned series of interest rate increases, then the supply of this cheap debt will become more expensive with lower market valuations likely.
2) The US has a regime of very low gasoline taxes and thus continuing vulnerability to very volatile oil markets. Instead of using a higher gas tax as a price signaling mechanism, to more efficiently ration and decrease dependence on this misvalued product, the recent decline in gas prices was used to temporarily fuel consumer spending to propel the noted tepid GDP growth.
3) As noted, other unanticipated known unknowns, as well as unanticipated unknown unknowns, could easily arise to upset market expectations with material negative economic consequences.
[JJL; TH 10/27/2016 1:54 pm]
4
BIG business had access to cheap credit after the recession. Small business was often deprived of access to ANY credit.
1
Since economic growth is ultimately capped by productivity increases (which are a function of population growth, education, technological advancement, etc.), which presumably didn't really abate during the great recession (which was more of an extreme credit cycle event), I wonder if we can get a read on what the "default" GDP would be if the great recession never occurred?
In other words, if we are still paying "catch up" in a sense to our maximum possible GDP (given productivity), when are we due to catch up? Until that point you'd assume we are riding on tailwinds and when we hit it, you'd assume we'd be back on the up-or-down cycle.
In other words, if we are still paying "catch up" in a sense to our maximum possible GDP (given productivity), when are we due to catch up? Until that point you'd assume we are riding on tailwinds and when we hit it, you'd assume we'd be back on the up-or-down cycle.
Hillary Clinton’s biggest enemy during next 4 years is not Donald Trump or his passionate supporters, no GOP in general, certainly not Russia. Hillary Clinton’s biggest enemy is Business Automation.
In the years ahead, millions of jobs in sectors such as accounting and auditing will be replaced with machines that can so the same tasks much more cheaply and effectively than White Collar workers - without requiring salaries, holidays or benefits- while administrators and paralegals will also be hit hard.
At the result of the digital revolution, about 45% of US jobs are risk of being automated.
Powerful computers are already carrying out the vast majority of stock market trading, and in teaching hospitals in Boston and elsewhere, software is starting to be used to diagnose medical conditions.
To put it bluntly, traditionally middle class jobs are certainly vulnerable to technology, and this is likely to have a huge impact on the success or failure of Hillary Clinton Presidency.
First thing first: Hillary Clinton should realize that any business: large or small, established or startup have at least one goal in common: Maximum profit, minimize cost, including employee cost.
Creating jobs or “creating good paying jobs” Was Not, Is Not, and WILL NOT be any business’s priority, to put it mildly.
Here in US, the general trend of outsourcing/automating/eliminating jobs and or “good paying jobs” is not stoppable.
In the years ahead, millions of jobs in sectors such as accounting and auditing will be replaced with machines that can so the same tasks much more cheaply and effectively than White Collar workers - without requiring salaries, holidays or benefits- while administrators and paralegals will also be hit hard.
At the result of the digital revolution, about 45% of US jobs are risk of being automated.
Powerful computers are already carrying out the vast majority of stock market trading, and in teaching hospitals in Boston and elsewhere, software is starting to be used to diagnose medical conditions.
To put it bluntly, traditionally middle class jobs are certainly vulnerable to technology, and this is likely to have a huge impact on the success or failure of Hillary Clinton Presidency.
First thing first: Hillary Clinton should realize that any business: large or small, established or startup have at least one goal in common: Maximum profit, minimize cost, including employee cost.
Creating jobs or “creating good paying jobs” Was Not, Is Not, and WILL NOT be any business’s priority, to put it mildly.
Here in US, the general trend of outsourcing/automating/eliminating jobs and or “good paying jobs” is not stoppable.
30
I completely agree with your assessment.
Job insecurity is a central theme of the 2016 campaign, fueling popular anger about trade deals and immigration. But much bigger job losses are ahead in US — driven not by foreign competition but by advancing technology.
We are having the wrong economic debate this year. The deeper problem facing US is how to provide meaningful work and good wages for millions of truck drivers, accountants, factory workers and office clerks whose jobs will disappear in coming years because of machine learning systems or AI.
The political debate needs to engage the taboo topic of guaranteeing economic security to families — through a universal basic income, or a greatly expanded earned-income tax credit, or a 1930s-style plan for public-works employment. The “automation bomb” could destroy 45 percent of the all work activities currently performed in US, representing about $1.9 trillion in annual wages, according to a study last year by the consulting firm McKinsey & Co. We’ve seen only the beginning of this change.
