More Bad News for Democrats

[jgaffney]

Putting the lie to the string of speeches at the Democrat Convention that our economy is "abysmal", in the words of Joe Biden, the Wall Street Journal has this:

The U.S. economy was much stronger in the spring than first thought because of better exports and less inventory liquidation by businesses, according to a government report that surprised economists.

Gross domestic product rose at a seasonally adjusted 3.3% annual rate April through June, the Commerce Department said Thursday in a new, revised estimate of second-quarter GDP.

Originally, the government had estimated second-quarter 2008 GDP climbed 1.9%. First-quarter GDP increased 0.9%.

Doesn't sound like the economy that is being described in Denver, does it?

[The New Guy]

gaff, don't you know the sky is falling!?!

at least it is according to democrats. it's an age old political strategy......tell everyone how bad things are and the only way to fix them is "change."

[jgaffney]

Adding to the concept that the economic malaise is an issue being created by the Democrat Party and the MSM, Back Talk has this:

People instinctively believe that a weak dollar is a sign of economic trouble and that a strong dollar is a sign of a robust economy (and is something to be proud of). This, I believe, is a case of language bewitching the intelligence. If we did not use the terms "weak" and "strong" but instead used the terms "export favoring" and "import favoring," people would be less hysterical about this issue. There is no correct value for the dollar relative to the other currencies of the world. Moreover, the fact that the dollar has fallen a lot relative to the euro over the last 5 years or so says nothing (repeat: NOTHING) about the strength of the US economy relative to the economies of Europe. By any measure, the US economy has outperformed the economies of Europe for the better part of 15 years (including the Bush years), yet the value of the dollar has fallen anyway. And it has fallen by a lot. Has it been an economic disaster for our economy? Here is how things are going today:

Durable-goods orders rise surprising 1.3% in July

.........
That's what happened in the month that just ended. In the quarter before that -- back when you were 100% sure that the economy had plunged into the next great depression -- economic growth was, in fact, even more robust than was thought at the time:

Economy shifted to higher gear in the spring

..........
Oh sure. Economists were expecting growth of 2.7%. Here is what they were expecting before we knew what the numbers would actually look like:

April. 30, 2008

Many analysts were predicting that the gross domestic product (GDP) would weaken a bit more — to a pace of just 0.5 percent — in the first quarter. Earlier this year, some thought the economy would actually lurch into reverse during the opening quarter. Now, they say they believe that will likely happen during the current April-to-June period.
...
A growing number of economists believe the economy is in a recession and is indeed contracting now.

I might add that, in addition to the growing number of economists who believed that the economy was in a recession, you believed it as well (I would guess). That's because you think that economists can predict the future, but I know better. When the data show that the economy is in a recession, then I'll strongly endorse the idea that the economy is in a recession. Until that time, I'll base my opinion of the facts instead of on the relentlessly negative predictions of economists.

Not only is economic growth strong, the export-favoring dollar is helping to address the one economic statistic for America that seems far out of whack with the rest of the world. Contrary to what you think (because you let the mainstream media do your thinking for you), the U.S. budget deficit is not "huge." Instead, it is pretty typical once its value is adjusted for GDP. It is typical in relation to the other nations of the G7, and it is typical in relation to the last 40 years of the deficits we've had in this country. By contrast, the current account deficit (i.e., the trade deficit) has been huge and has been much larger than the trade deficits of other nations. Slowly but surely, the U.S. trade deficit is coming down (now that the value of the dollar is export favoring).

Sure doesn't sound like the economy described by the speakers in Denver, does it? Or, that described in the PeeDee:

While many Americans savor a well-deserved day off today, Ginny Van Antwerp is just happy to have a job.

Ginny Van Antwerp left the mortgage industry for a career counseling job.The former mortgage industry underwriter from Santa Rosa was laid off three times in 15 months as the companies she worked for imploded along with the real estate industry.

With her family's finances hanging by a thread, Van Antwerp spent most of the past year retraining in a different field, finally landing a job as a career representative at Empire College on Aug. 1.

