Pictures of the Economy

[madape]

Dow Jones Industrial Average, Last 12 Months

NASDAQ Composite Index, Last 12 Months

S&P 500 Index, Last 12 Months

Summary Chart

[Chiwas]

Yeah, the arrow seems to be well aimed.

But the real lesson is that wars make those things happen, as in the old times.

If only the extra expending for warfare, which is making the markets grow, isn't allowed to spark an inflation, Bush will win without any doubt.

But to stop inflations these days is not as easy as in the old times.

[mary]

Hmmm, funny...if you just step back a little bit from the graph....you can actually see a bigger picture.

[u2sarajevo]

Originally posted by: mary
Hmmm, funny...if you just step back a little bit from the graph....you can actually see a bigger picture.

Looks to me like a rebounding economy.... wasn't that the point that madape was trying to make?

[mary]

Well, since his post consisted of 3 graphs and a satirical cartoon, I just wasn't sure what his point was. If anything it looked like his point was that a healthy stock market was going to kill the Democratic Party. He seemed to further imply that when the DOW arrow is point up, then obviously the economy's "arrows" are all pointing in the same direction. Those assumptions are fallible to begin with, but if you're going to comment on the performance of the market, you might as well give the whole picture - yes the stock market has done great this year. I guess I was adding the " and yes we are FINALLY regaining all that ground we lost in the past three years." But if looking at a graph of the stock markets tells you all you need to know about the economy and what direction it is heading in, someone needs to let those poor folks at the NBER in on the secret - they're apparently waisting their precious time.

(Sorry, I know I'm being crass...but I honestly can't help it right now)

Edited because I had more to say.

[madape]

Yep, that market crash on 9/11 sure did send the indexes into a tailspin. But, thankfully, it looks as though an agressive war on terrorism has had the pleasing dual effects of fostering peace the middle east AND spurring economic growth. It's amazing what the country can do when they feel well protected. If good news like this keeps coming out of the middle east, we may just see the indexes rise higher by election day than they were even weeks before the bloated dot-com bubble burst into the faces of an unsuspecting populace in the late 90s.

The funny part about this whole situation is that the Democratic party seems content to eat crow while the rest of the country eats steak. Radical ideologues like Howard Dean are pushing the party so far left, they're about to fall off the cliff...spouting ridiculous "Bush=Hitler" rhetoric as they plummet like something out of a Wile-E-Coyote cartoon. What an appropriate end to a party founded on cartoonish ideas like giant social welfare programs and a foreign policy built around deference to the UN. But just like in the cartoons, the self proclaimed "super-genuises" on the left have been outwitted by an unassuming, yet incredibly crafty bird. Meep meep!

[mary]

an agressive war on terrorism has had the pleasing dual effects of fostering peace the middle east

Well, then someone needs to get on the horn and let the middle east know that peace should be "fostering" over there - I don't think they know yet.

And for the record, I'm NOT a Democrat, but I ALWAYS eat steak.

[madape]

Here's a graph I think is pertinent to the conversation of jobs.



It shows that the tax cut has in effect, created it's own job problem. The tax cut has had the effect of raising wages, and those higher wages have had the effect of luring more people into the job market. Notice the sharp increase in women, teenagers, and retirement-age people in the workforce. It goes up when wages increase.

So even though the unemployement rate sits at 5.7% right now ( a two year low by the way) many of those who are looking for jobs right now weren't looking for them before the tax cuts. It's a universal law of economics: Give people a reason to work, and they will work. The job of the government in the economy is not to encourage people to sit around the house watching the tube, like a federal health insurance program would be almost certain to do, but instead incourage them to get out and work, like the Bush tax program is doing as we speak.

Or as Jean-Baptise Say so eloquently stated in 1834: "The encouragement of mere consumption is no benefit to commerce; for the difficulty lies in supplying the means, not in stimulating the desire of consumption.... It is the aim of good government to stimulate production, of bad government to encourage consumption"

[madape]

Well, then someone needs to get on the horn and let the middle east know that peace should be "fostering" over there - I don't think they know yet.

I think some folks are getting the message.

1. In Libya, Colonel Qaddafi took one look at our army massing for the invasion of Iraq and decided to get out of the mass-destruction business. He has since stopped lying to gullible U.N. inspectors and — in return for U.S. investment instead of invasion — promises civilized behavior. The notion that this terror-supporting dictator's epiphany was not the direct result of our military action, but of decade-long diplomatic pleas for goodness and mercy, is laughable.

