False U.S. Economy or not?

Discussion in 'Economics' started by CStar, May 14, 2008.

  1. CStar


    I can't seem to get a feel on which way the economy is going these days. I didn't believe the rate cuts should have been made but I did feel the Fed helped the economy by bailing out the banks, at least for now. Now my best guess is that the few dollars the President threw at Americans called The Economic Stimulus Package" has helped to hold together retail sales. I'm happy the store figured out the give us your rebate check and we'll trade it for a 10% extra gift card. That beat out the oil companies sucking it up by raising gas prices. And speaking of gas prices, I'm surprised they are not higher. In California, prices were around 3.20 a gallon when oil was 70-80 a barrel. You would think that the price would climb to 4.50+ but so far, it teeters at 4.00.

    My guess is that there must be just enough money circulating in the economy again, due to Fed action, "stimulus," etc. to create this. Raising unemployment, food cost, fuel cost, and health care cost seem like they should be weighing more in the economist's expectation of the health of this economy. There might be renewed buying on Wall Street as well from those who see European markets and the Euro losing ground and U.S. stocks more of a bargain right now.

    So I'm wondering with all of bailouts vs. the negative news, who here sees an economic upturn to the coming quarter vs. another downturn?

    That, and I can't really believe the CPI data they released as far as food and energy goes. As I mentioned, I think gas prices have lagged but diesel and the cost of food seem way underweighted in that report.

  2. credit card debt increased significantly this month
    nothing can help but recession. laws of economy can't be reverted and business cycle must happen

    Fed resists - so be it. They should get their lesson

    SImple money pumping is not the answer

    Answer is stop Iraq war, stop government deficits, raise rates above inflation

    Nothing of this will be done, So USA type of the consumer economy is not sustainable given current economy policy
  3. Rocko1


    Where do you go for reliable credit card debt stats?

  4. CStar


    Credit card default was reported as being on the rise as well. The only break some people will be seeing from the housing downturn is less property tax payments, but they will have to work a little to get re-assessed.

    Treasury note yields are increasing, so it seems to me the Fed should raise rates. This CPI report seems to be a panacea to let the Fed off the hook and maintain rates. I know that I-Bonds are finally pointing to increased inflation. The rate is now around 4.5% even though there is a zero interest rate issued by the Treasury for the May bonds. They have never been at zero, as far as I can recall.

    I think the U.S. is buying time and hoping for a melt-down in the Euro. That would create a stronger dollar and the Fed could maintain this lower than it needs to be Fed Rate. It would also get oil prices and gold prices down. That to me is a passive strategy, but not necessarily a bad one, if it happens.