Blogs » Politcs Plus » Is Your favorite Economist Better Than Mine?



The person(s) that says that they know how to fix our economy is just trying to pull a fast one. I would like to start by quoting Ben Smith of Politico when he said, “don't like economy we have? Just wait a day and you'll get a new one." The forecasters remind me of the office gossip who impatiently waits for a juicy bit of information to which they can then base a year’s worth of predictions on. Some of them will go back to 1929, 1938, or 1987 to find "cherry picked" data and then compare them to today's economic conditions.

Ben Smith said, "One day, gross domestic product is growing at a dismal 2.2%. The next-day manufacturing is at a -10 month high. Jobless claims are up again. That's not good but maybe it's just a quirk of the warm weather? Warmer weather?

Daniel Gross of Newsweek magazine said that March 2009 marked the beginning of an unexpected recovery and not the beginning of an era of irreversible stagnation. The U.S. economy went from shrinking at a 6.7% annual in the first quarter of 2009 and expanded at a 3.8 % annual rate in the four quarter of the same year-a turnaround unprecedented in modern history. In that time, the stock market has doubled, and corporate profits and export have surged to record highs.

The economy is not great by any means, but we are in a global economy, so if we are graded on a curve, we would then get an "A" because of our natural competitive advantages and capabilities. Contrary to the declinist's view, growth has not been a zero -sum game. America is the still the largest, richest, more secure market in the world, and we have a vast amount of natural resources. Other countries are able to see this, and that's why we continued to lead the world in Foreign Direct Investment (FDI). In 2010 our FDI was $194.5 billion up from $135 billion in 2009. Through the first three-quarters of 2011, our FDI was $155 billion.

It only took us 18 months to conduct our aggressive fiscal and monetary actions compare that to Japan, who waited 12 years to carry out theirs, after their credit bubble burst. U.S. companies quickly moved to reconstruct operations and debt. Business bankruptcy filings went from 28,322 in 2007 to 60,000 in 2009. We didn't throw in the towel, and pretax corporate profits rose from $1.25 trillion in 2008 to 1.94 trillion dollars in 2011. Did excessive regulations, higher taxes, and negative press hinder the multinational corporations? I don't think so, but it wasn't easy for the corporations because their employees worked longer hours to curtail the need for new hires, they cut back on the use of paper clips, started printing on both sides of the paper and canceled their magazines and newspaper subscriptions to make ends meet.

The pessimists continue to tell us that we just don't make anything anymore, but we still export $180 billion worth of goods every month. Protectionists continue to overlook the previous fact or don't realize that 43.6% of our revenues come from outside the United States. We cannot discount the fact that in the 3rd quarter of 2011, GM sold 620,000 vehicles in China compared to 550,000 in the United States which keeps that industry alive for American workers.

The job and housing markets are interconnected, and both are at a standstill. In the last quarter, it was due in large part to job losses in the public sector. The austerity minded state governments have balanced their budgets now, so the public job losses have come to a halt.We'll see the impact of those job cuts because a consumer is a consumer no matter where they punch in.. Tomorrow's jobs numbers reports are expected to fall short, but they will give us another piece of data to base predictions on.

We can look at numbers and forecast all day long, but like a good baseball coach will tell you; it’s all about the fundamentals. It's all about education because that's where our future lies. It's all about making sure that our first graders get enough sleep, eat the right food, and exercise, so they can all absorb the fundamentals equally. The costs of those building blocks cannot be evaluated by the CBO or your favorite economist. That's not saying that looking for ways to bring down the debt or implementing responsible fiscal policies aren’t important but we must continue to do more than one thing. We're perfectly capable of multitasking.

Most of this information came from Monday's weekly edition of a Time magazine article titled “America is Winning- and Why" by Daniel Gross. but as always,I sprinkled my thoughts here and there...:-)