Economics

Discussion in 'Money & Finances' started by Harry Havens, Jun 29, 2017.

  1. Harry Havens

    Harry Havens Very Well-Known Member
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    The Final Q1 GDP was released this morning. The headline is 1.4% which is annualized.
    https://www.cnbc.com/2017/06/29/final-reading-on-q1-gross-domestic-product.html

    Actually the Final Q1 will be up for revision again at end of July, as are all previous "finals".

    The BEA publishes the data here...
    https://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=1&isuri=1

    Note: To get both Nominal and Real GDP, click on section 1 Domestic Product and Income.

    1.1.6. is "real" GDP, which is normally used to quantity the GDP. It is basically nominal minus inflation.
    1.1.5. is "nominal" GDP.
    1.1.1. is the percent change annualized in "real" GDP.

    We are currently in 2Q which ends this week and will be 1st report last of July. The consensus is 3.0% annualized for 2Q.
     
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  2. Harry Havens

    Harry Havens Very Well-Known Member
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  3. Harry Havens

    Harry Havens Very Well-Known Member
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  4. Harry Havens

    Harry Havens Very Well-Known Member
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    Yvonne Smith and Ina I. Wonder like this.
  5. Bill Boggs

    Bill Boggs Veteran Member
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    So what are you telling us.
     
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  6. Harry Havens

    Harry Havens Very Well-Known Member
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    If referring to the maps, they are more for reference when discussing cost of living variances.

    Here is a chart from the Census Bureau called supplemental poverty measure. Generally, when the Bureau releases their “official” poverty measures, they are based on the contiguous 48 states as having the same costs of living and then Hawaii and Alaska. However, the Bureau also has one based on cost of living

    https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-258.pdf

    In the “official” releases, New Mexico, Louisiana, Mississippi, Kentucky, etc. have the highest poverty rates in the country.

    When factoring in cost of living, the order changes. District of Columbia, California, Florida, New York, etc.

    Some might find that interesting.

    If you are referring to the GDP, etc. I just find that interesting and considering the potential impact of Federal Reserve decisions on economic growth... it provides a platform to whine and gripe debate about economic matters.
     
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  7. Bill Boggs

    Bill Boggs Veteran Member
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    However we measure the economy someone is going to complain, be unhappy, feel left out. I guess it depends on who is calling the shots. I was trying to get he gist of things, what you were saying.
     
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  8. Chrissy Cross

    Chrissy Cross Veteran Member
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    I can see California is expensive...even central. I agree!

    I think each state has its pros and cons. I know that real estate tax is lower in CA than it is in Illinois by far.

    My daughter pays almost less tax on her almost $2,000,000 home than my son does on his $500,000 one.

    And $500,000 doesn't get you much in California at all but it does in some other states.
     
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  9. Gloria Mitchell

    Gloria Mitchell Very Well-Known Member
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    I tell you what makes all places expensive...when your spouse has not had a raise of any kind for 7 years ! Because they are supposedly topped out.
     
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  10. Harry Havens

    Harry Havens Very Well-Known Member
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    GDP, DEBT, Congress And The FED.

    The BEA released its Advance Q2 GDP, as well as its annual revisions. No real great surprises regarding Q2, as it fell within expectations. However the annual revisions saw a downward revision in 6 or the previous 7 quarters. Range of -0.7% to -0.2%.

    The nominal growth is not keeping up with growth in marketable debt. The likelihood of 77.4% Debt/GDP is very real, compared to 75.68% Debt/GDP from end of last fiscal year. Marketable debt is currently growing at a 4.95% annual clip and nominal GDP grew 3.72% the past 12 months. With deficits expected to rise, the debt will continue to outpace the GDP, given current FED targets of 2% real growth and 2% inflation, or 4% nominal GDP growth target. The economy has finally achieved the 2% real growth, but is still lagging below the inflation target.

