Note the sales decline at Sharper Image. It seems to be aimed at higher-income customers.

A rising tide sinks boats anchored to the bottom.

Didn't Labor Secretary Elaine Cho get through to you Kevin? It's the current state of the stock market that tells us how well off the laboring classes are.

Sheesh.

Sharper Image is not aimed at higher income people. It's aimed at people that like crap - the solidly middle class who watch too much TV and think an ion breeze will make them healthly while they choke down 2 pounds of doritos.

Happy Days Are Here Again

Ah, Kevin.

So you take one months of data and extrapate it out to insinuate that the economy has "a soft labor market."

This is the strongest economy in years. The average unemployment rate under Bush is lower than under CLinton's. Check the numbers. And Bush did it handicapped with 9-11, war and no dotcom buddle.

People are doing well. BUt it's hard for them to feel they're doing well when the MSM does its level best to report every piece of negative news on the economy and bury all the good news in the back, or caveat it with "unemployment is 4.5%, but here's why that's bad, bla bla bla."

That's why I stopped reading the MSM, Kevin. You start believing that stuff. No wonder people don't feel good about this President.

And, of course, during the past five years of strong sales figures, Mr. Drum wasn't exactly praising the strong economy; instead, it was time to look at nominal wage growth.

That was then, this is now.

egbert and sammler, what world are you guys living in? It seems you guys have your ideologies so far up your asses that whenever you talk, bile comes out.

I am amused at the unceasing efforts of the liberal media to prove that the economy is bad, even though it is and has been excellent. For the last 6 years, liberal politicians and media have been proclaiming that a recession was coming, even though employment has been rising, the unemployment rate falling, average wages rising, the stock market rising, and inflation under control. Paul Krugman was a leader in this chorus of doom, although recently Krugman has changed his tune a bit and done more fact-based economics

Of course, sooner or later we will have another recession. Then the pessimists will claim to be vindicated. Meanwhile, those of us who look at actual economic indicators, rather than liberal persiflage, have had the opportunity to earn good returns by investing in the stock market each time Krugman assured us that the economy was tanking.

P.S. A blogger proposed the theory that when Walmart sales decline, that's a good economic indicator, because it means that buyers have enough money to shop at nicer stores.

IMHO another factor is the growing internet sales. As more of us buy stuff on line, one can expect sales at all brick and mortar stores to drop.

Federated owns Bloomingdale's, which I don't usually associate with the proletariat.

Egbutt,

Unemployment rates now reflect fewer actual people under Bush than under Clinton - or anyone else. If you stop looking because the jobs just aren't there, you are no longer considered unemployed. Does wonders for the numbers.

Time to go extrapate my buddle.....

wishIwuz2 - If someone stops looking for work because the jobs aren't there, then he's classified as a "discouraged worker". The US Dept. of Labor Bureau of Labor Statistics counts discouraged workers. The percentage is down, not up, as you claim.

But what they don't count is workers who lost higher paying jobs and are now working multiple lower paying jobs that, even together, don't add up to their former wages.

Ex-lax,

Bureau of Labor Stats website seems to distinguish between Employment rate and Jobless rate. One includes "discouraged workers", the other does not.

I won't go further, because I admit to being a bit overwhelmed by the numerical babble on that page.

However, neither category is represented in Kevin's graph, which uses data from the International Council of Shopping Centers.

Ex-Liberal, egbert,

I don't know if either of you guys have any money, or if you own stock. It could be you write to earn your daily bread and don't really have any jack invested in the stock market. I have to ask have you put your wallets where your mouths are an bought more stocks recently?

I am a partner in a group that does own a lot of stock. We met a couple of weeks ago and having watched the market closely for many years, our considered opinion is that the market is due for a correction. We decided to liquidate about 1/4 of our portfolio. The money is parked in a money market waiting to take advantage of the lower prices after what we think is a coming correction. Of course, we are just a bunch of old farts, mostly Republicans, who are playing with real money for a long time.

Anyway the stock market doesn't say all that much about the health of the over all economy.