She's not making the big bucks she commanded during 20 years in finance, but she's recovered her self-esteem and she's paying the bills.

"The last two years of my life around Labor Day have been very intense," said Van Antwerp, 52, whose husband, Mark, is on disability from a construction injury. "I'm just glad to be here, doing something that is fulfilling."

You have to read all the way to the end of the article to learn:

Van Antwerp said her dark period began about two Labor Days ago when the mortgage company where she had worked for about five years announced it was closing part of its operations. Her $70,000-a-year job was eliminated.

"I thought my life was over," Van Antwerp said. "I was devastated."

After a lot of crying, she said, she dusted off her résumé and was hired by another financial institution almost immediately. About a year to the day after she got the new job, she was laid off again when the firm downsized.

Colleagues in the field also were losing their jobs about the time she signed on to her third job as a temp and went full time in October 2007. But again, it didn't stick. Her job was cut right after Thanksgiving for lack of work, she said.

That was when Van Antwerp realized her career path as a mortgage underwriter was not viable.

This year, through a program called Sonoma County Job Link, she began retraining, settling on an occupation that would lend itself to her ease with numbers and office experience.

She was hired by Empire College on her birthday for about half her old pay.

Now, instead of spending money on things she doesn't really need like she did in the heady days of the real estate boom, Van Antwerp lives frugally and focuses on family. She's able to pay her mortgage and help her two grown children.

So, the woman used to be making $70k a year, plus her husband's salary in construction. Sounds pretty flush to me. Did they bother saving any of that money, or did they spend every penny and more? But, now, "she's able to pay her mortgage and help her two grown children." How many progressives here would like to be doing that well?

[JustMyOpinion]

jgaffney, you said (and I'm surprised):


"So, the woman used to earn $70k a year, plus her husband's salary in construction. Sounds pretty flush to me. Did they bother saving any of that money, or did they spend every penny and more? But, now, "she's able to pay her mortgage and help her two grown children." How many progressives here would like to be doing that well?"


$70k is not much (especially for the Bay Area), and what do you suppose her husband had earned? They now live on less than half of their total past income since she is earning 50% of her previous income, and the husband is on disability which pays NADA. I feel Ike I am missing the point somewhere, and since you are always so articulate it must be me. Clarification? Is the point that they are surviving on a shoe string and that's a good thing?

[The Big Dog]

$70K on top of what her husband was making in the construction industry. While the total isn't mentioned it can certainly be inferred.

FWIW... my wife and I were getting along okay for several years on my $45K-$75K while she was getting nothing but SSDI.

It's not what you make, it's how you live.

Now, instead of spending money on things she doesn't really need like she did in the heady days of the real estate boom, Van Antwerp lives frugally and focuses on family.

Apparently she didn't understand how, but life has (as it usually does) explained it to her.

[JustMyOpinion]

TBD, I do understand your point, but honestly how does someone in that situation retire comfortably? I am assuming they don't have a cushion and in the 50's it's pretty hard to financially recover, don't you think?

[jgaffney]

Sept 2, 2008 17:57:13 GMT -5 JustMyOpinion said:

$70k is not much (especially for the Bay Area), and what do you suppose her husband had earned? They now live on less than half of their total past income since she is earning 50% of her previous income, and the husband is on disability which pays NADA. I feel Ike I am missing the point somewhere, and since you are always so articulate it must be me. Clarification? Is the point that they are surviving on a shoe string and that's a good thing?

JMO, my point was that the family lived pretty well before their incomes started dropping. Did they save any of their income, or did they spend every penny? Even after they have fallen from their former high income status, "Van Antwerp lives frugally and focuses on family. She's able to pay her mortgage and help her two grown children." So, even they don't feel that they're doing that bad.

So, why did Paul Payne make it the lead article in the B Section on Labor Day? Was it to try to show the readers that most of them are just a paycheck away from disaster? Or, was it to show that, with discipline and dilligence, anyone can still survive? Given the PeeDee's editorial bent, I would guess it was the former. But, it unintentionally turned into the latter.

