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Tilting at Windmills

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January 6, 2006
By: Kevin Drum

ECONOMIC NEWS....This is a couple of weeks old, but I'm just getting around to it now. If you want to know why the economy feels kind of lousy even though the nation's journalists keep telling us everything is peachy, EPI explains it all here.

The short answer is that although the headline numbers of growth and productivity are healthy, this growth isn't benefiting actual workers: hourly wages are down, household income is down, debt is at historic highs, the personal savings rate is now negative, job creation is sluggish, poverty is up, and the number of people without health insurance is rising.

So how come those numbers so seldom end up in the headlines?

Kevin Drum 2:20 PM Permalink | Trackbacks | Comments (75)

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Comments

Kevin,

Stop trashing the media. You & Atrios seek to destroy the media.

-Joe

Posted by: Joe Loserman on January 6, 2006 at 2:25 PM | PERMALINK

Because the media pundits who set the agenda for reporters and their editors are wealthy. These trends don't resonate with them, because they are doing very well, thank you.

The pundits are the cool kids. They don't think it's cool to talk about this stuff. So no one does (except those annoying liberals. And socialists).

Posted by: theorajones on January 6, 2006 at 2:30 PM | PERMALINK

Why, you ask? Because the US press is LAZY and poorly educated on these matters. There is no difference between this and the stenography of Bush's WMD claims prior to the Iraq debacle.

One can only hope that as press-room downsizing advances, the press will finally have some practical exposure to economics.

Posted by: SavageView on January 6, 2006 at 2:30 PM | PERMALINK

Ok, I was joking with the last one.

http://www.thenewstribune.com/news/local/story/5440902p-4912739c.html

I live in Ohio. I know one other person who is a registered Democrat - we're the only 2 people I know
that have gotten letters from the IRS pointing out minor oversights in our previous tax returns. While I'm more than happy to fork over the sum total of $100 in tax return mistakes on my part I think it's pretty fishy.

Given that the IRS was recently used to threaten a church that opposed the war and that it's also been used to target recipients of the EITC I don't see why Republicans wouldn't use it to run audits on people who don't support them.

Please - call upon the blogosphere to focus attention on this matter.

-Joe Loserman

Posted by: Joe Loserman on January 6, 2006 at 2:31 PM | PERMALINK

job creation is sluggish

yet jobs are being created at a rate exceeding that promised by John Kerry in his 2004 campaign.

Posted by: contentious on January 6, 2006 at 2:32 PM | PERMALINK

The short answer is that although the headline numbers of growth and productivity are healthy, this growth isn't benefiting actual workers:

Actually it is helping workers. Read the following analysis.

http://www.whitehouse.gov/news/releases/2006/01/20060106.html

"Economic Growth Continues - Unemployment Falls Below 5 Percent

Today, The Unemployment Rate Fell Below 5 Percent. The unemployment rate fell to 4.9 percent - lower than the average of the 1970s, 1980s, and 1990s. 108,000 jobs were created in December, and revisions to previous months added 71,000 jobs. The economy has created more than 400,000 jobs over the last two months, over 2 million jobs over the past 12 months, and over 4.6 million since May 2003. "

Posted by: Al on January 6, 2006 at 2:33 PM | PERMALINK


But the reason the press doesn't get this isn't partisan.

Take a look at Slate -why on earth would they publish Henry Blodget?

Or CNBC - why do they have Jim Cramer on there? His Hedge Fund used CNBC to pump and dump stocks.
Now they've given him a full hour a day.

It's just greed, incompetence, sensationalism mixed up with cronyism. It's a little click and if you're in you're in.

The upper class is doing fine. Most of them are still high on the hog from flipping a home or living it up off of a home equity loan.

When they feel the pinch - it'll get reported.

-Joe

Posted by: Joe Loserman on January 6, 2006 at 2:34 PM | PERMALINK

The reason for this is clear:

It's bedrock evidence that Bush's fiscal policies have benefitted the wealthy at the expense of the workers ...

CORPORATIONS are doing much better ... but that wealth isn't being redistributed to employees. For them, the economy is bad.

The other thing that's still glossed in economic reporting is that we don't have a national economy -- we have regional economies, and local economies, and a national unemployment rate does not tell you that in some places like D.C., the economy is overheated and in some places it's moribund ..

Michigan continues to bleed jobs while D.C. adds jobs -- and attracts new population for those jobs, which pushes up the cost of housing.

Posted by: Harpo on January 6, 2006 at 2:36 PM | PERMALINK

I remember reading somewhere that a larger than usual (or healthy) fraction of the economic "growth" the U.S. is experiencing is based on debt. That is, people are buying things on credit and that artificially makes the numbers look better than they are. Hence the negative savings.

To me, this seems like Enron accounting on a national scale. Then again, I'm not an economist.

