Could the recovery still come to a halt between now and the election?

[mot78]

For DU economists:

I'm glad personally that the economy is coming back, but unfortunately it benefit's *. But, it also seems to me that, at least in stocks, if not the whole economy, the market could take a dive between now and Election Day, which in itself could hurt *. The Nasdaq is up 40% for the year, and the Dow has been going up without any real respite since March. Could we just being seeing a temporary recovery in the midst of a larger Bear Market (weren't there incidents like this in the '70s?) or is this recovery genuine, and one that could make * unbeatable?

[Maple]

1. There IS no recovery

nor will there be.

The stock market is not the economy, and goes up and down on daily rumors and hopes.

[mot78]

2. I think this "recovery" is being distoring by Faux & Co

Neil Cavuto has been far more rosy about economic figures than even CNBC. The media did the same thing during the Tech Boom. If/when we kick * out, we should open his economic records and see if he's been cooking the books with the GDP numbers.

[Code_Name_D]

24. The records are open.

The state of the economey is no secrit. You just have to look past the spin. When Fox tells you that the economey is recovering, they are lying to you. And you do them greet favors by repeating the lie.

If Bush's policys actualy were turning the recovery around, than we here at the DU would not be critisizing him. We would be lionizing him in fact. But his policys are distroyng the economey. We don't have to "hope" thigns will turn south. They ARE turning south.

Why is the netionl debt & defisits explosding?
Why are all the 50 states in the red?
Why are there so many layoffs?
Why are so many services being cut?
Why the union busting?
Why is so much money still going into Star Wars?
Why the coruption in the corpreate board rooms?
Why the run away CEO pay while the rest of us get pay cuts?
Why dose Neal Bush get to work 3 hours a week for $15,000,000 a month?
Why is our overtime pay being done away with?
Why is health care expenditures & costs going up?
Why can we not by the same drugs cheeper from Canada?
Why dose the top 1% own 40% of the nations wealth?
Why dose the bottom 40% own 1% of the nations wealth?
Why isn't Kennith Lay in prizen for frawd?
Why is soschal security under attack?
Why are we contiuing to deregulate in light of indistrual abuses?
Why is the dollar crashing in value against other curiensys?
Why is Halibertian getting no bid contracts?
Why is Halibertian given a pass when they overcharge the government?
Why is federal colective bargening now prohibited?
Why are jobs being exported over seas to cheep labor?
Why has the US seaded its sovrenty to the WTO?
Why are the CAFKA negotaions not open to public comment or review?
Why is the Netionl Energey Policy clasified as "top secrit" for resons fo nationl security?
Why has California's electricl problems not been addressed? (They are still being made to pay exorbentint electric raites to Enron.)
Why is it that the FTC finds that there is no price colusion taking place, only to have memoes conferming price colusion or worse pop up weeks later?

These are NOT signes of a strong economey. And when ever you think that the economey might be turning around, just start asking some of these questions.

[reknewcomer]

14. Where I work orders are up and projections are for a healthy five quarters

It is not driven by the stock market and the recovery appears to have legs. I place the vitality and economic status above politics and hope it continues for the well being and health of all Americans.

[plcdude]

3. the stock market is not the economy

I think you are using a portion of an economic variable to describe the complex concept known as economy. The stock market is highly dependent upon profitability which can be the function of reduced work force, lack of salary increases, and scaled back capital improvements. So I hesitate personally in saying that the economy is coming back. I would love for it to recover but * administration's economic policies are not appropriately contributing to recovery but really stalling any recovery that could possibly happen.

[spooky3]

5. the economy is also being stimulated temporarily

by the end of the refinancing boom and the increase in govt. spending on defense related goods and services. It's analogous to the false sense of well-being one might feel after buying a plasma TV on credit, but when the years of payments start coming due, one is worse off.

[junker]

4. there is no recovery (echo)

when you put the DOW values in any other currency like say South African Rand, or NZ Buck, or Looney, you end up with the DOW flat or down for the year. The much hyped productivity and GDP numbers are FED and Govt collusion bullshit.

The real numbers are over 2 million long term unemployed *(not been this bad since Regan).

Dollar down over a third in last couple of years and about to plunge off a cliff.

Next year the estimate is that 4.4 MILLION tech/service/financial jobs will be lost to out sourcing.

Now that ain't a recovery in anybody's book who ain't addle brained.

[mot78]

13. Not to be sympathetic with * but arn't jobs a lagging indicator?

Don't figures like productivity (which are up) lead to job creation within a year 1/2?

About the jobs that are being created now, arn't a lot of those jobs just mcjobs?