Their estimates, based on U.S. Bureau of Labor Statistics data covering more than 800 occupations, draw a shocking picture of the future. In manufacturing, 63 percent of activities could be automated. In food service and accommodations, 74 percent of the work could be performed by machines. In retailing, 59 percent of current jobs could be lost.
Job insecurity is a central theme of the 2016 campaign, fueling popular anger about trade deals and immigration. But much bigger job losses are ahead in US — driven not by foreign competition but by advancing technology.
We are having the wrong economic debate this year. The deeper problem facing US is how to provide meaningful work and good wages for millions of truck drivers, accountants, factory workers and office clerks whose jobs will disappear in coming years because of machine learning systems or AI.
The political debate needs to engage the taboo topic of guaranteeing economic security to families — through a universal basic income, or a greatly expanded earned-income tax credit, or a 1930s-style plan for public-works employment. The “automation bomb” could destroy 45 percent of the all work activities currently performed in US, representing about $1.9 trillion in annual wages, according to a study last year by the consulting firm McKinsey & Co. We’ve seen only the beginning of this change.
Their estimates, based on U.S. Bureau of Labor Statistics data covering more than 800 occupations, draw a shocking picture of the future. In manufacturing, 63 percent of activities could be automated. In food service and accommodations, 74 percent of the work could be performed by machines. In retailing, 59 percent of current jobs could be lost.
23
My solution is that every time a computer uses our personal data, we get a cut of the profit -- in cash. A tiny transaction fee pops into our personal account every time a computers parses or filters us. Why should other people buy and sell my data every day, and make millions, while cutting me out of it? I don't want a coupon or discount. I want my share in cash, like an employee or stockholder. I do not get to choose where my data goes or who uses it, and many basic activities now require online activity. Seriously, we should get paid for our contributions to any economy that needs both big data and individual consumers to produce profit.
I've had fun toying with the idea as a science fiction story, but we will need to do SOMETHING' to keep people afloat after full automation. Guaranteed minimum income solves some problems but creates others. We could pay people for something productive -- going to school, research, engaging in crafts or fine arts, contributing to the economy. We also need to get over the idea that jobs in child care or as nurses' and teachers' aides are inherently of little value.
I've had fun toying with the idea as a science fiction story, but we will need to do SOMETHING' to keep people afloat after full automation. Guaranteed minimum income solves some problems but creates others. We could pay people for something productive -- going to school, research, engaging in crafts or fine arts, contributing to the economy. We also need to get over the idea that jobs in child care or as nurses' and teachers' aides are inherently of little value.
1
As a Dutch born Aussie now ensconced in the US of A I will walk taller seeing that graph of the economic expansions. Got something to boast about. But even a commoner like myself can see that all good things eventually come to an end, it did in Netherlands and will soon in Aussielands. The Australian economy is heading to a housing bubble with an inevitable consequences.
But, getting back to here, the previous periods of expansion were 10, 8, 8 and now 7 years going on 8. Doesn't look like a favorable trend. As noted, the Federal Reserve is in a bind as to how to increase growth, and the current legislature has been a totally ineffective aid due to partisan fighting. The new presidential administration will likely face the same problems, a POTUS at odds politically with the Legislature and unable to put in place corrective measures. Hillary Clinton can suggest all she likes but will the policies be implemented. Strumpf is likely to be a non-issue.
The next contraction could be delayed if Americans buy more American made goods. That however is unlikely to happen because that means paying more for goods and that requires higher wages which is unlikely to materially happen.
And guess what, the Aussies were one of the few countries that was little affected by the 2008 recession, in part because of the anti-austerity stance by the then Labor (read Democrat) government where they spent like mad men (school halls anyone or house insulation?). Bugger the debt.
But, getting back to here, the previous periods of expansion were 10, 8, 8 and now 7 years going on 8. Doesn't look like a favorable trend. As noted, the Federal Reserve is in a bind as to how to increase growth, and the current legislature has been a totally ineffective aid due to partisan fighting. The new presidential administration will likely face the same problems, a POTUS at odds politically with the Legislature and unable to put in place corrective measures. Hillary Clinton can suggest all she likes but will the policies be implemented. Strumpf is likely to be a non-issue.