Posted by: gq on January 6, 2006 at 2:37 PM | PERMALINK

Robert Reich nails it here.

Posted by: Ryan at The Higher Pie on January 6, 2006 at 2:39 PM | PERMALINK

Stop trashing the media. You & Atrios seek to destroy the media.

I think both Kevin and Atrios have made it clear that they aren't trying to undermine the media. Heck, a huge percentage of there links are to "mainstream media".

Posted by: gq on January 6, 2006 at 2:44 PM | PERMALINK

Can anybody help Al and tell him why those jobs where created in Nov. and Dec. (Hint Christmas)

Posted by: scott on January 6, 2006 at 2:47 PM | PERMALINK

"More than 3 million manufacturing jobs have been lost since January 2000."

Well yeah but thats because we are allowing companys to out source so many jobs to foreign countrys. Thats all a part of this "one world order" you Libs love so much. (Assumed)

Posted by: Lurker42 on January 6, 2006 at 2:47 PM | PERMALINK

Look at the faces of the folks in McDonalds and Burger King and the drivers of the taxi cabs.

They never had it better.

Posted by: lib on January 6, 2006 at 2:49 PM | PERMALINK

Reich, as usual, is largely wrong. He asks for honesty yet despite the numbers there in front of him, he wont find space to tell us how many times in the past 60 years medium wages have stagnated as the GDP/capita rises. He also says there is nothing to cheer about unless you are in the top 20%. Yet he must know that the lag will soon yield and wages will start to climb.

Not that you expect Reich who so blatently lied in his book....

Posted by: remo wiliams on January 6, 2006 at 2:49 PM | PERMALINK

Actually it is helping workers. Read the following analysis. AI you are badly confused, that isnt "analysis" as much as "public relations."

Try this for "analysis:"

The numbers provided are nearly meaningless without context and real analysis. The historic comparisons decades ago for employment rates are a lot less relevant than the employment rate in 1999 in measuring progress over the past 5 years - unfortunately we have lost ground even if employment rate is better than it was 30 years ago.

108,000 jobs were created in December
That might sound like a lot to you put its pathetic and anemic and doest keep up with population growth.

Analysts say the economy needs to create about 150,000 new jobs a month to keep pace with population growth. Bush is the first president since the Great Depression to end a term with a jobs deficit.

The other implication is that job growth this year, the fourth year of expansion, will not match past standards. For example, in the fourth year after the 1990-91 recession, job growth averaged 306,000 per month. That pace is a pipe dream for 2005.
....
The labor force participation rate has fallen from 67.3% in early 2000 to 65.8% in January, the lowest in more than 16 years. Had that rate not dipped as much, the jobless rate would be much higher.

Posted by: Catch 22 on January 6, 2006 at 2:49 PM | PERMALINK

contentious: yet jobs are being created at a rate exceeding that promised by John Kerry in his 2004 campaign.

how does it stack up against gwb's promise in the sotu speech of 7-million jobs will be created if you give me more tax cuts?.....

3-years later.....and he's still short

Posted by: thisspaceavailable on January 6, 2006 at 2:52 PM | PERMALINK

yet jobs are being created at a rate exceeding that promised by John Kerry in his 2004 campaign

and considerably less than Bush promised.

By the way, how high is that federal debt ?

Posted by: Stephen on January 6, 2006 at 2:57 PM | PERMALINK

white house: The unemployment rate fell to 4.9 percent - lower than the average of the 1970s, 1980s, and 1990s.

despite that....it is still higher than the lowest rate found in the year before bush entered the white house...

go figure...

Posted by: thisspaceavailable on January 6, 2006 at 2:59 PM | PERMALINK


white house: The economy has created more than 400,000 jobs over the last two months, over 2 million jobs over the past 12 months, and over 4.6 million since May 2003.

despite that.....

its still below what the president said his tax cuts would deliver...

such a flip-flopper


Posted by: thisspaceavailable on January 6, 2006 at 3:02 PM | PERMALINK

Remo,

You write: "Reich, as usual, is largely wrong." but you completely fail to deliver and in fact show zero that he was actually wrong about.

"tell us how many times in the past 60 years medium wages have stagnated as the GDP/capita rises" If you know he is "wrong" why dont you tell us? He says its "rare," is he wrong? How many times in the last 60 years has median income declined 4 years straight after the end of a recession? Heck, how many times has it happened 3 years in row?

Yet he must know that the lag will soon yield and wages will start to climb. Your future predicition is hardly reason for cheer is it? When exactly is this going to happen and when will it be enough to erase the decline in the median wage in the meantime and return the median back to the historical average. When will it be time to cheer? Would returing to the average amount be suffient to cheer and when wiil that finally happen?

Posted by: Catch 22 on January 6, 2006 at 3:03 PM | PERMALINK

>Because the US press is LAZY and poorly educated on these matters

True, but there is also a lot of pressure to Don't Worry, Be Happy!! For all the blather about "efficient markets" and that Chicago School shit, they are well aware that a economy 70% driven by consumers is very susceptible to people's mood swings.

