tagged w/ gross domestic product
Friday morning’s release of Q4 GDP officially put the deepest recession since WWII in the rear-view mirror.
After eleven straight quarters below peak levels, chain weighted GDP finally dug itself out of the hole and hit new all-time highsFriday morning’s release of Q4 GDP officially put the deepest recession since... more
So after my last video on how to fix the USA’s economy, I saw a lot of ignorant comments in the comments section about WELFARE.
They weren’t NEW ignorant comments, they were the SAME ignorant comments that you hear over and over. Apparently nobody out there is challenging people on their declarations, and allowing the virus of ignorance to spread.
So I wanted to make a list of facts and talking points for progressives when confronted with these conservative... well, let’s call them what they are-- they’re LIES, and stop the spread of ignorance in it’s tracks.
So let’s go down the list, and tackle them one by one, shall we?
1) Welfare spending is the reason our government is in debt.
If you had the choice between giving somebody a dollar and getting back either $1.50 or $0.80, which would you choose? Hold that thought.
According to USGovernmentspending.com The Federal Government is committed by law to spending 557 billion on welfare in the year 2010. Which seems like “Oh my! That’s a lot of money!” Which, for one person, yeah it is. But for our federal government, not so much.
Especially when you compare that to the $895 billion we’re committed to spend, by law on Defense spending. Which doesn’t account for the $711 billion in our discretionary spending on stuff like the War in Iraq and Afghanistan, and useless cold war-era weapons that we don’t even use, and never will.
Next you have to take into account what we get for those dollars spent.
Most economists agree on the following figures, including conservative ones:
Welfare spending has a fiscal multiplier of about 1.5-- while military spending has a fiscal multiplier of 0.8.
To which you might say, “wow, you just said some numbers, but what the hell does that mean? It means that for every dollar our gov’t spends on welfare, we get one dollar and fifty cents back in the form of GDP. With military spending, for every dollar we spend, we get back $0.80.
That seems really stupid. And that’s because it is. Which is why politicians frame their arguments about or disgustingly wasteful military spending as being “patriotic” or “supporting the troops.”
How much support actually goes to our troops? You, know, like after they come back from getting shot at and having their legs blown off?
According to the White House’s own figures, we’re slated to spend $125 billion on veterans affairs. And we all know about staffing shortages and underfunding that goes on in our VA system. So clearly this isn’t about supporting our troops.
For those who don’t care about human lives, and only the hard economics, I want to ask you again: If you had the choice between giving somebody a dollar and getting back either $1.50 or $0.80, which would you choose?
Now for the humanitarians out there, if you had to choose between giving somebody a dollar to feed their family, knowing you’d get back $1.50, or give somebody $1 knowing that your next door neighbor would have his legs blown off and you’ll only get back $0.80, which would you choose?So after my last video on how to fix the USA’s economy, I saw a lot of ignorant... more
2 years ago
Happy? Or scared?
Today’s big economic news is a report showing the US Gross Domestic Product grew 3.5 percent from July through September, the first GDP growth in over a year. Wall Street was happy. Stocks on the Dow Jones average rose nearly 200 points. The Obama Administration’s $787 billion stimulus program, combining tax cuts and government spending got some of the credit. At the same time, another report this week showed that American consumer confidence is down, partly due to unemployment continuing to climb. It’s almost at 10 percent now, while wages are mostly flat and home prices remain low, 401Ks are not recovered, blah, blah, blah…
If you’ve looked at a newspaper, or TV screen, or the Internet in the past 18 months, you’ve seen all the dismal stats.
So now that the GDP is growing again, which way are things going for you? Not in the next six months, but in the next six years. What kind of economy is going to emerge from the greatest economic decline since the 1930s? That’s the big question, and it points out one of the big dilemmas of journalism. You would think that the really important stuff would be stuff that you would want to pay closest attention to but the important stuff — the average American’s position in the economy — often builds over a lot of time, sometimes over many years, in the way that you’re supposed to boil a lobster, starting with the water at room temperature, so that by the time he or she is cooked, he or she doesn’t notice (so they say). So although this present recession seemed to start abruptly, the factors behind it kind of crept up on us. And that’s what’s tough to cover, and tough to follow.
As I've said before, at Vanguard we try to look forward. In May, we did a documentary mini-series in which we tried to look at the economy that we’ve had in the US since the 1980s, against the backdrop of its collapse. Laura Ling went to Las Vegas, formerly the fastest growing place in the US, for "Lost Vegas."
Adam Yamaguchi went to China’s manufacturing center for "Outsourcing Unemployment."
And Lauren Cerre and Tracey Chang went to Argentina for "Thank You, Recession."