[redqueen]

19. Pffft

Productivity leads to job creation? I think not. Productivity indicates that less people can do the work of more people which = less jobs.

[Sparky McGruff]

21. Outsourcing leads to high productivity, too

At many companies, one person is doing the work of 20, because all of the work that was done by 19 co-workers is contracted out. The "managers" are getting loads of work done, "all themselves".

Better "productivity" gains than putting a computer on my desk, that's for sure.

[knight_of_the_star]

22. Exactly

The economic upturn that is happening right now has happened without fail ever since the 1950s due to an increase of part-time retail jobs and holiday spending. It's just a little hiccup.

[velocity]

6. the Euro is going up and the dollar down

if this keeps up INFLATION comes into play. No there is no recovery.

[BiggJawn]

7. WHAT "Recovery"?

I don't care what the Economists say, without JOBS there is NO recovery.

Oh, sure, the market is just rolling over and buttering itself on a daily basis, but I don't participate in the market, and I think neither do all those people out there who lost their jobs in the last 3 years.

Only the "Play-ahz" are enjoying any kind of "Recovery", not us wage-slaves.

JOBS! *THAT'S* the Message! JOBS!
Screw the Dow.
And the Euro keeps getting more and more expensive. now it's $1.22, against something like 95 cents a last year.

[Shrek]

8. I think you're missing something important

The job picture is bad, but at the moment there are still a lot more people with jobs than there are people without jobs. And those people are going to open up their 2003 401(k) statements sometime in January, and they're going to get a pleasant jolt -- and guess who's likely to get the credit, deserved or not?

And I doubt that the Euro exchange rate is going to influence too many voters one way or the other; only a tiny fraction of the electorate takes European vacations or engages in currency speculation. It's just not an issue that will motivate very many voters.

I really think the stock market has the potential to influence a lot of swing voters, and it's perilous to dismiss the issue out of hand.

[redqueen]

20. True, more are employed than not

How many of those are about to have their overtime pay eliminated by the friendly crooks at Bu$hCo?

Stop freaking out, people. Economy or not, this guy has wrecked us like we haven't been wrecked in decades.

It would take adding hundreds of thousands of jobs per month to get this country where it was before he graced us with his presence.

Tax receipts down + social spending cuts + people watching jobs racing to third world countries + bush spending like he doesn't know what conservative means + iraq contract scandals = he's toast.

[grannylib]

9. hasn't started yet, actually...and the deficit is gi-normous...

[LuminousX]

10. The Fire Metaphor

Think of the economy as a campfire. As it dies down there are two ways of building up the heat and flame. The proper way to do it is to stoke it with wood so you will develop a nice bed of coals to work with that while not creating blistering flame, provide continued consistent heat.

The improper way is to drop a big log on the fire and pour some lighter fluid on it. You'll get a lot of flame, a quick flash of heat, but once all that fluid is gone, you have a cold log.

What Bush has done, with tax cuts etc. is to pour an accelerant on the economy. It burst and flares, giving the illusion of a fantastic recovery but once that stimulus is burnt out of the system, what will be left?

[leftofthedial]

11. what recovery?

this is a resetting of the bar, not a recovery.

It is being reset with more wealth concentrated higher on the scale, with a much smaller middle class, with much lower paying jobs, with a newly skewed tax code and national debt load that makes it harder for any American to move up the economic ladder.

"Recovery" is an illusion--a figment of massive deficit spending and phony tax restructuring.

[Cronus Protagonist]

12. There is no recovery

Until we get back to the Clinton admin's levels of economic activity.

Let me be a little more graphic. If you cut three legs off a dog, throw acid in its eyes, cut off it's nose and set it's tail on fire, it's not accurate to call it a "recovery" if the dog drags itself to a puddle with its one paw for a last drink of water before it dies.

FUCK BUSH Buttons, Stickers & Magnets

[snippy]

15. Probably not. However it could weaken significantly.

And even without significant weakness, job creation is unlikely to be strong. Bush may have the benefit of a better economy at election time, but it may continue to be a jobless recovery.

The economy definitely is in recovery but it is important to remember that we are in the ninth quarter of this recovery with only the last two quarters and the current quarter showing anything but extremely sluggish growth. Republicans do not like to admit that this is the ninth quarter of this economic expansion, but it is a fact.

The improvement in the economy in the last two quarters and the current quarter has been the result of incredible government stimulus of a size and scope never seen before. That stimulus includes near record low short term interest rates set by the Fed, longer term interest rates heavily influenced by the Fed at or near 40 or 50 year lows, a huge increase in the money supply since the first of the year, record deficit spending by the federal government this year and next, a substantial decline in the dollar, and the Bush tax cuts.