2. In Afghanistan, supposedly intractable warlords in a formerly radical Islamist, female-repressing culture of conflicting tribes and languages have come together. Under our NATO security umbrella and with some U.N. guidance, a grand conclave of leaders freed by U.S. power surprised the Arab world's doubting despots with the elements of a constitution that leads the way out of the past generation's abyss of barbarism.

3. In Syria, a hiding place for Saddam's finances, henchmen and weaponry — and exporter of Hezbollah and Hamas terrorism — Dictator Bashar al-Assad is nervously seeking to re-open negotiations with Israel to regain strategic heights his father lost in the last Syrian aggression. Secret talks have already begun (I suspect through Turkey, Israel's Muslim friend, rather than the unfriendly European Union); this would not have happened while Saddam was able to choke off illicit oil shipments to Syria.

4. On the West Bank, incipient Israeli negotiations with Syria — on top of the overthrow of the despot who rewarded Palestinian suicide bombers — further isolates the terror organizations behind Yasir Arafat. Under the pressure of Israel's security fence, and without the active support of Egypt and Saudi Arabia (each eager to retain protection of a strong-willed Bush administration), Palestinians now have incentives to find an antiterrorist leader who can deliver statehood.

5. In Iran, the presence of 130,000 U.S. troops near the border was not lost on the despot-clerics in power, who suddenly seemed reasonable to European diplomats seeking guarantees that Russian-built nuclear plants would be inspected. Colin Powell has been secretly dickering with the so-called reform ayatollah for a year in hopes of being on the right side of a future revolution. The old "Great Satan" crowd has just barred four-score reformist Parliament members from seeking re-election. That panicky crackdown in Teheran is a sign of the rulers' weakness; the example of freedom in neighboring Iraq will help cause another part of the axis to fall.

6. In Iraq, where casualties in Baghdad could be compared to civilian losses to everyday violence in New York and Los Angeles, a rudimentary federal republic is forming itself with all the customary growing pains. After the new Iraq walks by itself, we can expect free Iraqis to throw their crutches at the doctor. But we did not depose Saddam to impose a puppet; we are helping Iraqis defeat the diehards and resist fragmentation to set in place a powerful democratic example.

.. from the Safire article I linked to in the above post

[mary]

"Additional Employed or Seeking Work"

Would this be gathered from # of unemployment claims, employment surveys, blind extrapolation.....something else??

[madape]

Originally posted by: mary
"Additional Employed or Seeking Work"

Would this be gathered from # of unemployment claims, employment surveys..something else??

I'm not sure. I pulled the graph off of noted economist Steve Antler's webblog this morning. It was a "tease" for an article he's releasing tomorrow. I'm sure he'll speak more on the mechanics of the model then.

I would imagine that it is based on forecasting a statistic like "employment as a share of working age population".

I pulled this chart off the Department of Labor website


Again, he's only talking about the impact of the tax cuts on workforce growth. I'd be interested to see how he excludes other macroeconomic factors. In any case, let's hope that the recovery we saw in fourth quarter 03 reverses the downward trend and the percentage returns us to our pre-9/11 highs of around 64.7% by November.

[u2sarajevo]

Economy Grows at Healthy 4.1 Percent Rate

Feb 27, 10:07 AM (ET)

By JEANNINE AVERSA

WASHINGTON (AP) - America's economy, bolstered by brisk business spending, grew at a healthy 4.1 percent annual rate in the final quarter of 2003. That was even faster than first thought and offered new evidence that the nation's economic recovery was firmly rooted going into the new year.

The latest reading on the gross domestic product - the broadest measure of the economy's health - was slightly better than the 4 percent pace estimated a month ago for the October-to-December quarter, the Commerce Department reported Friday. GDP measures the value of all goods and services produced within the United States.

"The capital spending rebound is in high gear," said economist Ken Mayland, president of ClearView Economics.

Even though the fourth quarter's growth rate marked a slowdown from the red-hot 8.2 percent pace of the third quarter - the best in nearly two decades - it nonetheless represented a solid performance.

The 4.1 percent pace was better than economists were predicting. They were forecasting growth rate of around 3.8 percent.

On Wall Street, the report helped to lift stocks. The Dow Jones industrials gained 34 points and the Nasdaq was up 4 points in morning trading.

