So ya think the economy's improving, huh...

[chiburb]

Yesterday's news that GDP was reported at 2.4% created all kinds of positive headlines, many hailing the turnaround. While most stories mentioned a big increase in defense spending, they also failed to mention this:

"But here's an interesting factoid: the war in Iraq provided a one-time spike in defense spending (and therefore GDP) of about $40 billion, all of it deficit spending. Without the war, GDP would have increased by only $16 billion, an annualized rate of .67%. That's not so hot.

So, um, are we going to have another war this quarter to keep the numbers up?"

Not only is that "not so hot", it would be .83% below what was forecast.

Source here:
http://www.calpundit.com/archives/001798.html

[diplomats]

1. We're still spending money in Iraq but not nearly as much

and today we have the unemployment rate dropping to 6.2 percent - but that's highly msielading, too, because we're losing jobs and so many people have dropped out of the active labor pool.

[chiburb]

3. Yep (on Iraq)...

$4 billion/month = 12 billion/quarter. Yesterday's report included $44 billion in the quarter. So... there is no way to sustain 2.4% when it was the result of a spike.
Should I have posted this in the Economy forum?

[jedicord]

2. Where are the jobs?

Anadarko Petroleum is going to lay off 400 employees, closing two offices (Midland and Amarillo) in an effort to reduce overhead costs by $100 million/year.

Next paragraph (seriously): "The layoffs were announced the same day the company reported a second-quarter profit of $301 million, up 25 percent from the same period a year ago."

Now tell me that the tax cuts are going to create jobs.

[thermodynamic]

12. Corporate games like that even happened before Bushit took office

"Downsize This" pointed that out, or was it "Stupid White Men"? No matter, they're both books of substance worthy of being read... :D

I agree, Bush's* tax cuts are doing nothing constructive for this country.

[pbeal]

4. we have an enronomeny

Shifting debt around to look like growth. The economy is weak to begin with why in the world are these bozos setting it up to fail again.

[villageidiot]

5. Some other factoids for consideration

Productivity, which influences the GDP, is up. This means companies are producing more with less people. I'll go out on a limb here and predict that this 2.4% GDP number will be adjusted downward, with little mention of it in the press. The trade deficit numbers haven't been finalized, amongst other things.

HUGE Government spending is the only thing that Captain Segway has going for him now. That doesn't seem very "republican", does it? What I don't get is how people can be so blind to this. Clinton certainly increased government spending, but he did so in a fashion that was beneficial to the general economy and he did so without bankrupting the Federal Economy.

[priller]

6. Shows you how misleading statistics can be

Hype: "GDP up 2.4% - whoopee!"
Reality: Almost all due to a spike in defense spending, which is debt financed.

Hype: "Unemployment dropped again!"
Reality: Not because firms are hiring, but because job-seekers just gave up and stopped looking for jobs.

Hype: "Productivity is up!"
Reality: What this means is companies are producing the same output with fewer workers.

All these things sound good on the surface. And on TV, that's all you get is the bare surface, and apparently that's all the stock markets seems to care about, too. But look at the underlying factors, and we see the economy is not really improving, it's just being propped up.

[chiburb]

8. The following deserves a thread of it's own...

But amplifies what you said, priller:

PAUL SOLMAN: When the government adds the white-collar unemployed to out-of-work urban youth, plus the manufacturing workers who've borne the brunt of the recession and jobless recovery, it comes up with an average official unemployment rate of 6.4 percent, highest in a decade, and more than 50 percent higher than it was just two years ago. Now, there is a positive way to look at it. Today's 6.4 percent is nowhere near the post-depression record of 10.8 percent, set back in the recession of 1982. Chicago-based John Challenger, however, in the outplacement business since the early '80s, says unemployment is much worse than the official number suggests.

JOHN CHALLENGER: 6.4 percent only tells the first part of the story. There are discouraged workers. There are people who have been marginalized, and that puts unemployment up over 12 percent.

PAUL SOLMAN: 12 percent?

JOHN CHALLENGER: They're being pushed out of the workplace. They're being deskilled. The problem is much deeper than it looks.