I mean as far as I've been able to determine, we are the only country in the world that *has*, let alone takes seriously, the "Consumer Confidence Index". What kind of crap science worrys about "how people feel", I ask you?

Well, with that underlying theme do you want to be the major media figure whose truth-telling knocks the Dow down?

Hey Al, look closer. The unemployment rate is falling because the "looking for jobs" number has fallen. The overall rate of workforce participation is down, down, down. And please also enlighten your little conservative heart on how many of the jobs were "created" by the economy, as the blurb shamefully implies, and how many were created by Bush's Big-Ass Government.

Posted by: doesn't matter on January 6, 2006 at 3:03 PM | PERMALINK


KEVIN DRUM: The short answer is that although the headline numbers of growth and productivity are healthy, this growth isn't benefiting actual workers . . . So how come those numbers so seldom end up in the headlines?

Because pundits who are purportedly on the left give a "short answer" to such matters, while devoting lengthy columns to giving "credit where credit is due" to Bush's "progress," whether it's in Iraq or domestically.

This is a throwaway post for you. You give the appearance of being for greater equality and fairness, even as you express no outrage nor point any accusing fingers yourself. Instead you allow your readers to rant as you pull back from the messy battlefield of "class warfare," lest you be accused of it. Serves the purposes rather nicely of not ruffling any feathers and keeping your options open, doesn't it?


Posted by: jayarbee on January 6, 2006 at 3:04 PM | PERMALINK

remo: He also says there is nothing to cheer about unless you are in the top 20%. Yet he must know that the lag will soon yield and wages will start to climb.

Not that you expect Reich who so blatently lied in his book....


sooooo

reich in your view lied, because you say the yield which hasnt apparently happened yet...

will

someday?

but not yet?

who says dead enders dont have a sense of humor?

Posted by: thisspaceavailable on January 6, 2006 at 3:06 PM | PERMALINK

"This is a throwaway post for you."


Rwwwroar!!! This cat has claws!!!

Posted by: booger on January 6, 2006 at 3:09 PM | PERMALINK

Here's a chart on Bush's job growth
Clinton's record:
1993 2,785
1994 3,853
1995 2,154
1996 2,793
1997 3,358
1998 3,003
1999 3,172
2000 1,948
No matter how much Bush's sh*t stinks, his minions will insist it smells like perfume.

What do you think this news will do to the price of oil and the US economy?
Peak oil in Kuwait
Kuwait's biggest field starts to run out of oil
By Peter J. Cooper
KUWAIT: It was an incredible revelation last week that the second largest oil field in the world is exhausted and past its peak output. Yet that is what the Kuwait Oil Company revealed about its Burgan field. The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al-Zanki told Bloomberg. He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate. Kuwait will now spend some $3 million a year for the next year to boost output and exports from other fields.
However, it is surely a landmark moment when the world's second largest oil field begins to run dry. For Burgan has been pumping oil for almost 60 years and accounts for more than half of Kuwait's proven oil reserves. This is also not what forecasters are currently assuming.

Posted by: Mike on January 6, 2006 at 3:10 PM | PERMALINK

Is there a difference between a $5.00/Hr job and a $18.00 job, when it comes to the unemployment rate. Does it make sense that all those manufacturing jobs that's been lost that were paying good wages, are now substituted for twice as many not-so-good paying jobs. Would the unemployment rate drop? Could we compare actual or averaged hours worked per week in the country, and compare the numbers, say between 2000 and 2005? Could it be that people that lost those good paying jobs are now having to work two or more jobs to maintain their standard of living? Does anyone know if this information is available? Please excuse my ignorance.

Posted by: DA on January 6, 2006 at 3:10 PM | PERMALINK

Yeah, sure, you lost your $18.00 an hour job at the plant, but if you could somehow work everyone of those 4.3 million new jobs created since 2003, you could be making (excuse my rough calculations) about $21,500,000 an hour. PLUS, now that you're making twenty one million dollars an hour, that "tax cut for the rich" suddenly looks a lot more appealing. Everybody wins!!! It's the free market!!! God bless The Invisible Hand!!!

Posted by: booger on January 6, 2006 at 3:16 PM | PERMALINK

Kevin,

I hope you have recovered from the USC loss. I'm still on cloud nine after my UT came through.

Posted by: Rocky on January 6, 2006 at 3:18 PM | PERMALINK

No way - Rich Lowry and the NRO say that times have never been better. Rush confirms it and says that Bush and Reagan should both be on Mt Rushmore for creating more jobs than anyone in the history of the universe, except for that one Klingon administration, which Spock helped destroy.
The only people who aren't making it are those guys sitting on bar stools six nights a week
Why here in West Chester, we are all rolling in do-re-me.
Bush rocks!!! Plenty of Belgian Brew down here at Stonewall-Moose for me.