Looking ahead, the economic picture seems promising, analysts say. Economic growth in the current January-to-March quarter is expected to clock in at a rate of around 4.5 percent or higher, according to some analysts' projections.

For out of work Americans, though, these are still frustrating times even as the economy is in recovery mode. Job growth has been painfully slow. The economy has lost 2.2 million jobs since President Bush took office in January 2001, a sore spot as he seeks re-election. Democratic presidential contenders have seized on this to make the argument that his economic policies are not working.

Federal Reserve Chairman Alan Greenspan and other economists, however, are hopeful that companies will step up hiring in the coming months.


In an especially encouraging sign that companies are feeling more confident in the staying power of the recovery, they boosted investment in equipment and software in the fourth quarter at a sizable 15.1 percent annual rate. That was stronger than the 10 percent rate first estimated and was a main factor in GDP being revised upward for the fourth quarter.

Another factor: Businesses were more aggressive than previously thought in adding to their stockpiles in the fourth quarter. Business inventory building added 0.92 percentage point to fourth-quarter GDP, even better than the 0.61 percentage-point increase estimated a month ago. That also was a sign that businesses were betting on stronger appetites for their goods.

A sustained turnaround in capital spending by business is a key ingredient for the economic recovery to be lasting. It was deep cuts to such spending that thrust the economy into a recession in 2001. The economy has struggled mightily to get back on firmer footing and finally in the second half of 2003 managed to cast off its lethargy.

The economy's performance in the second half of last year marked the best back-to-back quarterly performance since the first two quarters of 1984.

Economists are heartened that businesses appear to be doing more to keep the economy going. Throughout economic hard times and during most of the recovery consumers have been doing the heavy lifting.

In the fourth quarter, consumers spent modestly and increased their spending at a 2.7 percent annual rate, slightly stronger than the 2.6 percent pace estimated a month ago. Still, that marked a slowdown from the third quarter as consumers spent lavishly - powered by extra cash from a home-mortgage refinancing frenzy and the president's third round of tax cuts.

Analysts predicted the economy would slow in the fourth quarter compared to the third quarter's scorching pace as the stimulative impact of refinancing and the tax cuts faded.

Consumers in fact trimmed spending on big-ticket goods, such as cars, at a 0.1 percent rate in the fourth quarter, the first decline since the second quarter of 2000.

Although economists believe consumers will keep their pocketbooks sufficiently open to help along the economy, they are still keeping a close eye on their behavior. Some economists worry that consumers might turn more cautious given the lackluster job market.

[Drbio]

Of course, Bush will get no credit for a rebounding economy.

[dude1394]

Nor will he get credit for changing the stagnant culture of the middle east, nor will he get credit for removing a mass-murdering threat to all of the middle east, nor will he get credit for freeing up to 50 Million souls, nor will he get credit for the largest HIV donation to africa in history, nor will he get credit for finally getting schools to test children so that both students not learning and teachers not teaching can be identified, nor will he get credit for lowering the amount of arsenic allowable in the water, nor will he get credit for finally ending the farce that is kyoto, nor will he get credit for finally having the political courage to bring up privitization of social security, nor will he get credit for getting a medicare-drug-prescription benefit for seniors that no one has been able to do for years.

Oh...I should have enumerated that he won't get credit for this from the media of the dimwits, but he will from the majority of voters this year.

[dude1394]

Here is another interesting graph that debunks the myth of the high number of "discouraged workers".

Buzz chart

[reeds]

People people people...you crack me up sometimes...are you giving Bush credit for the stock market recovering???Is that what I am reading? PLEASE..ever heard of what comes up must come down? The opposite is also true with the stock market..after every bear market, there is a recovery- YES- EVER BEAR market is sooner or later followed by a bull market...or at least steady improvement..i wouldnt have mattered who was in office, it was in the cards..and yes, in a few years or so, no matter who is in office, the market will give up these gains again..its a cycle..presidents always get too much credit when the market is going good, or bad....

[Drbio]

It cracks me up how the dimwatocraps pull out the market fluctuation card when they would have been annointing Clinton as God had it occured on his watch.

