65 replies to this topic

[The Irish Doggy]

wiegie, on 04 April 2012 - 09:51 AM, said:

Consumer spending does affect the economy in the short run, but long-run economic growth is associated more with investment in capital goods than it is with consumer spending.  (Although there are a lot of interaction and feedback effects in these relationships which aren't really worth going into right now.)  [I will readily admit, though, that fluctuations in consumer spending can definitely affect the economy in the short-run.]

Not sure I understand this. Capital goods, IIRC, are machines, factories, etc. - the stuff we use to make consumer goods.  So, I'm curious how consumer spending does not support the long run as much as capital goods?

[wiegie]

The Irish Doggy, on 04 April 2012 - 01:38 PM, said:

Not sure I understand this. Capital goods, IIRC, are machines, factories, etc. - the stuff we use to make consumer goods.  So, I'm curious how consumer spending does not support the long run as much as capital goods?

A complicated answer would show that more capital goods shift out the Long-Run Aggregage Supply Curve which results in higher potential output and a long-run increase in economic growth with the potential for people to purchase even more consumption goods in the future.

A (very) simple answer says that if a nation produces a capital good (like a computer used for work) rather than a consumer good (like an HD tv) then the next year the economy will be able to produce even more of both goods.  Hence you get greater increases in output in the future than if the nation had chosen to produce the consumption good.

[tosberg34]

bushwacked, on 04 April 2012 - 10:35 AM, said:

* Private sector adds 209,000 jobs in March
* Report does not change expectations for nonfarm payrolls
http://www.reuters.c...E8F41A620120404




It won't be long now.

You've been saying this almost every day for the last 4 years.

Edited by tosberg34, 04 April 2012 - 03:54 PM.

[CaP'N GRuNGe]

wiegie, on 04 April 2012 - 02:47 PM, said:

A complicated answer would show that more capital goods shift out the Long-Run Aggregage Supply Curve which results in higher potential output and a long-run increase in economic growth with the potential for people to purchase even more consumption goods in the future.

A (very) simple answer says that if a nation produces a capital good (like a computer used for work) rather than a consumer good (like an HD tv) then the next year the economy will be able to produce even more of both goods.  Hence you get greater increases in output in the future than if the nation had chosen to produce the consumption good.

But the capital good only provides the means to create the consumer good and with our evolution into just in time inventory practices we don't stockpile inventory like we used to and rather it is the consumer demand which still drives production and GDP correct?

[bushwacked]

wiegie, on 04 April 2012 - 09:51 AM, said:

And as for the overall theme that the economy has hit a sweet-spot, I'm not nearly so optimistic.  Yes, things look to be on the right track, but there is no way that I would say that we are out of the woods.

I recently read that Bernanke didn't think the economy was robust enough to continue the recent job growth trend.  I see the job numbers for March weren't as good as the last three.

[Azazello1313]

the sweet spot is adding 120,000 jobs a month when we're still several million jobs in the hole from before the recession?

might want to at least reduce the font size on that "MISSION ACCOMPLISHED" banner, bushwacked.

[Ursa Majoris]

Considering what a colossal hole we were in when he started, Obama has done a good job to get us where we are now.  On top of the collapse of the banks, people have been retrenching like mad as they have finally realized their personal piggy banks (their houses) have run out of money.  This in itself has kept consumers from kickstarting the economy.  Paying down personal debt is to the long term benefit of the nation but while people are doing that, they are obviously spending less, hence the slow recovery.  Furthermore, the European situation (for which Obama can carry no blame) has slowed recovery too.

Adding 120,000 jobs a month is actually pretty damn good.

[Brentastic]

Ursa Majoris, on 06 April 2012 - 10:45 AM, said:

Considering what a colossal hole we were in when he started, Obama has done a good job to get us where we are now.  On top of the collapse of the banks, people have been retrenching like mad as they have finally realized their personal piggy banks (their houses) have run out of money.  This in itself has kept consumers from kickstarting the economy.  Paying down personal debt is to the long term benefit of the nation but while people are doing that, they are obviously spending less, hence the slow recovery.  Furthermore, the European situation (for which Obama can carry no blame) has slowed recovery too.

Adding 120,000 jobs a month is actually pretty damn good.

Not if we're losing nearly 400,000 per week AND the initial claims numbers have been revised up 56/57 prior weeks
Link

[bushwacked]

Ursa Majoris, on 06 April 2012 - 10:45 AM, said:

Considering what a colossal hole we were in when he started, Obama has done a good job to get us where we are now......
Adding 120,000 jobs a month is actually pretty damn good.

+ 1.  Of course the contigent who thinks the fed gubbment is purposely conspiring to collapse the economy will disagree.  And people like Az, who are desperate to diminish the substantial progress we've made because Obama deserves due credit for it.