Posted by: ReallyDenseWitless on January 6, 2006 at 3:20 PM | PERMALINK

Like almost everyone, I naturally root for heroes: Moses, the Civil Rights Movement, Harry Potter, etc. These are heroes (and heroic movements) that I naturally sink my teeth into and root for.

The media is our national story teller and today they have picked a ridiculous hero: "the economy." To put it simply, the economy sucks as a hero. It's dull and uninteresting.

In fact, the next time you want to read a bedtime story to your kid, try starting off with "once upon a time there was a little boy named 'the economy.' And just like Harry Potter and Frodo, this little boy was an orphan. But not because his parents were killed! Oh no. He didn't have parents. In fact, he didn't really exist. And whenever he had a good day it didn't have an affect on any one who needed help."

That's a lousy story.

But the fact that the media chose the economy as today's hero further reveals how they constantly fail in fulfilling their role of national story teller. They are not in touch with the lives of real people.

Any one who walks in North Philadelphia and has honest discussions with residents there can tell you that this supposed rise in the economy is a farce. And Christian fundamentalists? You guys ought to check out how the abortion rates rise with the poverty rates. Believe me, you'll get a real kick out of it. Katrina was supposed to expose what a farce it is to ignore the lives of people facing urban poverty. But I still haven't seen s**t.

As long as the media continues to tell us "bed time stories" about heroes called "the economy" they are not only helping to create an environment conducive to economic apartheid, they are also creating a a stupid, boring, sucky story.

So come on media! Step up to the plate and become the story tellers that you were born to be!

Posted by: Andrew Slack on January 6, 2006 at 3:25 PM | PERMALINK

God bless The Invisible Hand

and the Job it bestoweth upon the faithful...

Posted by: cleek on January 6, 2006 at 3:26 PM | PERMALINK

Making the economy look crappy is getting harder every month, isn't it?

Posted by: tbrosz on January 6, 2006 at 3:28 PM | PERMALINK

By adopting economic policies that target the top 20%, Bush is encouraging everyone to become rich and join the top 20th percentile. Democrats probably want everyone to live in poverty on welfare in the bottom 20th percentile. When everyone is on top, we'll all be rich.

Posted by: Grover on January 6, 2006 at 3:32 PM | PERMALINK

Kevin,

At about 2 PM today it came over the wire that China is going to "diversify" its foreign investment portfolio (away from US Treasuries). The dollar then took a huge fall against the yen and euro. If the Chinese are serious, this means increased interest rates, lower stock prices, and lower economic growth outside of export-driven industries.

Posted by: Greg in FL on January 6, 2006 at 3:33 PM | PERMALINK

"When everyone is on top, we'll all be rich."

I'm running for the Republican nomination with that slogan.

Posted by: booger on January 6, 2006 at 3:43 PM | PERMALINK

I'm simply rewarding My faithful, and punishing those who do not worship money, as they so richly deserve.

So if my prophets in the MSM sing my praises, who are you to complain? Go ahead and complain. I'll smite you more.

Posted by: Mammon on January 6, 2006 at 3:45 PM | PERMALINK

No one needs to even try to make the economy look crappy. Whatever is not bad about the economy is the housing bubble due to low interest rates.

The only way to make it look good is to use the Bush bottom as the baseline. Only the wingnuts are familiar with the Bush bottom.

Posted by: lib on January 6, 2006 at 3:49 PM | PERMALINK

At about 2 PM today it came over the wire that China is going to "diversify" its foreign investment portfolio (away from US Treasuries). The dollar then took a huge fall against the yen and euro. If the Chinese are serious, this means increased interest rates, lower stock prices, and lower economic growth outside of export-driven industries.

It may instead mean increased US exports, and quicker job growth, as foreign consumers satisfy their appetite for newly affordable American products. It may eventually mean higher mortgage rates, but that's unlikely to create many problems beyond the 1/3 of the country that sends Democrats to office. Texas should do just fine. Oh, and the Dow hit a four year high on the news. So much for "lower stock prices". I personally think a lower dollar is exactly what the doctor ordered for our debt-laden economy, provided it doesn't become a freefall. Given the uncertain world in which we live, I suspect America's value as a haven will prevent a freefall from happening. Sooner or later foreigners will eye American assets and sense a buying opportunity, and so the wonderful self-correcting mechanisms that characterize capitalism will play their usual role.

Posted by: Jimmi on January 6, 2006 at 3:57 PM | PERMALINK

Kash & I over at Angrybear were disappointed with the job growth annoucement from BLS - and check out Mark Thoma's followup. But then read the sunny view from NRO's Michael Darda. After all - Bush says our economy is the envy of the whole world. Hey who cares if your real income is falling as long as the President and his minions can spin this kind of fake sunshine.