The next contraction could be delayed if Americans buy more American made goods. That however is unlikely to happen because that means paying more for goods and that requires higher wages which is unlikely to materially happen.
And guess what, the Aussies were one of the few countries that was little affected by the 2008 recession, in part because of the anti-austerity stance by the then Labor (read Democrat) government where they spent like mad men (school halls anyone or house insulation?). Bugger the debt.
10
"The next contraction could be delayed if Americans buy more American made goods. That however is unlikely to happen because that means paying more for goods and that requires higher wages which is unlikely to materially happen."
The only way American made goods could be price competitive with imported ones would be through increased automation which would not require higher wages.
The only way American made goods could be price competitive with imported ones would be through increased automation which would not require higher wages.
3
So then , who would buy these goods and with what?
1
I don't get it. Why do financial institutions hire economists? There seems to be no correlation with the rise in the stock market with the dreary fundamentals underlying the world economy.
5
Why do financial institutions hire economists?
To fool the world into believing they're not casinos.
To fool the world into believing they're not casinos.
1
The Wells Fargo fiasco just further confirmed that Obamas failure to deal with real regulation and CEO pay issues within the financial services industry will ultimately doom the country to another major meltdown and recession. None of these individuals were even prosecuted or went to jail for destroying the economy and their only penalty was paying some fines which ultimately came out of the taxpayers pockets. Wells Fargo just got caught, yet, other than the CEO resigning and ultimately walking away with 134 million in his pocket while working at WF, nothing will really happen and the 5000 who lost their jobs will still be out in the cold.
Remember, the banks have grown even larger and the too big to fail adage applies more than ever, so, be prepared American taxpayer as, once again, if problems re-emerge, which they are likely to do so, it will be
`privatize the profits and socialize the losses`.
Remember, the banks have grown even larger and the too big to fail adage applies more than ever, so, be prepared American taxpayer as, once again, if problems re-emerge, which they are likely to do so, it will be
`privatize the profits and socialize the losses`.
8
You gotta feel sorry for John Strump. How's he going to make it on 134 million these days?
1
Presidents aren't monarchs, just a co-equal branch of gov't. Things will change when Congress changes. Until Republicans decide to stand for public good as well as private profit, and competent governance over scorched-earth victories, a Democratic president is not free to govern as a Democrat. This GOP extremism and rigidity has been building for decades, and is now shattering under its own weight.
2
People like yourself continue to forget that in the first two years of his mandate, President Obama had a majority in both the house and senate and could have easily passed the appropriate regulations, yet, he did not. It, also did not go unnoticed that among his biggest donors were Wall Street and much of the financial services industry. Obamas AG, Eris Holder stated prosecution of the individuals involved was imminent yet, nothing happened there either.
History continues to repeat itself.
History continues to repeat itself.
1
This sounds familiar....does the Great Moderation ring a bell? (the illusion that allowed the Insider Gods of Washington to miss the housing/derivatives bubble (Lehman Crisis), that led to the greatest financial robbery in the history of mankind, that we are still paying for? Is this the signal of the return of the Great Moderation, by the back door?
3
I think we're going to have a minor, short-lived recession, which will create the momentum for a further expansion. The Fed must raise rates, then we can exhale and move on, and up.
1
ChesBay, according to Larry Summers and his application of Secular Stagnation to what has been observed in the last 3 recessions, with each new recession it takes longer and longer for the economy to bounce back from anemic growth along with rehiring. Also, it's not typical for the Fed to raise interest rates during a recession or thereafter unless inflation heats up.
6
Total economic output of a $17 trillion economy across 3.8 million square miles and 320 million people is inherently difficult, if not impossible to measure. It appears the secular economics of the country as a whole will continue where certain regions experience periods of growth because of regional economic factors such as the financial sector, tech sector, resource (mining, oil, and gas) sector, construction, and the manufacturing sector. But it is unlikely all of these sectors will grow simultaneously, leaving certain regions of the country behind while others move ahead. It's interesting to look at the electoral map and the states that have the lowest economic output/least advanced economic sectors are overwhelmingly Red (Texas is a notable exception but this can be attributed to its size) while states with more modern economies and stronger economic output are overwhelmingly Blue. We need a federal government that can address the needs of people in both economies, not polarized politics that can only address the needs of one while ignoring the other.