Here's an example of an article on the fact that low paying jobs have been increasing faster than higher wage jobs here

http://www.bls.gov/news.release/empsit.t12.htm

Total unemployed, marginally attached workers, discouraged, etc. 7.9% April 2006. 8.2% April 2007.

Great economy you got there, ex.

And Bush did it handicapped with 9-11, war and no dotcom buddle.

Um, war generally decreases unemployment rates, so its not exactly a handicap.

About $15 per foot per year? Seems cheap except you have to haul waste out and water in.

What is the cost of a boat? One can get a workable sailboat for 40 grand.

I am in! Any partners?

egbert says:

"The average unemployment rate under Bush is lower than under CLinton's."

The number of people working is a funny thing. If we have employment full, but everyone is paying off the 9 trillion dollar conservative debt, then workers are awfully dumb.

The American Conservative will always increase the size and power of government until the middle class is working 100 hrs a week to pay off the communist debt.

I am amused at the unceasing efforts of the liberal media to prove that the economy is bad

I am amused at the unceasing efforts of "ex-liberal" to contend that the economic imbalances under Bush aren't a problem for the Republicans.

"ex-liberal"'s tacit approval of said imbalances are, of course, less amusing, and once again belie his/her/its claims of ever having decent motivations or good faith.

Shame on you, "ex-liberal".

It could be you [egbert and "ex-liberal" write to earn your daily bread

Oh, it could indeed, Ron. ;)

I'm not going to say the economy is rosy, but really, let's not over-read these numbers.
1. Generally, March was way better than expected, so some April lag was no doubt due to a March "hangover"

2. April was bitterly cold on the East Coast. Look who's at the top of the list there: Pacific Sunwear, Wet Seal... i.e., bathing suits/summer gear. Do you like to buy you bikini during a frost warning? Me neither.

Let's all wait until next month before we start wrining our hands here.

I think it is mostly killer gas prices taking their bite. It's soaking up all the spare disposable income-which of course will dissapear from the bottom first. The shop floor workers where I'm at are really hurting (the ones that commute a long way with a big truck, esp). They want to work longer hours and fewer days every week as a result.

Uh, Joe Blow, you might want to check that list again. Wal-mart's sales were down as was Target and other general retailers.

That cannot be explained by the weather since Wal-mart sells coats as well as bikinis.

This post has inspired me to do my part to save the economy. I'm on my way over to Sharper Image to buy an electronic golf ball balancer or LCD toothpick or something.

Another explanation is that we are just running out of consumption fuel. There was a topic about this recently:
http://streetlightblog.blogspot.com/2007/05/personal-income-and-spending.html

The green line on the graph is trending downward generally. The red line really speaks volumes.

>"I think it is mostly killer gas prices taking their bite"

Doc has a good chunk of the short-term economy encapsulated in one sentence.

In the longer term, the US is the Titanic and economic reality is an iceberg up ahead. Right now it's still full speed ahead and the band is playing.

In the near future, there is going to be more than a simple 'correction'.

Ron Byers: Ex-Liberal...I don't know if either of you guys have any money, or if you own stock.

Why do you think I can afford to spend the day posting comments here?

I am a partner in a group that does own a lot of stock. We met a couple of weeks ago and having watched the market closely for many years, our considered opinion is that the market is due for a correction. We decided to liquidate about 1/4 of our portfolio. The money is parked in a money market waiting to take advantage of the lower prices after what we think is a coming correction.

Ron - You and your group know far more than I do about the stock market. You may be right that a correction is coming.

However, we now know that many Democrats, especially Paul Krugman, were wrong about the imminent recessions they've been hinting at throughout the Bush Presidency.

Krugman reminds me of the joke about the analyst who correctly predicted ten of the last two recessions.

hmmmm, consumer credit up in April, sales down. I wonder where all the money went?

I suppose it COULD have gone to pay taxes, but, that would really be a bad thing, wouldn't it?

Jake

I have to agree with Doc. The American Consumer (TM) is simply tapped out. All of the money has now been transfered to the 1% class and there simply isn't anymore left. You can only export our jobs for so long before the scheme collapses.

100% of the gains from productivity have gone to the upper class over the last 30 years, while the middle class spends themselves into debt. Eventually the savings rate goes negative, the real estate bubble finances the last orgy of middle class spending on plasma TV's and hot tubs and then the long slide into banana republic status begins.