Posted by: pgl on January 6, 2006 at 4:05 PM | PERMALINK

Its a war economy which in my mind does not trickle down to joe six pack or Merlot Mike. I don't think the GOP understands anything but a war economy. The 1998 bomb was an innovation economy and corps felt left out if they didn't hire and get into the game.

The rich get richer and the poor get the picture.

I'm not hurting, but I'm not thriving either. But the corp I work for just bought another jet.

Posted by: the fake Fake Al on January 6, 2006 at 4:13 PM | PERMALINK
Making the economy look crappy is getting harder every month, isn't it? Posted by: tbrosz
Nope, to repeat: No matter how much Bush's sh*t stinks, his minions will insist it smells like perfume. Posted by: Mike on January 6, 2006 at 4:17 PM | PERMALINK

Jimmi,

I know you're just joking.

Of course lower stock prices are not to be expected immediately, but when the Fed is forced to surprisingly raise rates. The recent stock market euphoria has a lot to do with anticipation that the Fed is done with it's long series of incremental rate increases. Oh, and notice I qualified myself about growth by saying "outside of export-driven industries".

I agree that there probably won't be a "freefall", but not for the reasons you give. The fact is that China can't afford to let it's currency get too strong against the dollar, lest it's export-oriented job creation suddenly stop. So it will be judicious when it diversifies away from buying our debt.

And, I don't buy into the "wonderful" and "self-correcting" aspects of capitalism. Unfettered capitalism has a history of bubbles, boom-bust cycles and huge dislocations. Talk to an old-timer about the 1930's, if you are lucky enough to have access to someone who can remember those days.

Posted by: Greg in FL on January 6, 2006 at 4:18 PM | PERMALINK

tbrosz: Making the economy look crappy is getting harder every month, isn't it?

No, not really.

That's the difference between the reality-based living of the liberal world and the faith-based living of the conservative world.

Just because you clap real hard, squeeze your eyes shut, dream about it, and spout nonsense on a blog comment page won't create the good economic news you wish existed.

Posted by: Advocate for God on January 6, 2006 at 4:51 PM | PERMALINK

"In 2005, the American economy turned in a performance that is the envy of the industrialized world."

- President Bush, today

What still has the ability to surprise me, on occasion, is not that Bush exaggerates the facts. You expect that from a politician. It's that he distorts reality to such a degree that no sane person would dare quibble with his opinion -- it is so outlandish, so far outside the accepted opinion of nearly all experts, that you can only stand back, shake your head, and wonder what could make a man (and not just any man, but the leader of our country) say such a thing. The combination of failed judgment, lack of interest with the facts, and utter shamelessness is truly mind-boggling.

Posted by: JJF on January 6, 2006 at 6:12 PM | PERMALINK

Advocate for God: That's the difference between the reality-based living of the liberal world and the faith-based living of the conservative world.

That statement and your net name inspired this rewrite.

Old version: In God We Trust, all others pay cash.

New version: In God we have Faith, all others provide evidence.

Posted by: alex on January 6, 2006 at 6:20 PM | PERMALINK

morw news here: http://news.bbc.co.uk/2/hi/business/4589568.stm


job creation for November (revised) and December (unrevised) totaled 415,000, about equal to the overall rate of 2.5 million per year.

Posted by: contentious on January 6, 2006 at 6:21 PM | PERMALINK

Greg in FL,

I have to agree with Jimmi that a falling (but not free falling) dollar would be a good thing. I'm a little puzzled though by his assertion that higher interest rates would hurt Democratic ARM holders more than Republican ones.

Unfettered capitalism has a history of bubbles, boom-bust cycles and huge dislocations.

It certainly does, although the overvalued dollar is a matter of central banks (especially China's) manipulating the currency market rather than a "free" market phenomenon.

Bush's failure to address this is his biggest economic screwup. Moreover, China diversifying its assets won't make the buck fall against the yuan, since the yuan is still basically pegged. Don't hold your breath waiting for Bush to do anything about that either.

We're in a housing/consumption bubble right now, and ran about a 6.5% trade (current account) deficit in 2005. The sooner the bubble starts to deflate the better. Painful now, but more painful the longer you wait.

Posted by: alex on January 6, 2006 at 6:34 PM | PERMALINK

The US budget deficit shrank to $319bn (180bn) last year as better economic conditions boosted tax revenues.

That was October (one of the stories on the BBC web page op cite.) that is about 2.6% of GDP. Taking into account state surpluses, government debt is about 2% of GDP. that's the annual deficit, not the total. It's a smaller fraction of GDP than most of the developed world. Even China runs a government deficit.

If China diversifies away from American investments, what do you think they'll buy? Probably Sudanese and Zimbabwean assets.