[sike]

Originally posted by: dude1394
Nor will he get credit for changing the stagnant culture of the middle east, nor will he get credit for removing a mass-murdering threat to all of the middle east, nor will he get credit for freeing up to 50 Million souls, nor will he get credit for the largest HIV donation to africa in history, nor will he get credit for finally getting schools to test children so that both students not learning and teachers not teaching can be identified, nor will he get credit for lowering the amount of arsenic allowable in the water, nor will he get credit for finally ending the farce that is kyoto, nor will he get credit for finally having the political courage to bring up privitization of social security, nor will he get credit for getting a medicare-drug-prescription benefit for seniors that no one has been able to do for years.

but will he team up with OJ to find the "real" killer??? cause thats what I'm waiting for!
yeah, Democrats hate him and Republicans love him......why does this ever surprise us???

[dude1394]

Originally posted by: reeds
People people people...you crack me up sometimes...are you giving Bush credit for the stock market recovering???Is that what I am reading? PLEASE..ever heard of what comes up must come down? The opposite is also true with the stock market..after every bear market, there is a recovery- YES- EVER BEAR market is sooner or later followed by a bull market...or at least steady improvement..i wouldnt have mattered who was in office, it was in the cards..and yes, in a few years or so, no matter who is in office, the market will give up these gains again..its a cycle..presidents always get too much credit when the market is going good, or bad....

So it is your contention that the stock market and the gdp would be the same without dubya's tax cuts? To say he has had no impact doesn't make sense to me. Even clintoon had some impact as he was a free trader.

You can bet that the current crop of dimocrats will have an effect. Yes there is a cycle, but tax policiy is an aspect of it.

[dude1394]

The surprising thing to me about the dumbocrats are that the reason they hate him is because he's not a dimocrat, nothing more or less.

[reeds]

Greenspan moves markets- not Bush and his tax cuts...

[dude1394]

Well you wouldn't know it to hear the dimocrats talk. Their big economic policy is to......RAISE TAXES!! Oh YEAH that will do it.

So if bush tripled the tax rate it would have no effect?? Do you like to post naive statements?

[Chiwas]

Money is more efficiently used by the private sector; additionally to this, the extra cost of the intermediate -the government- does not exist -or can be used in other issues not administratives-, which is doubly good.

However, the private sector does not distribute the money between poor people, does not make a generalized -and planned- expenditure on social sectors.

That's why both points of view -and policies- are needed in a democracy.

[Mavdog]

Interesting that you justify a claim of an improved American economy by way of displaying graphs of the stock markets. The charts do nothing to support a general claim about the economy, they merely show how stocks are being valued; that value is based on the cos. earnings, which have NO correlation to the overall health of the economy, but is reflective of their operating efficiency. In fact, this operating efficiency can very much be in opposition to the American economy, specifically domestic employment vis a vis the “outsourcing” trend. Companies can increase their earnings by reducing their employee costs, which would result in higher stock values. The vast majority of public cos. don't depend on only domestic sales.

The tax cut has had the effect of raising wages, and those higher wages have had the effect of luring more people into the job market. Notice the sharp increase in women, teenagers, and retirement-age people in the workforce. It goes up when wages increase.

First, the chart is a FORECAST of job growth, not actual. Second, the 7.1 Million Americans who are unemployed in Jan ’04 (still higher than the 4.8M unemployed when the Bush administration took office), would like to know how the tax cut has raised wages when they can’t get a job. A tax cut stimulates demand, which doesn’t stimulate supply domestically when those goods are imported. However, as mentioned above, that increased demand provoked by the spending of the tax cuts can improve some cos. sales and earnings…

Remember that there are more than 2.2 million Americans who WERE working when the bush administration took office and are NOT today. The tax cut hasn’t found them employment.

So even though the unemployment rate sits at 5.7% right now ( a two year low by the way) many of those who are looking for jobs right now weren't looking for them before the tax cuts.

funny that there are more adults who are NOT in the labor force- who have just given up looking as they couldn’t find a job-than anytime in the Bush term. The federal unemployment rate conveniently leaves these adults out of the equation, yet they are unemployed. The tax cut didn’t help them, did it?

It's a universal law of economics: Give people a reason to work, and they will work.

Actually give them an opportunity to work and they will…too bad they can’t find an opportunity to find a job as the jobs aren’t there for them to seek.

The job of the government in the economy is not to encourage people to sit around the house watching the tube, like a federal health insurance program would be almost certain to do, but instead incourage them to get out and work, like the Bush tax program is doing as we speak.

uh, a flight of imagination there compadre…a federal health insurance program will “encourage people to sit around the house”???? You are very confused on what a health insurance program does and what you must be addressing, which is NOT health insurance but some reference to a disability insurance.