    It appears to me that Congress and the FED are not working towards the same goal. The FED is very worried about inflation accelerating beyond its stated 2% target and appears willing to increase rates, as well as unwinding of QE. The Congress seems hamstrung to either reduce spending or increase taxes (or both) to slow down the rate of growth in the debt. At a minimum additional infrastructure spending tied directly to tax increases is about the only tool left in the fiscal basket, unless the FED were to suddenly reverse direction and accept a higher inflation target (4%) on the monetary side. I have a better chance of winning the lottery, imo.

    I am not sure how this could possibly end well.
     
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  11. Harry Havens

    Harry Havens Very Well-Known Member
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    Something to chew on in banking. The unofficial problem bank list, from CalculatedRiskBlog.com. The unofficial list was nearly 1,000 at the height of the recession and fell by 3 last month to 134. The total assets of the 134 banks is $32.8B.
     
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  12. Harry Havens

    Harry Havens Very Well-Known Member
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    Fewer Immigrants Mean More Jobs? Not So, Economists Say
    The article would have you believe that farmer's just started buying machinery to replace Mexican workers, which is mostly true... but was done with labor costs in mind. Cheap Mexican labor provided a smaller picking cost per unit than mechanical. Raising wages to attract American workforce would have exceeded the picking cost per unit of mechanical.

    That is exactly what has taken place across the width and breadth of American industry. Robots were not introduced into the auto industry due to lack of labor, but rather the high cost of that labor per unit.

    Proponents of raising minimum wages need to understand those increased costs in a cost competitive world. Increasing wage costs of jobs that can exceed costs of automation, guarantees those jobs will become automated. The notion of passing those added labor costs along to the customer in a competitive world is nonsense. Americans have shown resistance to higher costs by purchasing cheaper made foreign goods.

    In jobs that cannot be automated, wage hikes would be beneficial and would be passed on to customers.

    Is it too much to ask for consistency amongst economists when evaluating jobs and wages?
     
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  13. Harry Havens

    Harry Havens Very Well-Known Member
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    Gross Domestic Product: Second Quarter 2017 (Second Estimate)

    The release of the 2nd estimate was yesterday, but this is for the April~June period, so it is kind of old news in a way. Considering nearly 70% of GDP is brought about by consumers, their confidence in the economy is very important. 3rd quarter performance (our current quarter) is now up for possible headwinds, even though the consensus currently stands at 2.7%.

    For every optimistic outlook, there are numerous obstacles that loom. Consumers with confidence can help overcome these obstacles, but that same consumer will be bombarded with Harvey related information for months to come, imo. No doubt, there will be suffering for a long time, but that suffering will be amplified due to a liberal media bias, Trump presidency, Red State Texas, FEMA and a potential cutoff of national flood insurance, climate change and dirty oil, etc. If you think none of this will happen, then you haven't been reading, as it has already taken place and will gain traction, imo.
     
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  14. Harry Havens

    Harry Havens Very Well-Known Member
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    Bard Setser's "A Few Words on the Dollar".
    Nearly every economy on the planet has benefited with a strong dollar, except the U.S. Certainly a weaker dollar would cause inflation's ugly head to rise, but a return to historical inflation norms of 4.0% (1950~2000), is necessary if the U.S. is to survive its uncontrolled fiscal policy at a time when the monetary policy chiefs are advocating tightening.
     
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  15. Harry Havens

    Harry Havens Very Well-Known Member
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    The Census Bureau has published the latest Supplemental Poverty Measure through 2016. It differs from the popularly published Standard Poverty Measure, as it is adjusted for cost of living in each state. As such the povery measure rises from the standard model of 13.7% to 14.7% in the Supplemental. The PDF file.
    upload_2017-9-26_10-31-54.png

    The result in the rankings...
    upload_2017-9-26_10-49-33.png


    There moves afoot to raise the minimum wage in several states and should be lauded for their efforts. However, raising wages would also raise the cost of living. Considering the rigidity of national programs for the poverty stricken, simply raising wages could be detrimental to those already in poverty on the the standard model.
     