As I wrote a couple days ago, total construction is at an all-time high in the US, despite a decrease in housing starts over the last couple months. the building of new infrastructure, including roads, has never been more robust. That wuilding will continue throughout the next year (including the 2006 election), so the federal deficit will probably continue to benefit from rising tax collections consequential on the total economic benefits of the construction.

It's really a waste of time to read a few economic statistics, you have to read masses of them all the time.

The US economy "feels bad" because we suffer more and more from Chinese competition. Unless Chinese companies start to pay higher salaries, better benefits, and start to clean up their effluents better, this "feeling bad" is likely to continue. Plus US oil companies are constrained from buying oil in Sudan and SE Asia whereas the Chinese oil companies are not; as the recent disaster reminds us, the US coal companies have higher health and safety costs than the Chinese coal companies. I am not complaining that American standards are too high, but they do have costs to the US companies that compete against the Chinese companies.

Posted by: contentious on January 6, 2006 at 6:41 PM | PERMALINK

more from the BBC:

quote

Meanwhile, the Institute for Supply Management's services index rose to 59.8 in December from 58.5 in November.

It was the 33rd consecutive month of expansion in the sector, which makes up around 80% of US economic activity.

The increase beat analyst forecasts that the ISM index would rise to 59 - a figure above 50 indicates expansion while one below signals contraction.

Experts pointed to a fall in the survey's prices-paid index to 69.5 from 74.2 - mainly as a result of falling fuel prices - as one of the major factors behind the increase.

"The overall indication in December is continued economic growth in the non-manufacturing sector with a cautiously optimistic outlook as we enter 2006," Ralph G Kauffman, head of the ISM's survey committee added in a statement.


Elsewhere, there was also good news on the jobs front as first-time jobless claims fell by 35,000 last week to 291,000 - the lowest level in more than five years.

unquote

Posted by: contentious on January 6, 2006 at 6:45 PM | PERMALINK

contentious: The US economy "feels bad" because we suffer more and more from Chinese competition.

That's not the only reason, but it's a biggie. Also, China is not our only trade problem, but they are the 600 lb. panda bear.

So when is Bush going to address Chinese currency manipulation?

Posted by: alex on January 6, 2006 at 6:47 PM | PERMALINK

I have to agree with Jimmi that a falling (but not free falling) dollar would be a good thing. I'm a little puzzled though by his assertion that higher interest rates would hurt Democratic ARM holders more than Republican ones.

Blue state residents are much more likely to be carrying gargantuan mortgages, and are much more likely to be pushing the envelope of safe debt ratios. Check out the figures for housing expenditures as a percentage of income, and you'll find they corellate preatly neatly with Kerry's margin of victory on a state-by-state basis. I actually wasn't even commenting on ARMs, though, what I had in mind was the effect of increasing rates on real estate values. It's hard to argue against the proposition that Bostonians and San Diegans are in rikier territory in this regard than Topekans and Wacoites.

Posted by: Jimmi on January 6, 2006 at 6:54 PM | PERMALINK

Jimmi: It's hard to argue against the proposition that Bostonians and San Diegans are in rikier territory in this regard than Topekans and Wacoites.

That's probably why I didn't argue against it. However, your reference to how this correlates to voting patterns is an odd attempt to equate correlation with causation.

Posted by: alex on January 6, 2006 at 7:00 PM | PERMALINK

It would be interesting to get ones hands on all that cool profiling data the political parties must have, especially the republicans (with thier closer alliance to choicepoint, etc).

Posted by: jefff on January 6, 2006 at 8:07 PM | PERMALINK

Thisspace,

What happened last year or in the 90's isn't important. You will try to change that but you won't. What is important is what happens the next 10 months.

JP Morgan is predicting continued strong GDP growth and even stronger jobs growth as the Katrina effect reverses. The jobless rate could be as low as 4.4% before the November election with jobadds over 200K per month.

With 13 consecutive qtrs of 3% or higher GDP growth since the tax cuts and over 6M jobs created and all of the stock indexes all at post-bubble highs before the election it's going to be very hard to spin the economy as a disaster.

You couldn't do it in 2000. You couldn't do it in 2004. You're going to pull it off with unemployment at 4.4%? Really!

Posted by: rdw on January 6, 2006 at 10:34 PM | PERMALINK

Right now, the American people aren't focused on economic growth; they're concerned about economic insecurity. Call it the "Insecurity Index."

For the full story, see:
"The Bush League Economy."

Posted by: AvengingAngel on January 6, 2006 at 11:42 PM | PERMALINK

According to a post Brad Delong put up (linking to a columnist), wages had the same type of stagnation in the early 80s and in the early 90s.

Now why couldn't Reich let his readers know this?
Why doesnt Krugman ever let his readers know this?

It is essentially a lie of omission.

Reich is a good guy, but he clearly fabricated in his quite funny book about being Sec of State. A little like Reagan.

