us economy dip less than feared

Discussion in 'Economics' started by morganist, Jul 15, 2009.

  1. Did you not read the part where the Fed upped its growth forecast looking for the Economy to only "shrink" between 1-1.5% as opposed to their previous forecast of 1.3-2.0%

    Are you not aware that the unemployment rate lags an economic recovery?

    Everyone knows that.
     
  2. this from the ft

    "The financial crisis, narrowly defined, is over: stock markets have rallied; liquidity is returning to markets; banks have been able to raise equity; and the extreme risk spreads in financial markets of last year have disappeared. When addressed powerfully, panics end. In this case, the commitment of the authorities to the rescue of a failing financial system was unprecedented. It has had the desired results.

    The worst of the economic crisis is also passing. As the Organisation for Economic Co-operation and Development noted in its latest Economic Outlook, “for the first time since June 2007, the projections ... have been revised up for the OECD area as a whole compared with the previous issue”. Similarly, the International Monetary Fund states in its latest World Economic Outlook update that “economic growth during 2009-10 is now projected to be about half a percentage point higher than forecast by the IMF in April, reaching 2.5 per cent in 2010”."
     
  3. i don't agree with you. everything in that seems negative. just because they have raised their forecast does not mean their forecast is correct if they estimated things correctly we might not be in this mess.

    in relation to unemployment i can understand the position that if it is high labour is cheaper and economic recovery is easier to achieve however the other necessities to get the economy recovering are not there. due to the interest rate being so low there is less investment from the private sector and banks as their agents. this means no new investment for businesses so no new start ups. also businesses are finding it harder to get short term credit to cover operating costs. unemployment will rise and there will not be a recovery soon as a result of this.

    for economic recovery to occur investment has to be there that means either the government has to do it, fiscal stimulus (which it is but it is limited and as soon as it stops there is nothing to get people investing privately (low interest rate) again) or the private sector has to do it saving with interest rate as incentive low interest rate means low incentive meaning no long term investment into the market so although there might be a recovery in the near term through the fiscal stimulus it will not continue unless the interest rate rises.

    the interest rate cannot rise sufficiently to provide incentive because it will cause businesses to collapse and people to lose their homes due to extra payments on the high level of debt. effectively until the debt gets paid off or another method of raising capital is introduced there will be no long term economic recovery.

    also unemployment is hitting records which means the economy is in record bad shape.

    http://news.bbc.co.uk/1/hi/business/8151017.stm

    you also have to understand that for the labour force to enter the workforce it has to have the right skills. this means retraining or people doing jobs they are not trained in. i assume your position is based on the rational expectation concept of the long term labour market where it is assumed that people will instantly get new jobs that pay less if they are unemployed. although that is a noble idea the adaptive expectations theory that it takes time is more accurate and most economists now take that position.

    also that counters the view of a fiscal stimulus which means that the government had to aid the labour market to get the economy running again.

    in short your point contradicts your view of the business cycle.
     
  4. Sevenout

    Sevenout


    Well I knew that. I'm glad that the "Fed"
    takes the time and energy to give us a growth forecast. That way we can plan accordingly. After all they do have our best interest in mind.

    By the way does anyone know if the Fed has released the "economy recovered day" yet?
     
  5. Your first post in over 3 years???
    What cave did you crawl out of?

    Or is that one of MANY ALIASES?
    :D

    Or is this one of those "archived" screen-names that gets pulled out of the "warehouse" and used to generate web-activity for Baron?
     
  6. i thought it was odd he only post five times in so many years too.

    also i like the way you used that to avoid answering my post.
     
  7. No it does not.

    One does not solely need a decrease in the unemployment rate in order to stimulate a recovery. You simply need consumers to stop being so cautious, and start spending money again with a more confident outlook.

    Fed Chairman Bernanke seems to agree with me . . .

    Federal Reserve Chairman Ben Bernanke cautioned Congress on Wednesday that “even as the economy begins to recover, unemployment can still remain high.” Bernanke pointed out that the labor market usually lags behind the business cycle.
     
  8. how can they spend if they don't have money. how can they get money if they don't have jobs.

    what school of economics do you follow?
     
  9. lrm21

    lrm21

    its a double dipper and everyone knows it.

    Any "true" uptick is due to business cutting faster than the economy collapses, coupled with all the funny money sloshing in the system.

    Long term show me what is positive about the U.S Economy.

    Taxes? Highest in the G20 and going higher, cap and trade, nationalized healthcare

    Regulations: Getting worse

    Class Warfare: Govt has declared war on middle and upper class

    Ant-capitalist Govt. Is clearly more interested in propping up the fortune 500 and wall street than in the small business.

    Government Debt?

    Are people gonna be buying homes zero down? Are we going to be pumping internet stocks.

    Look at DOW priced in Gold. There is no rally, its bullshit.

    Anyone with half a brain knows, that any uptick in the economy will be used to save and siphon out money, perhaps to move out dollars.

    Sorry but is this the same FED who with treasury engineered stress test with unemployment at 8% in worse case.

    Same Fed who's attempt to target yields at the long end have completely failed and blown up.

    Sorry but the FED is full of shit.

    All they have left is to talk it up. They are out of bullets. It took Japan 10 years to run out of bullets we did it 20 months.
     
    #10     Jul 15, 2009