[jgaffney]

The Wall Street Journal has this well-researched rebuttal to the Democrat proclimations of doom and gloom in our economy:

How does the performance of the U.S. economy really compare with other advanced economies over the eight years of George Bush's presidency? Data published by the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), the World Bank, the International Comparison Program (ICP) (a cooperative venture coordinated by the World Bank) and the U.S. Census Bureau allow a nonpartisan, factual assessment. Here are some of the findings:

- Economic growth. U.S. output has expanded faster than in most advanced economies since 2000. The IMF reports that real U.S. gross domestic product (GDP) grew at an average annual rate of 2.2% over the period 2001-2008 (including its forecast for the current year). President Bush will leave to his successor an economy 19% larger than the one he inherited from President Clinton. This U.S. expansion compares with 14% by France, 13% by Japan and just 8% by Italy and Germany over the same period.

The latest ICP findings, published by the World Bank in its World Development Indicators 2008, also show that GDP per capita in the U.S. reached $41,813 (in purchasing power parity dollars) in 2005. This was a third higher than the United Kingdom's, 37% above Germany's and 38% more than Japan's.

- Household consumption. The ICP study found that the average per-capita consumption of the U.S. population (citizens and illegal immigrants combined) was second only to Luxembourg's, out of 146 countries covered in 2005. The U.S. average was $32,045. This was well above the levels in the UK ($25,155), Canada ($23,526), France ($23,027) and Germany ($21,742). China stood at $1,751.

- Health services. The U.S. spends easily the highest amount per capita ($6,657 in 2005) on health, more than double that in Britain. But because of private funding (55% of the total) the burden on the U.S. taxpayer (9.1% of GDP) is kept to similar levels as France and Germany. The U.S. Census Bureau reports that 84.7% of the U.S. population was covered by health insurance in 2007, an increase of 3.6 million people over 2006. The uninsured can receive treatment in hospitals at the expense of private insurance holders.

While life expectancy is influenced by lifestyles and not just access to health services, the World Bank nevertheless reports that average life expectancy in the U.S. rose to 78 years in 2006 (the same as Germany's), from 77 in 2000.

- Income and wealth distribution. The latest World Bank estimates show that the richest 20% of U.S. households had a 45.8% share of total income in 2000, similar to the levels in the U.K. (44.0%) and Israel (44.9%). In 65 other countries the richest quintile had a larger share than in the U.S.

Investment has been buoyant under President Bush. According to the ICP, outlays on additions to the fixed assets (machinery and buildings, etc.) of the U.S. economy amounted to $8,018 per capita in 2005 compared to $4,963 in Germany and $4,937 in the U.K. Higher taxes on the upper-income Americans, as proposed by Mr. Obama, are likely to result in lower saving and investment, less entrepreneurial activity and reduced availability of bank credit. Lower-income Americans would be among the losers.

When considering the distribution of income and wealth in the U.S., another factor that should be taken into account is the sharp rise in the number of immigrants. The stock of international migrants (those born in other countries) in the U.S. grew by nearly 10 million from 1995 to 2005, reaching a total of 38.5 million according to the World Bank.

The inflow of migrants may have restrained the growth of average income levels in the bottom quintiles. Nevertheless, their earnings still allowed immigrants to remit $42 billion to their families abroad in 2006, double the level in 1995. So the benefits are widely spread among the families of immigrants remaining abroad -- an important U.S. contribution to the reduction of poverty in these countries.

- Employment. The U.S. employment rate, measured by the percentage of people of working age (16-65 years) in jobs, has remained high by international standards. The latest OECD figures show a rate of 71.7% in 2006. This was more than five percentage points above the average for the euro area.

The U.S. unemployment rate averaged 4.7% from 2001-2007. This compares with a 5.2% average rate during President Clinton's term of office, and is well below the euro zone average of 8.3% since 2000.