Such a sad ending such a great nation.

i do love reading the blithering idiocies of egbert and ex-liberal on the economy (and i especially love how they have no clue as to what paul krugman actually says, they just wave his name around).

before we talk about the economy in greater detail, let's dismiss the idiotic egbert talking point about the impact of 9/11 on the economy as the bullshit that it is: we were already in a recession on 9/11. it ended on 9/30. that's 19 days of economic devastation. in short, you don't have a clue, egbert.

as for the economy more broadly, here's what we have: a.) the weakest job growth of any recovery in the post-world war ii era, with the primary sources of job growth being retail/restaurant, healthcare, and government; b.) the employment to population ratio (the indicator that one should use, because unemployment numbers are subject to a number of definitional considerations) still running a good measure behind the levels it reached in the '90s despite 22 quarters of growth; c.) mediocre real gdp growth despite enormous keynesian stimulus (lower, for example, than under clinton); d.) minute real household income growth (disguised in aggregate statistics by the tremendous real income growth in the upper 1-2% of households by income); d.) tremendous increase in household debt to historic highs, which hasn't been that terrible a problem at low interest rates; e.) consumption having been supported not be real income gains but by household equity extraction, resulting in the lowest level of household equity in american history (and that's before we start to see a decline in housing prices really take hold); f.) a tremendous increase in the national debt, which will result in a painfully expensive intersest line item for many years to come; g.) lack of private investment despite 22 quarters in growth; h.) continued decline in the number of jobs that offer health insurance (down to below 60% of all jobs) accompanied by an increase in out-of-pocket costs for those that do still offer benefits.

in short, for owners of capital, this has been a great economy; for high-income earners, this has been a wonderful economy; for most american households, this has been a stagnant economy.

and that's what the retail numbers show.

jake, my guess is that the increase of credit use combined with the decrease in retail sales is, at least in part, a reflection of $3 gasoline.

"ex-liberal": Why do you think I can afford to spend the day posting comments here?

Why, indeed?

howard ably disposed of "ex-liberal"'s bullshit, but it's worth noting, again, that Krugman has been noting that American consumer spending has been driving the economy, American consumers have been getting the shaft, and therefore their ability to keep spending couldn't last forever.

Small wonder "ex-liberal" seems so interested in discrediting him.

Of course, "ex-liberal" knows all about being discredited. Why, it happened again right here!

(By the by, it's also worth noting that the economy limping along as it has is more attributable to consumer spending driven by low interest rates than Bush's ruinous, irrespeonsible tax cuts. Laffer curve, my ass.)

Gregory, btw, nice to see you again: as you know, i mostly can't stand the endless blitherings and piffle of the ex-liberals and egberts of the world to comment here on a regular basis anymore, but it's good to see that people like you, craigie, apollo 13, ron byers, and others are still fighting the good fight for truth and justice!

Kevin, does Amazon.com also qualify as an upper class luxury store ? You're trying too hard again. Brick and mortar stores are in trouble, not because the economy is bad but because on-line retailing has soared and everybody is getting cheaper prices as a result. Come on. All we would need to have you telling us how great the economy was is to elect a Democrat in 2008. Like magic, everything would be rosy.

howard, if in fact it is $3 gas, then I take it we don't need to guess where the money went. If we see another record quarter for big oil, your hypothesis will be sustained by the facts.

Jake

Mike K, do yourself a favor and don't expose yourself to ridicule by commenting on things you don't understand. if something happens for which there is very little precedent (actual drops in retail sales, which, iirc, have happend like twice or three times in the past 35 years), that's not because amazon suddenly took over all the sales (exactly how much competition is there between amazon and wal-marts or target?).

in addition, online sales, while certainly an increasing part of the economy, are still a modest part of the total retailing picture.

and finally, walmarts was driving prices down long before amazon showed up.

meanwhile, of course, kevin would not simply assure us that everything was rosy in the economy under a democrat: that's the kind of argument that people mount when they don't have anything meaningful to say.