PAUL SOLMAN: John Challenger's extreme claim, first made to us on the phone, is what motivated this story, and what we came to Chicago to explore: That today's unofficial unemployment rate is much higher than the official 6.4 percent. And in fact, what we found suggests that for men in the workforce, today's number actually rivals the 10.8 percent record of 1982, because, it turns out, there are four factors suppressing today's official number, at least for men: Millions more discouraged workers than there were in 1982; millions more on disability; nearly 1.5 million more incarcerated men; and finally, there's a demographic factor. Today's is an older workforce. To make it comparable to 1982, the economists we spoke with would adjust today's number upward for that reason alone. And the same is true for each of these categories. Take discouraged workers, who aren't officially counted as unemployed unless they say they actively looked for work in the past four weeks.

http://www.pbs.org/newshour/bb/economy/july-dec03/unemployment_07-29.html

[smirkymonkey]

10. The unemployment picture even more bleak than reported...

At 6.2% down from 6.4%, like you said, was not counting the almost 500,000 displaced workers who haved dropped out of the search - and are basically feeling hopeless and discouraged.

The job market is going to be the last thing in the economy that improves," said Mark Zandi, chief economist at Economy.com. "Businesses have to feel the recovery is going to stick around for a while before they expand hiring."

Great news, huh?? Translation: It's more profitable to get fewer people to do the same amount of work than it is to add to the payroll.

Here's my take on it: The * Administration has created even more of a sense of entitlement in bloated corporations so that they feel justified in laying off, not re-hiring, shrinkage of benefits, etc. This in turn reduces the demand for goods as disposable income for average households becomes more scarce - even fully employed families will hold back in fear of the axe coming down at any moment. Supply side Economics is bulls**t, and it won't work - so I don't even want to hear about how more $$ in the hands of capitalist is going to create more jobs and the rest of that fascist crap. More people have to rely on government programs for survival - yet meanwhile the current admin is hell bent on bankrupting the treasury in order to reduce and/or even eliminate all such programs.

Nothing but greed and mean spirtedness. When will they realize that if this country goes down they are coming down with it? God they make me sick!!!

[pbeal]

9. enronomeny enronomeny enronomeny

Not that I expect it to catch on but it would be neat if all the potential Democratic party presidential canidates started to use "enronomeny" when refering to the bush economy

[newyawker99]

11. Hi villageidiot!!

Welcome to DU!! :toast:

[sandnsea]

7. What about the 80's?

I've had freepers quote 80's GDP as evidence of the great economy at that time. But what if we factor in the defense deficit spending at the time. What does that do to the 80's GDP? I'm not much of a mathematician, anybody know how to calculate the GDP against defense spending growth? Even without war spending, there's still a difference between recent military and regular economy GDP. Help anyone??????

[JNelson6563]

17. I can't answer your question

but the defense spending hasn't been this high since Korea. Beware the military complex.

Julie

[annagull]

13. Natural gas is going to skyrocket this winter

since there is a "shortage" already. Lock in your rates, it's supposed to get brutal this winter.

[MiltonLeBerle]

15. actually, they've changed their minds somewhat about that-

http://pqasb.pqarchiver.com/chicagotribune/index.html?ts=1059778489

Gas bills may not be as high as feared ; Revised estimate sees 13% increase

BTW- the full article is in the archives already(it turned 7 days old today) and isn't free, and the abstract doesn't say much:

Ted Lenart, Nicor's assistant vice president for supply and operations, said Nicor has a similar outreach effort under way. Nicor also plans to launch a Web site in October with improved communication on gas costs and plans bilingual newsletters in English and Spanish to help customers better understand options, Lenart said

I've heard estimate rumours about price increases as high as 300%...a far cry from 13%.

[annagull]

16. I guess "Tricky" Dick Cheney had another secret pow wow

with his energy buddies.I can hear him now, "Just wait until after the election, then you'll have a license to steal!"

[jagguy]

14. its easy to hit on one number

trouble is, in toto, all indicators are improving. Very gradually but the all are trending up. Jobs, as always, trail the pack.

[MiltonLeBerle]

18. The problem with jobs that may or may not be trailing this pack-

They won't pay as well, and won't be as secure or as plentiful as in past recoveries.
For instance- up to 25% of all current IT jobs are expected to be outsourced to India and southeast Asia over the next year.

[Brian Sweat]

19. What indicators are improving

Consumer convidence just tanked.
Unemployment is really up about .05%.
The growth in the GDP is really less than 1%.
Housing starts are gonna tank in the next quarter (take it to the bank).