5
There's a case to be made that slower growth is also steadier and can last longer. The success of the expansion in the 90s arguably led to the "irrational exuberance" of the tech bubble, and then recession. In our slower more tentative economy there is not much cushion, as Irwin notes, but also not much opportunity for the animal spirits to run amok. The weakest points are stagnant wages (getting better, hopefully) and housing shortages, which can once again set off a cycle of land value inflation and excessive household debt. Raises in the minimum wage, infrastructure investment and more effective housing/land use policies can hopefully keep us going longer.
7
Take a look at a consumer-staple stock like Procter and Gamble or a utility stock like Con Edison, both “defensive” stocks, by clicking on the “maximum” time frame button in the graphs in these Morningstar links. Both stock prices are inflated at least 30% to 40% above their 2007 highs. These are only examples, and not atypical. In fact the inflated prices on many stocks are higher percentages, perhaps largely as a result of the Fed’s “funny money” policy since 2008:
http://www.morningstar.com/stocks/XNYS/PG/quote.html
http://www.morningstar.com/stocks/XNYS/ED/quote.html
Then, for a source of a “negative shock”, as the article puts it, take in declining growth, revenue, and profit margins for many companies, the Fed’s lack of monetary policy tools to fight a future recession since it’s kept interest rates so low for so long, a lack of willingness in a Republican House to implement any fiscal stimulus, negative interest rates around the world from other central banks, the bad debt China is sitting on, European banks teeter-tottering, and any number of geo-political flash points around the world.
This current bull market is an artificially over-built house of cards just waiting for any number of “negative shocks”.
http://www.morningstar.com/stocks/XNYS/PG/quote.html
http://www.morningstar.com/stocks/XNYS/ED/quote.html
Then, for a source of a “negative shock”, as the article puts it, take in declining growth, revenue, and profit margins for many companies, the Fed’s lack of monetary policy tools to fight a future recession since it’s kept interest rates so low for so long, a lack of willingness in a Republican House to implement any fiscal stimulus, negative interest rates around the world from other central banks, the bad debt China is sitting on, European banks teeter-tottering, and any number of geo-political flash points around the world.
This current bull market is an artificially over-built house of cards just waiting for any number of “negative shocks”.
7
30 to 40% growth over 9 years doesn't sound high to me. An P&G is lower than it was 2 years ago. Not sure I see your point.
If there is a recession, it will have much more to do with the conservative political narrative that we are doing worse than we really are and we need to cut spending to right the ship. Conservatives love a recession because it justifies cuts to entitlement programs. If they had the courage to authorize spending on infrastructure (human and physical), we'd create the most economically powerful entitlement of all - a job.
21
I can not see the GOP funding more infrastructure projects as long as the democrats demand that all of the work on such projects be restricted to "prevailing wage" union members who kickback most of their union dues to the democrats, so the more infrastructure spending the more union kickbacks.
4
In the 1980s, workers in the trades you are so concerned about, were about 25 percent unionized. That is now down to less than 8 percent. The influence on the democratic party that you seem to think is so important is a ship that has long sailed.
13
In my naïve view, expansions usually end when the bubble they create bursts and collapses. If I am right, we are a long way from that given that the current expansion has been characterized by it's slow and deliberate pace. When this expansion becomes aggressive, watch out.
7
The idea that the laws of nature somehow demand that the US is 'due' for a recession is ridiculous. The fact is, the entire global economy was hit by the worst economic crisis in 75 years and the recovery takes time. The US remains the world's strongest economy; there are some structural problems that need to be dealt with, namely low productivity and the idea of 'secular stagnation' that L Summers has brought to the fore of macroeconomic debate.
The best way to give the economy a boost is a massive investment in infrastructure financed by debt. Interest rates virtually at zero make this an obvious necessity, with the US infrastructure more and more resembling that of a third world country. Other problems like the decline in prime age employment & labor force participation rates can be addressed by investments in education, work training, and other ways of compensating those who suffer from long-term unemployment, be it due to corporate trade deals or general changes in the structure of the economy.
As far as the Fed is concerned, the U.S. has been undershooting the 2% inflation target for years, so it makes sense to let inflation overshoot the target for a brief period of time to compensate. Too often, the Fed has treated the target like a ceiling, which virtually commits us to the slow, slogging economy we now find ourselves in. This will also give the Fed the ammunition to eventually normalize rates, providing insurance against the next downturn, whenever that may be.