Posted by: remo williams on January 7, 2006 at 1:17 AM | PERMALINK

According to a post Brad Delong put up (linking to a columnist), wages had the same type of stagnation in the early 80s and in the early 90s.

I agree. You get a repukelinazi in the white House, wages get lower and workers get shafted.

You're right. Repukelinazis are out to KILL the little guy.

Posted by: dataguy on January 7, 2006 at 9:12 AM | PERMALINK

'remo wiliams' posted:

"Yet he must know that the lag will soon yield and wages will start to climb."

How did you pick your alias, Mr. Snow ?
.

Posted by: VJ on January 7, 2006 at 1:52 PM | PERMALINK

'contentious' posted:

"yet jobs are being created at a rate exceeding that promised by John Kerry in his 2004 campaign"

&

'Al' posted:

"Actually it is helping workers"

No, you are both wrong.

There are less workers in the national workforce now, as a percentage, than there were at the start of the Boy Emperor Clown Criminal's terms. The National Labor Participation Rate is lower now than it was in 2000.

The Unemployment Rate did not fall by 0.1% because more jobless workers went back to work, but because fewer jobless workers are being counted, and have been relegated to the category of the 'Long-term Unemployed'.

There are MORE jobless workers, not less.
.

Posted by: VJ on January 7, 2006 at 1:55 PM | PERMALINK

There are MORE jobless workers, not less.

That's not true. During Dec employment increased by 168,000 while the number unemployed dropped by 197,000. The difference is a drop in the work force of 30,000.

The employment survey shows an increase of 2.6M jobs in 2005. JP Morgan is predicting jobadds will be increasing while the growth in the labor force continues to slow as the boomers hit 60. The problem in the next few years will be a shortage of workers.

Posted by: rdw on January 7, 2006 at 3:28 PM | PERMALINK

"How did you pick your alias, Mr. Snow ?"

I have more hair.
So your point is that despite wages stagnating for 4 years in the 80s and 4 years in the 90s before climbing, somehow the recent years are different? What do you base this on?

Posted by: remo williams on January 7, 2006 at 10:00 PM | PERMALINK

"In 2005, the American economy turned in a performance that is the envy of the industrialized world." - President Bush, today


JJF wrote:
"What still has the ability to surprise me, on occasion, is not that Bush exaggerates the facts. You expect that from a politician. It's that he distorts reality to such a degree that no sane person would dare quibble with his opinion -- it is so outlandish, so far outside the accepted opinion of nearly all experts, that you can only stand back, shake your head, and wonder what could make a man (and not just any man, but the leader of our country) say such a thing. The combination of failed judgment, lack of interest with the facts, and utter shamelessness is truly mind-boggling.

Posted by: JJF on January 6, 2006 at 6:12 PM | PERMALINK


Bravo! Right on target!

Posted by: MarkH on January 7, 2006 at 11:25 PM | PERMALINK

'remo williams' posted:

"So your point is that despite wages stagnating for 4 years in the 80s and 4 years in the 90s before climbing, somehow the recent years are different?"

No, it's quite consistent:

* Wages went backwards by almost 20% during the 12 years of the Reagan/Bush administrations

* Wages advanced during the 8 years of the Clinton administration

* Wages declined every year of the past five years under the Boy Emperor Clown Criminal

Just as the stock market does much better during Democrat administrations, workers do better during Democrat administrations.
.

Posted by: VJ on January 8, 2006 at 1:01 AM | PERMALINK

Oh, so wages would have gained under Gore? This has anything at all to do with who is President?

Posted by: remo williams on January 8, 2006 at 9:28 AM | PERMALINK

Mark H, VJ,

Sorry to say but when economic discussion gets even close to the weeds the general public tune out. As a political issue the two big numbers are GDP growth and Unemplopment. Both are trending the Presidents way quite powerfully. We will probably go into the 06 elections with 13 consecutive quarters of 3%+ GDP growth and an unemployment rate near 4.4%.

The 2nd thing they see is the region around them. Downtown Philly is adding it's 3rd major building in 3 years (Comcast's 50+ story hdqtrs) and continuing it's boom of condo conversions. The office vacancy rate will hit it's lowest level in a decade.

Much better yet is almost all of the surrounding burbs are in the midst of an extended building boom that is now moving outside the residential segment. West Chester, Coatesville, Exton, Media and Malvern are just few towns in the middle of the biggest office boom in 40 years.
Outside West Chester city the University is just starting a major expansion.

The fact is the economy will be on GWBs side in 2006 and on the GOP's side in 2008. The Democrats had a lot more to work with in 2002 and 2004 and did nothing with it. They'll have nothing to work with in 2006. You'll talk about record high debt levels and the GOP will talk about record high wealth levels and it'll cancel out. The general public hears this stuff and they see a cat fight between eggheads.