Health insurance aids the productivity of a worker by keeping them and their children healthy. A healthier worker is a more productive and a more reliable worker; a healthy child allows the worker to be at work rather than taking care of their child.

To suggest that a federal health insurance program would motivate workers to work less is total fabrication, unsupported by either facts or logic. It's like suggesting that if people had health insurance they would try to get sick more often than if they didn't have coverage. Yuck yuck Yuck, that would be funny...cept it seems you may be serious.

The American economy is still very fragile and is not, such as you assert with the stock graphs above, on solid footing. Part of the increase in business activity is due to the increased gov outlays (good ole deficit spending, Keynes would be so happy to see GWBush use his theories!) not due to additional stimulation of the tax cuts. The average american doesn't spend extra disposable $ on services (the part of the economy improving) but on goods...imported goods at that.

[dude1394]

So the stock markets are showing a deteriorating economy?

So there is NO job growth? The shrinking unemployment rate is a fiction? So what IS the number? Where does it come from and what was it 10 years ago.

I'm not so sure you can say that an opportunity to work is all there is to it. Obviously if the unemployed were willing to take the positions that are being filled by illegal aliens the unemployment rate would go down, but everyone weighs the work versus their opportunity. You could say the the unemployment extensions have done more to keep the unemployment rate high than many other factors.

I'm more than willing to have an HONEST debate on universal health insurance, but everything seems so difficult with the partisan politicians going at it. Are we willing to not have an mri on every corner, are we willing to not have the newest drugs created,etc.,etc. I actually would like to see a serious debate on how the hospital, insurance, doctors, tort lawyers, pharmacy companies all sort of seem to remove the price comparison shopping from consumers. But again it will be tough to have a serious debate.

[Mavdog]

So the stock markets are showing a deteriorating economy?

that may be your conclusion, I didn't say or suggest that. What I posted is that the stock indexes do not reflect the current state of the economy, it reflects the relative value of stocks and the cos. earnings.

So there is NO job growth? The shrinking unemployment rate is a fiction? So what IS the number? Where does it come from and what was it 10 years ago.

The unemployment rate was 3.5% in Jan '00, it rose to 5.6% in mid 03 and is now down to 5.1%. 10 years ago it was 4.9%. When Bush took office there were 4.6M unemployed; today there are 7.1M unemployed, and that doesn't include those not seeking jobs who have left the workforce.

Lack of job growth is THE major issue facing bush's campaign, that's why the Bush campaign wants to talk about "the wartime President" (like the pres starting a war is a good reason to re-elect him...faulty logic for sure). That issue alone may cost the Repubs Ohio as well as other areas who experienced the loss of manufacturing jobs.

I'm not so sure you can say that an opportunity to work is all there is to it. Obviously if the unemployed were willing to take the positions that are being filled by illegal aliens the unemployment rate would go down, but everyone weighs the work versus their opportunity. You could say the the unemployment extensions have done more to keep the unemployment rate high than many other factors.

Are you under the false and mistaken impression that unemployment benefits continue indefinitely?
Blaming immigrants for unemployment is disingenuous, they take jobs in the hidden economy. Employers who pay FICA or benefits can't hire undocumented wqorkers.

I'm more than willing to have an HONEST debate on universal health insurance, but everything seems so difficult with the partisan politicians going at it. Are we willing to not have an mri on every corner, are we willing to not have the newest drugs created,etc.,etc. I actually would like to see a serious debate on how the hospital, insurance, doctors, tort lawyers, pharmacy companies all sort of seem to remove the price comparison shopping from consumers. But again it will be tough to have a serious debate.

I don't know about you, but I'm OK not having an MRI on every corner, the issue of a National Health insurance plan has nothing to do with drug cos. spending on research (or on advertising their products AD NAUSEUM!) as tax policy/sales price affects that cap budget item.

For many Americans, that close to 20% labeled as poor, it's not an issue of "price comparison" as the price itself is more than they can afford. They have NO insurance, hence no access to healthcare and specifically preventive healthcare.

The better question is if the country can afford to NOT have access to healthcare for ALL its citizens rather than just those whose affluence allows them.

[TheBaron]

If the economy is so hot, then why are all the unions for Kerry?