Basically, we were looking at what kind of economy will emerge from this present downturn. Will we manage to go back to the system we’ve had since the 1980s? There we had tremendously high levels of consumer spending on cheap stuff — cheap because we’ve outsourced many of our manufacturing jobs to places where wages are lower. And our wealth creation came from real estate, stock, and equity inflation — essentially a series of bubbles. Or we could go back to the system we had in the ‘50s through the ‘70s, where there wasn’t so much economic separation in the US — we were essentially middle class — and wage growth was the key to economic improvement.
As we travel around the world, there is also another model that we see in globalized economies: Those economic engines of the developing world, like China and India, where the “developed” portion of the economy, the economy that we see and which looks like ours, doesn’t include all the population, or even most of it. Many, or most citizens, in these countries are invisible in economic terms. In fact, when Tracey Chang interviewed the COO of Infosys, the poster child of India’s high-tech development, in Bangalore India, he pointed out to her that India’s growth was not including most people.
So where are you going to emerge? Right now there seem to be three directions.Happy? Or scared?
Today’s big economic news is a report showing the US Gross... more
The Commerce Department said today that the country's gross domestic product grew in the third quarter for the first time this year, which signal the end of the recession. Fireworks! Celebration! Champagne! Not so fast. Largely this is thanks to government programs like cash for clunkers and the first-time homebuyers' tax credit. Once those programs start to wane, the economy is going to have to still keep growing on its own. Our friends at Goldman Sachs explain:
“The big picture perspective is that things have improved,” said Jan Hatzius, chief United States economist at Goldman Sachs. “The question is, how sustainable is this growth going forward?” Job-seekers, he says, probably will not see the benefits of a recovery for months to come.
What's your recession story? Your community's? I wonder if anyone sees signs of this change around them or if this number is just a number.
Leave your comment on Current News.
Recently on the Current News Blog: - The Tamil Tigers and innovations in IEDs - The UN Cuba vote and Sean Penn's scoop - 86 dead in Pakistan attack; Views from Peshawar - Seattle crackdown: Child prostitution in the United States - Should Oakland legalize the sideshow?The Commerce Department said today that the country's gross domestic product grew... more
12/9/2009 Dr Paul explains how GDP and unemployment rates are not good indicators for measuring economic sustainability.12/9/2009 Dr Paul explains how GDP and unemployment rates are not good indicators for... more
The economy sank at a 5.7 percent pace in the first quarter as the brute force of the recession carried over into this year. However, many analysts believe activity isn't shrinking nearly as much now as the downturn flashes signs of letting up.The economy sank at a 5.7 percent pace in the first quarter as the brute force of the... more
GDP up, incomes down. Why bother reporting about GDP at all?
This just cheeses me off. Yesterday, the US government released figures showing that GDP grew at an annualized pace of 3.3%. The implicit message: Yippee, we're not in a recession!
The press, of course, ate it up. AP crowed: "The U.S. economy grew in the spring at a 3.3 percent pace. The best gross domestic product results in nearly a year beat Wall Street's expectations." The Voice of America's headline trumpeted: "US Economy Growing at Faster Rate Than Predicted." Even the Canadian press got into the act: "US economy shows vigour in Q2."
But today, the other shoe dropped. Even though GDP was up last quarter, personal income declined in July. Apparently it was the largest drop in three years. So just one day after the press hypes a good news story about how "the economy" is growing, we find out that people are actually poorer!! Talk about whiplash.
There are so many lessons in this little episode...
1. Too many reporters elevate the "economy" over people.
Look, the GDP is just an accounting convention. It measures how much
money changes hands, NOT what people get for their money: it counts what we spend, not what we value. In an ideal world, GDP statistics should be a footnote to economic reporting. Instead, it's become the main story: for some reason, reporters and policymakers have elevated this one statistic above all else, and joyfully trumpet the good news for the "economy" even as more and more people are falling behind.
2. GDP and income aren't closely linked anymore. One reason, perhaps, that GDP figures are so entrenched is the memory of the broadly shared economic growth of the 1950s and 1960s -- when incomes and GDP really did rise hand in hand. But those days are long gone. For decades now, reports of economic "growth" have had very little to do with economic gains for the poor and middle class. So it should be absolutely no surprise that trends in income and gross output can move in opposite directions -- and that the "economy" can do well even as people struggle.
It's high time that reporters caught on to the new reality -- GDP isn't much of a bread-and-butter story anymore, and "economic growth" doesn't mean what we think it does.
3. We read too much into the blips. The stock market soared yesterday, in part on the news of the strong GDP figures. It's fallen back today, perhaps because of worries over consumer spending. But both GDP and income figures are probably wrong -- they're typically revised, sometimes substantially, in subsequent data releases. Besides, quarter-by-quarter and month-by-month blips don't tell much, really, about long-term economic trends. The monthly and quarterly data often contains as much "noise" as "signal." But we still seem to treat the most recent releases as gospel. That's simply a mistake. (On the market, fortunes are made and lost betting on the short term direction of these trends -- and it really is betting.)
-Clark Williams-DerryGDP up, incomes down. Why bother reporting about GDP at all?
This just cheeses me... more