JP Morgan is forecasting 3.5% growth in 2006 and 2007 with low inflation and low interest rates and booming profits. As you know this is the best of all worlds with remarkably balanced growth. At the same time the global picture is even more remarkably balanced with not a single economy expected to show recession. Even Old Europe is expected to hit 2% which is a boom for them. This is the most stable currency and economic growth environment ever seen. On top of that trade talk has never been more active. Outside the WTO and the EU all of the major trading nations are in major talks with the developed world to increase trade.

We will head into the 2008 electins in fine shape.

Posted by: rdw on January 8, 2006 at 10:29 AM | PERMALINK

'remo williams' posted:

"Oh, so wages would have gained under Gore?"

Highly likely, as Gore would not have help enact failed RightWing economic policies, but continued those from the previous 8 years.

.

"This has anything at all to do with who is President?"

It has a LOT to do with who is President.
.

Posted by: VJ on January 8, 2006 at 2:31 PM | PERMALINK

'rdw' posted:

"Sorry to say but when economic discussion gets even close to the weeds the general public tune out."

You must have missed the latest polling.

.

"We will probably go into the 06 elections with 13 consecutive quarters of 3%+ GDP growth and an unemployment rate near 4.4%."

The American people aren't falling for it:

WHEN IT COMES TO HANDLING THE ECONOMY, DO YOU APPROVE OR DISAPPROVE OF THE WAY GEORGE W. BUSH IS HANDLING THAT ISSUE?

59% – Disapprove
[AP Poll]

.

"The fact is the economy will be on GWBs side in 2006 and on the GOP's side in 2008. The Democrats had a lot more to work with in 2002 and 2004 and did nothing with it. They'll have nothing to work with in 2006."

The American people aren't falling for it:

GENERALLY SPEAKING, WOULD YOU SAY THINGS IN THIS COUNTRY ARE HEADING IN THE RIGHT DIRECTION, OR ARE THEY OFF ON THE WRONG TRACK?

65% – Wrong track
[AP Poll]

.

"JP Morgan is forecasting 3.5% growth in 2006 and 2007 with low inflation and low interest rates and booming profits."

Wall Street has been making glowing forecasts every year for the past five years. They've been wrong all five years.

.

"We will head into the 2008 electins in fine shape."

You just keep telling yourself that. It gives me a reason to smile.
.

Posted by: VJ on January 8, 2006 at 2:34 PM | PERMALINK

VJ

Fact: since the tax cuts we've had 9 quarters of +3% GDP growth and have averaged close to 4%.

Unemployment is at 4.9%.

Corporate profits and balance sheets are at record highs as are cash levels and balance sheet strength. The exceptions are highly unionized, northern industries. That's what we will continue to export House seats from the liberal North to the Conservative South.

Posted by: rdw on January 8, 2006 at 8:57 PM | PERMALINK

Much of the reason is dickwads like Robert Samuelson, who put out that tripe like it was obviously the thing that matters. The worship of simplicity, "basic economics", flashy sound bites, etc., and ouf course a studied attempt by some to hide the deliberate gilding (and gelding...) of society.

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Posted by: singer,歌手 on January 9, 2006 at 11:25 AM | PERMALINK


'rdw' posted:

"Fact: since the tax cuts we've had 9 quarters of +3% GDP growth and have averaged close to 4%."

I hate to burst your bubble, but most of that is not real GDP. They are running the Iraq and Afghanistan military operations spending as if it is GDP.

You can see what I mean here:

http://www.nightlybusiness.org/transcript/2002/trnscrpt022802.htm

Even though the Bushies had reported a GDP of 1.4% for the 4th QTR of 2001 (which supposedly ended the recession), we have Erika Miller reporting this:

"Another factor was strong government spending, the result of the war in Afghanistan and counter-terrorism efforts. It's interesting to note that without the government's increase, GDP WOULD HAVE BEEN NEGATIVE..."

Then there's this from Louis Uchitelle, Economics Writer for the New York Times, in regards to 1st QTR 2002 GDP:

"The economy grew in the first quarter at a very bullish 5.8 percent rate, the government estimated last month. Take away the big increases in inventory replenishment and in government spending, increases that almost certainly will not repeat themselves, and the 5.8 percent growth rate DWINDLES TO 1.3 PERCENT.

http://www.nbr.com/trnscrpt/2002/trnscrpt052302.htm

After that, the Bushies stopped releasing the separate data, but I assume they are still doing the same phoney operation.

You don't really believe the recent GDP numbers can be real given that there are less workers in the national workforce than there were in 2000, national Poverty has increased every year and national wages have declined every year, with bankruptcies at record high levels ?

.

"Unemployment is at 4.9%."

Again, the Unemployment Rate has only been dropping because there are fewer jobless workers being counted. If one adjusted the National Labor Participation Rate to where it was in 2000, the current Unemployment Rate is 6.7%, and that still doesn't include the high number of underemployed workers working part-time who want full-time work but cannot find it.
.

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