- Debt interest payments. The IMF reports that the interest cost of servicing general government debt in the U.S. has averaged 2.0% of GDP annually from 2001-2008, compared with 2.7% in the euro zone. It averaged 3.2% annually when President Clinton was in office.

The cost of the wars in Iraq and Afghanistan has been largely absorbed in a relatively small increase in the defense budget (to 4.1% of GDP in 2006 from 3.8% in 1995). A much higher proportion of U.S. income was devoted to the military during World War II and the Korean War.

The evidence shows that much of the Democratic Party's criticism of President Bush's economic record is wide of the mark. True, the economic slowdown now affecting most advanced countries will likely result in rising unemployment over the coming months. But thanks to sensible policies pursued by the Bush administration (not always with adequate support from a Democratic-controlled Congress), the U.S. economy is sufficiently flexible to keep unemployment below the 7.7% peak reached in the last postrecession year of 1992.

The main risk is that, if elected, Barack Obama will pursue a "social justice" strategy. This would encompass higher taxes on entrepreneurs, savers and investors, more direct government intervention in the economy, and protectionist policies (including revoking existing trade agreements) aimed at safeguarding the jobs of his union backers in "old" industries and public services. If so, the pain is likely to be more widespread and prolonged.

It never ceases to amaze me that some people think that the best way to revive an economy is to raise taxes. Make no mistake - your taxes will go up under Obama, regardless of what he says now. How many people saw a reduction in their taxes after the Bush tax breaks were passed? Did you know that Obama has said that he will let those tax breaks expire? How many peoplle counted on the "middle class tax break" promised by Clinton. Remember how fast he backed away from that? Why would you think it will be different this time?

[The Big Dog]

Sept 2, 2008 18:21:58 GMT -5 JustMyOpinion said:

TBD, I do understand your point, but honestly how does someone in that situation retire comfortably? I am assuming they don't have a cushion and in the 50's it's pretty hard to financially recover, don't you think?

Okay, let's think about how do they retire comfortably.

Let's start with it's their responsibility, first and foremost, to put away money for their retirement. It's something they should have been doing from the day they started working. If they didn't, then that's tough noogies for them, but I don't see how it then becomes my responsibility as a taxpayer (who has been salting away a little here and there for the past three decades I've been working) to provide for them.

Yeah, it's hard to build something up when you start doing it in your 50's and from scratch. But making the rest of us pay for their irresponsibility is where you are going to lose the argument, each and every time.

[JustMyOpinion]

jgaffney, I agree with you that often people have their priorities in the wrong order and live beyond their financial means. My other half is a CFP (certified financial planner) and drives me NUTS with frugality. I don't spend lavishly but I can tell you there is a fine line between being smart and a tad bit crazy when it comes to money! LOL

I still think it would be difficult to live on half of a previous income, and as I get older I have no intention of going backward
financially. I do see the value in the lesson...

[JustMyOpinion]

TBD, I agree people need to be smart when it comes to retirement. Unfortunately so many people today don't work for employers that have retirement plans and are left to navigate investing on their own.

I think one of the toughest challenges seniors face today is medical care. Prescription coverage is being slashed right and left and at the same time the income level of seniors stays pretty much the same. Medicare is penalizing doctors for taking care of seniors, they get paid next to nothing for it and consequently many older people are not well taken care of. I don't think we've seen the worst of it, and probably most of us think we'll be just fine, but will we?

[The Big Dog]

Mrs. BigDog and I will be. We've saved, built a small portfolio and own a home with a boat load of equity (we only owe about $90K on it). She has a small retirement from the county and I've been salting away in a 401k for many years.

We also don't intend to live in California in our retirement. Our retirement dacha will be in a state with as minimal a tax gouge as possible and where our money will stretch.

It's called planning. If more young people, and even at 50 I consider myself still young, planned instead of having too big a house and all the toys (like our parents and grandparents etc.etc. planned before us) we wouldn't need to have the conversation.

But the overwhelming thrust I get from your responses is that it is someone else's responsibility to take care of those who were careless. Am I wrong?