The best way to give the economy a boost is a massive investment in infrastructure financed by debt. Interest rates virtually at zero make this an obvious necessity, with the US infrastructure more and more resembling that of a third world country. Other problems like the decline in prime age employment & labor force participation rates can be addressed by investments in education, work training, and other ways of compensating those who suffer from long-term unemployment, be it due to corporate trade deals or general changes in the structure of the economy.
As far as the Fed is concerned, the U.S. has been undershooting the 2% inflation target for years, so it makes sense to let inflation overshoot the target for a brief period of time to compensate. Too often, the Fed has treated the target like a ceiling, which virtually commits us to the slow, slogging economy we now find ourselves in. This will also give the Fed the ammunition to eventually normalize rates, providing insurance against the next downturn, whenever that may be.
24
Americans are living on borrowed money and borrowed time for almost 10 years.
While it has warned repeatedly that consumer debts are out of hand, many policy makers believe the burden on households to continue rising in this era of ultra-low interest rates.
US Household expenditures are expected to remain high relative to GDP and the ratio of household debt to income is projected to rise further.
Already, debt burdens in US are tremendously high, leaving families vulnerable to even small economic shocks, such as gas price rise.
In short, the next president is more likely to face depression than recession.
While it has warned repeatedly that consumer debts are out of hand, many policy makers believe the burden on households to continue rising in this era of ultra-low interest rates.
US Household expenditures are expected to remain high relative to GDP and the ratio of household debt to income is projected to rise further.
Already, debt burdens in US are tremendously high, leaving families vulnerable to even small economic shocks, such as gas price rise.
In short, the next president is more likely to face depression than recession.
16
Check your facts and list your sources, Mr. Smith. Here's mine:
http://247wallst.com/economy/2016/05/24/household-debt-trends-improve-in...
Just because something is obvious doesn't mean it's true. In fact, the opposite is true: things that are "obvious" go unquestioned, making conventional "wisdom" oxymoronic. Which was the underlying theme of Mr. Irwin's essay.
http://247wallst.com/economy/2016/05/24/household-debt-trends-improve-in...
Just because something is obvious doesn't mean it's true. In fact, the opposite is true: things that are "obvious" go unquestioned, making conventional "wisdom" oxymoronic. Which was the underlying theme of Mr. Irwin's essay.
1
"Organic" growth? With the federal reserve standing on interest rates, and the European central bank still buying government bonds, etc., the economy feels as "organic" as Westworld. And it is important to know that there are fewer investment opportunities in the Dow and Nasdaq than in past markets as good companies are held by private equity firms who are not looking to go public.
Hopefully, young adults who went through the dot-com bubble of 2000 and/or the more recent 2007-and-beyond recession have learned what is and is not truly important, and that all the trappings of excess materialism are not worth it.
As for the next recession, as Monty Python used to say, "no one expects the Spanish Inquisition."
Hopefully, young adults who went through the dot-com bubble of 2000 and/or the more recent 2007-and-beyond recession have learned what is and is not truly important, and that all the trappings of excess materialism are not worth it.
As for the next recession, as Monty Python used to say, "no one expects the Spanish Inquisition."
12
"the federal reserve standing on interest rates"
Meaning you think there's a big crowd of people who would bid up interest rates, borrowing trillions at 2, 3, 4% if it wasn't for the meddling Fed? Who are these eager, qualified borrowers, sir? And what are their plans for those trillions, since, as you accurately point out, "there are fewer investment opportunities in the Dow and Nasdaq than in past markets".
Meaning you think there's a big crowd of people who would bid up interest rates, borrowing trillions at 2, 3, 4% if it wasn't for the meddling Fed? Who are these eager, qualified borrowers, sir? And what are their plans for those trillions, since, as you accurately point out, "there are fewer investment opportunities in the Dow and Nasdaq than in past markets".