[Big John]

Brentastic, on 06 April 2012 - 11:06 AM, said:

Not if we're losing nearly 400,000 per week AND the initial claims numbers have been revised up 56/57 prior weeks
Link

[Chavez]

wiegie, on 04 April 2012 - 09:51 AM, said:

The Fed has indeed dramatically increased the monetary base, but the overall money supply has not really gone off of its long-run trend.  This is because the money supply = the monetary base * the money multiplier  --  and the money multiplier dramatically decreased due to the financial crisis (as banks reduced their lending).  Once the financial system starts to get back on track, the multiplier will start to go up, which would lead to the money supply going up (which would then cause inflation to increase), but it is most likely that as the multiplier increases, the Fed will shrink the monetary base so that the overall money supply stays reasonably on trend and we don't get high inflation. (In fact, the quite low interest rates on long-term loans indicates that this is exactly what the financial markets are predicting is going to happen.)
Consumer spending does affect the economy in the short run, but long-run economic growth is associated more with investment in capital goods than it is with consumer spending.  (Although there are a lot of interaction and feedback effects in these relationships which aren't really worth going into right now.)  [I will readily admit, though, that fluctuations in consumer spending can definitely affect the economy in the short-run.]


And as for the overall theme that the economy has hit a sweet-spot, I'm not nearly so optimistic.  Yes, things look to be on the right track, but there is no way that I would say that we are out of the woods.

I gained no insight from this post.

[Ursa Majoris]

Brentastic, on 06 April 2012 - 11:06 AM, said:

Not if we're losing nearly 400,000 per week AND the initial claims numbers have been revised up 56/57 prior weeks
Link

I scanned your link (I have no idea why I bother) and it doesn't say we're losing 400,000 jobs a week.  If such was really the case, the last person in work would be leaving by the end of this year.  

[wiegie]

Brentastic, on 06 April 2012 - 11:06 AM, said:

Not if we're losing nearly 400,000 per week AND the initial claims numbers have been revised up 56/57 prior weeks
Link

please note that the 120,000 is a NET gain

[wiegie]

Chavez, on 06 April 2012 - 12:41 PM, said:

I gained no insight from this post.

I'm here to help.  

[bushwacked]

wiegie, on 06 April 2012 - 01:08 PM, said:

please note that the 120,000 is a NET gain

And here I thought anyone with a fleeting interest in the economy would realize the Bureau's lose and gain numbers were net.

[Brentastic]

wiegie, on 06 April 2012 - 01:08 PM, said:

please note that the 120,000 is a NET gain

You know, I figured that was the case but wasn't sure.  Thanks for clearing that up.

What about all the other UE peeps who have fallen out of the count?

[wiegie]

Brentastic, on 06 April 2012 - 02:42 PM, said:

What about all the other UE peeps who have fallen out of the count?

The payroll estimates (the ones that talk about net job gains) count the number of people employed by firms by surveying firms themselves.  As such, it doesn't really have the problem of people falling out of the count (that the estimates for the "unemployment rate" have).

[delusions of grandeur]

Obama Is Not a Keynesian, He's an American!

[Azazello1313]

Ursa Majoris, on 06 April 2012 - 10:45 AM, said:

  Adding 120,000 jobs a month is actually pretty damn good.

no, it's not.  in fact, it's less than the amount the economy would have to add just to keep up with population growth.  playing catch up in a "recovery" after losing 15 million jobs, it is not good at all.

[Big John]

Brentastic, on 06 April 2012 - 02:42 PM, said:

You know, I figured that was the case but wasn't sure.  Thanks for clearing that up.

What about all the other UE peeps who have fallen out of the count?

getting close

Edited by Big John, 06 April 2012 - 06:20 PM.

[Pope Flick]

Azazello1313, on 06 April 2012 - 05:58 PM, said:

no, it's not.  in fact, it's less than the amount the economy would have to add just to keep up with population growth.  playing catch up in a "recovery" after losing 15 million jobs, it is not good at all.

It certainly could be better but the inherited cluster SNICKERS shouldn't have been expected to be fixed by the first commercial break. Not when the 'loyal opposition' is too busy telling chicks to stick aspirin between their legs and little else in the realm of realism.

[bushwacked]

Azazello1313, on 06 April 2012 - 05:58 PM, said:

no, it's not.  in fact, it's less than the amount the economy would have to add just to keep up with population growth.  playing catch up in a "recovery" after losing 15 million jobs, it is not good at all.

Yet you've never once expressed skepticism, only consistent support, for the previous adminstration despite the fact we ended up with a net loss of American jobs. It seems to me, that Ursa, Pope, and Wiegie aren't claiming 200K jobs a month is "enough" more than they are noting they last 3-4 months have been the best in nearly a half decade (due to the obvious circumstances), and there is reason for optimism regarding a long term recovery.

Edited by bushwacked, 07 April 2012 - 01:18 AM.

[TimC]

wiegie, on 06 April 2012 - 01:09 PM, said:

I'm here to help.  

Help me figure out what it's like to be a big nerd?

[Avernus]

my main concern isn't the number of jobs created but exactly where the jobs are being created...are they temporary jobs? Are we talking about someone who had a maybe mediocre job working for say Vanguard and then having to work at a local retailer like Sears which is going under at the moment?

I have never been a fan of statistics even though they give you an idea of where things are, but there are intangibles in place that people are not looking at....

I'm not saying this isn't a good thing, but I would get a better idea as to what direction we are headed in if I knew where the jobs were being created...

[bushwacked]

Under Obama, the US economy has now gained back all private sector jobs lost during latter part of the Bush recession. :

http://blogs.wsj.com...ama-presidency/

At the same time 607,000  fewer people are working in the public sector.  Indisputable proof that Obama is a Socialist and he is ruining the robust economic growth experienced under the previous administration.

Discuss.