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  16. Bill Boggs

    Bill Boggs Veteran Member
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    Seems like a vicious circle to me. I used to pay some attention when I was working and a good economy meant more to me. Since I've retired and can't and must go with the flow and know or feeling that the Congress does not care or is smart enough enough to know or understand these forces at work, I blow it off., let come what may or let it snow, let it snow, or not.
     
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  17. Harry Havens

    Harry Havens Very Well-Known Member
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    The 3rd estimate of 2Q, 2017 GDP is released. The 2nd quarter was revised to 3.1% annualized in real dollars (2009 dollars).

    In real dollar terms the economy has grown 2.23% from same period of last year. In nominal terms, the GDP has grown 3.84%. Nominal is important when considering national debt. In the current fiscal year, the marketable national debt has risen 3.24% and overall national debt 3.2%. Thus far the economy is barely outpacing the rise in national debt. (Data for fiscal year is through 9-26, with 3 more days to be added).
     
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  18. Harry Havens

    Harry Havens Very Well-Known Member
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    Gross Domestic Product: Third Quarter 2017 (Advance Estimate)

     
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  19. Harry Havens

    Harry Havens Very Well-Known Member
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    The latest month's inflation information has been published by the BLS.
    The unadjusted index showed a slight decrease, although the "core" was up an unadjusted 3.3% on an annualized basis. The latter is playing with fire, imo.
     
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  20. Harry Havens

    Harry Havens Very Well-Known Member
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    I'm a couple of days late, but November's CPI is available for viewing.

    upload_2017-12-15_11-40-36.png
    I always compare my results to the CPI. For the year, I came in under the CPI, but property taxes edged up, as well as homeowner and vehicle insurance. Thankfully, not as much on the vehicle insurance as the CPI listed. 8% over the last year!! Of course my homeowner's insurance went up, but the CPI has it going down. As for property taxes... short of downsizing to a tent, when have they ever gone down?
     
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  21. Harry Havens

    Harry Havens Very Well-Known Member
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    There is no doubt that interest rates on the U.S. debt is rising and has been for the past 3 years. On top of that the national debt is rising rapidly and now outpacing growth in nominal GDP. That means the debt to GDP ratio is also rising. The national debt is already $1.3T above the year ago level. The interest rates have been slowly rising, which is in large part to the European Central Bank's cold feet, regarding tapering bond purchases and lifting interest rates, as well as an abundance of zombie companies and internal EU problems. It keeps the demand for U.S. debt in play and keeps the rates from rising rapidly.

    So a hearty thank you to the EU and the ECB.
    U.S. debt over the years....
    upload_2018-6-5_18-51-12.png
     
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  22. Thomas Stearn

    Thomas Stearn Well-Known Member
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    Then it sounds like the US is dependent on the EU and not the other way around? Europe sneezes and the US catch a cold?
    Analysts over here don't get tired of pointing at the writing on the wall and have anxiously been waiting for the Fed to raise interest rates further. Even if the ECB would not have to follow suit immediately, when it does, it will make life for the debtor countries in southern Europe much more difficult in the long run. On the other hand, savers, who are partly having to pay penalty interest on their savings, would feel relieved as they have been suffering from that unexpected and cold expropriation or "financial repression" as they subtly put it. Financing models of lots of retirees have collapsed.
    Do American savers actually have to pay penalty interest?
    A debt-to-GDP ratio of 104% is considerable compared to euro zone's 87 percent (Greece 182, Italy 132). The US will, however, be in a better position to cope with it given that they can rely on its own currency and a huge domestic market.
     
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  23. Bill Boggs

    Bill Boggs Veteran Member
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    I was not/am not good at economics. Don't understand all those charts. All I can do is reconcile my checkbook/bank statement and live on what I make with little or no dept.
     
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  24. Don Alaska

    Don Alaska Very Well-Known Member
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    It is so sad to watch this happen. Congress now spends without much regard to income. That is why they pass "spending bills" instead of budgets...and most of the "laws" are made in the Executive Branch.
     
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  25. Harry Havens

    Harry Havens Very Well-Known Member
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    If I were to study your financial dealings, it would be called a study of microeconomics. You may know more about economics than you realize.
     
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