1
The recession is likely in the four year term of
the next president. The growth is tepid. There is a bubble
in stock market, dollar is rising and world economy is
weak even considering the fake high growth in China
and India. Business investment is low. Consumer spending
stimulated by the low interest rate is keeping the economy
going. with the increase in interest rates consumer
spending particularly on cars and homes purchase will
weaken. Fiscal policy will depend on the make up
of congress. If the republicans retain control there may be
another push to rein in the spending. Probability of
recession is high.
the next president. The growth is tepid. There is a bubble
in stock market, dollar is rising and world economy is
weak even considering the fake high growth in China
and India. Business investment is low. Consumer spending
stimulated by the low interest rate is keeping the economy
going. with the increase in interest rates consumer
spending particularly on cars and homes purchase will
weaken. Fiscal policy will depend on the make up
of congress. If the republicans retain control there may be
another push to rein in the spending. Probability of
recession is high.
2
Mr. Irwin doesn't address my belief that the current economy is less likely to have a downturn because our recovery has been more organic, than the highly manipulated economy of 2000-2006.
5
A question out of ignorance. Isn't it increasingly more difficult to achieve a 4% expansion as the economy grows larger? And shouldn't we see it as an inevitable consequence of our huge economy?
7
What fascinates me is when we feel like things are bad and live through a tough time like in the 2008 recession, that foreign money comes flying in to the U.S. market. So in times of global financial stress it seems others see us as one of the few safe alternatives among the world economies.
12
Nothing we are doing in regards to cajoling growth out of the economy is long term sustainable- negative interest rates, more, more, more debt. We are not finding cheaper energy anywhere, we have to drill deeper or steam oil out of rocks to get at it. We are rushing to build housing in regions where we know we are running out of water. We give car loans and mortgages to people with no money down and hope for the best.
Therefore, no, we cannot predict the timing of the next recession, but yes, the longer the time period to the next recession, the worse that recession will be.
Therefore, no, we cannot predict the timing of the next recession, but yes, the longer the time period to the next recession, the worse that recession will be.
15
John Dyer writes: "We are not finding cheaper energy anywhere, we have to drill deeper or steam oil out of rocks to get at it."
There was an oil glut in early 2016 that brought cheaper energy.
There was an oil glut in early 2016 that brought cheaper energy.
8
"We are not finding cheaper energy anywhere"
Nonsense: the cost of photo-voltaic cells is dropping faster than that of memory chips in the 90s (or oil company stocks in the 2020s, or coal company stocks right now). What's getting harder to find is reasons to keep digging dead dinosaur food out of the ground and burning it. As we stop, energy will continue to get cheaper, belching free wealth into the economy just as the carbon trade now belches death into our lungs (no I'm not dramatizing: millions die every year from disease caused by the carbon trade).
The only problem is marshaling the political will to use an adequate portion of our wealth to ease the human disruption caused by technological change in the economy. The obstacle is shortsightedness, such as assuming that because oil is harder to find, that must mean energy is and always will be. Lift your sights, man.
Nonsense: the cost of photo-voltaic cells is dropping faster than that of memory chips in the 90s (or oil company stocks in the 2020s, or coal company stocks right now). What's getting harder to find is reasons to keep digging dead dinosaur food out of the ground and burning it. As we stop, energy will continue to get cheaper, belching free wealth into the economy just as the carbon trade now belches death into our lungs (no I'm not dramatizing: millions die every year from disease caused by the carbon trade).
The only problem is marshaling the political will to use an adequate portion of our wealth to ease the human disruption caused by technological change in the economy. The obstacle is shortsightedness, such as assuming that because oil is harder to find, that must mean energy is and always will be. Lift your sights, man.
1
"They die because something specific killed them. "
Seldom a day passes without seeing some silly story about imminent recessions. The source of them is usually a journalist needing something to write about and often the peg is someone in the financial industry talking his book, a perma bear, or a fruitcake. One such is David Stockman Reagan's budget director who must have predicted 25 recessions in the last 6 years. As Irwin points out recessions are sparked by some event like a banking crisis, overheating, or some external happening. It's impossible to predict an external event but otherwise the US economy is in Goldilocks situation by just about every measure.
Seldom a day passes without seeing some silly story about imminent recessions. The source of them is usually a journalist needing something to write about and often the peg is someone in the financial industry talking his book, a perma bear, or a fruitcake. One such is David Stockman Reagan's budget director who must have predicted 25 recessions in the last 6 years. As Irwin points out recessions are sparked by some event like a banking crisis, overheating, or some external happening. It's impossible to predict an external event but otherwise the US economy is in Goldilocks situation by just about every measure.
18