It is almost impossible to describe how huge the size and scope of all of this stimulus actually is. In the past, any two or three of these items of stimulus would have had a appreciable impact on the economy. This time it took all of it to have two quarters of decent economic growth. And all of this stimulus comes at a price to be paid later.

None of this stimulus can be repeated and most can not be sustained for too many more months, especially the low interest rates and the declining dollar. Bush is hoping that it will last long enough for him to win in 2004, and it might. But the economy also could slow early next year to trend growth of around 3.5% which is unlikely to lead to strong job growth. Trend growth also would probably cause the market to decline significantly.

However, even if economic growth remains above 4% next year, job growth is facing several headwinds. These include increasing productivity, globalization, foreign outsourcing, merger and acquisition activity, and the excess capacity which still exists with a lack of pent up demand to drive the creation of additional capacity. There are also a significant number of part time workers who will work increased hours. Add to these factors the fact that since the 1920's, republican presidents always have been bad for job creation.

Since the depression, not a single republican president has had a better rate of job creation than any democratic president. The highest rate of job growth under a republican was 2.2% per year during Nixon's time in office. The lowest rate of job growth under a democrat was 2.3% per year during Kennedy's time in office.

Since WWII ended, a total of 57.51 million jobs were created during the terms of democratic presidents which is an average of 2.054 million jobs per year. During the terms of republican presidents a total of 31.11 million jobs were created which is an average of 1.003 million jobs per year. One million new jobs per year does not match the annual growth in the labor market. Thus, if next year's job growth matches the republican average, the unemployment rate will go up.

One other factor relating to unemployment is that discouraged workers will be returning to the labor market as economic growth continues. This will prevent the unemployment rate from declining as much as it otherwise would due to whatever job creation which occurs. The unemployment rate including discouraged workers and part time workers seeking full time work in September 2003 was 9.3%. This does not include under employed workers.

As for the fact that employment is a lagging indicator, remember that we are now in the ninth quarter, soon to enter the tenth, of this recovery. Employment has indeed lagged but it does not lag forever. We may very well be near a peak in job creation within the next few months.

[Castilleja]

16. Thanks, Snippy...

Stellar post, very informative.

[tritsofme]

18. When if ever, do you think all this massive stimulus will lead to

rapid inflation?

[snippy]

23. I don't know, but it almost certainly will and

I think it could get ugly once it begins. Two things which have contributed to the absence of inflation so far are the excess capacity in our economy and the impact China's economy has had on the price of so many goods. Some people say that China's number one export is deflation.

One other aspect of the CPI inflation number concerns the way it is calculated. The price of so many goods has declined but the cost of so many services has soared. Healthcare and education for example. I think the CPI now probably overweights goods and underweights services.

[1songbird]

25. Well said, thanks.

[Schmendrick54]

17. Always point to Bush's own job creation report card.

There are some wonderful charts and numbers at <www.jobwatch.org> which everyone should hammer on when Buahies try to claim prosperity is just around the corner.

The key idea is that Bush's own people said earlier this year that the economy would be growing by about 230,000 jobs a month, WITHOUT the job-creating boost of the Bush Tax Break for the Rich 2003. They claimed that by passing this budget-busting bill that about 75,000 additional jobs per month would be created starting in July.

So how are we doing? 57,000 jobs were created in November, about a quarter of a million short of the Bush administration's own definition of success. Less than 20% is not a passing score on most tests. During the last 4 months, the total number of jobs created is about 324,000, which sounds like a lot until you observe that it is about a million jobs short of their own prediction.

Another chart worth looking at on this page shows that this is the WORST recovery in the last sixty years in terms of job growth. It is true that job growth is a lagging indicator, but never in the last 60 years have we still had negative job growth compared to the end of a recession. The only other recession which came close was the 1991 recession, and we all know how well that recovery helped Bush the Elder get reelected.

So my answer to your question is "What recovery?"

Regards,
Schmendrick

[ramapo]

26. Rising stock prices do not lift all boats

The partial market recovery provides cheering points for the media.

There will not be a true, broadbased recovery until there is some significant development that generates jobs along the lines of the computer revolution of the '80s and '90s.

[AntiCoup2K4]

27. The "Bush Recovery" is just like "Al Qaeda"

Since both are completely fictional, either is capable of doing whatever the Fraudministration needs them to do at the moment. And unfortunately, both will eploited to no end over the next year :-(