the problems i've identified in the economy and real and, in at least some cases, deeply embedded (the decline of manufacturing jobs, for example); in addition, we are certainly nearer to a recession than we were 22 quarters ago but our tools for fighting a recession are quite limited. due to the irresponsible approach of bush and the gop to fiscal policy, we have no scope for tax cuts while if the fed starts cutting rates, the impact on the dollar and long-interest rates could be quite negative.

in short, there is no rosy scenario, no matter who is in office come january, 2009.

howard, good to see you as well, and a pleasure to see your delivering the smackdown to fools like Mike K so I don't have to.

jake, you might enjoy reading this (and its associated links):

http://bigpicture.typepad.com/comments/2007/05/commerce_retail.html

you know, gregory, you make me think about the time when dick cheney said the economy is doing fine: look at all the people making money on ebay!

that's the quality of mike k's comment.

meanwhile, of course, kevin would not simply assure us that everything was rosy in the economy under a democrat: that's the kind of argument that people mount when they don't have anything meaningful to say.

QED. ;)

But seriously, we've seen this movie before. Water carriers like "ex-liberal" and Mike K indicate the kind of idiocy that passes for economic analysis among the bush cultists -- they have theirs, so economic conditions are just another data point to spin.

Here in the real world, as nice as it might be to offer tax cut after irresponsible tax cut, Democrats have once again to deal with the Republican fiscal mess, which takes time and involves difficult choices that don't simply involve opening up the public trough to corporations and the wealthy. And howard is correct to indicate that simply electing a Democrat won't magically make things better overnight (a fact I'm sure our trolls will point out by Feb. 1, 2009).

9/11?? But the President asked us to SHOP in response to 9/11.

Maybe the terrorists have won?

From my sales desk 1st quarter sales in the US are down. (this would be wholesale) My international customers are buying more, enough to make me net positive so far this year.

howard wrote: we are certainly nearer to a recession than we were 22 quarters ago

Right. We are precisely 22 quarters nearer to the next recession than we were 22 quarters ago.

well, ex-liberal, i'll give you credit for understanding that basic point, which is exactly why neither kevin nor anyone else here labors under the delusion that if only a democrat were elected president in november, 2008, the ills of the economy magically go away.

Right. We are precisely 22 quarters nearer to the next recession than we were 22 quarters ago.

"ex-liberal" may be on to soemthing. Therefore, let's encourage the Republicans to campaign on what a great economy their fiscal management has created. I'm sure "ex-liberal" would agree that the Republicans should get the credit they deserve.

I live in one of those areas of the country where the real estate market has been red hot. Even with all the hand-wringing of the last 2-3 years, news articles have said that we're the exception (along with a few other key regions). We're told that the sharp increase has slowed, sales are still brisk, etc.

We had our house appraised last August, and again, last week. The appraised value went from $796k to $740k. That's a 5% drop in just 8 months. Appraiser said that it was due to "panic sales" in our neighborhood; people who sold significantly below "market value" in order to move their house quickly.

Of course, this was not unexpected, and it doesn't really hurt me, because we bought almost 10 years ago, so the recent run-up pretty much hasn't affected us at all.

But the fact is; this anecdotal data runs counter to what is being publicly reported and talked about in our market. So what does that say about the "conventional wisdom" of our newsmedia and analysts?

Ex-Liberal,

You never did answer my question about how old you are. C'mon, you said you rooted for Kennedy in the Kennedy-Nixon debates. I figure that must put you over age 70. Is it true? When you say 'ex-liberal' do you mean the last time you were a liberal was 50 years ago?

howard did a very nice job of deflating the conserative talking points, so I don't have a lot to add. Just wanted to echo and reinforce the notion that Kevin's post simply gives creedence to the fact that America is becoming a two-tier society, where the upper income brackets are enjoying salad days, while the middle and lower classes struggle to survive.

History has show that this sort of society is unsustainable and leads to either collapse or revolution. Which will it be???

Q: Why do Scotsmen wear kilts?

A: Sheep can hear zippers.

howard, i followed the link. interesting. Whether gas or taxes, my underlying point is that the article about consumer credit increasing implied that the increase is a good thing, that consumers think the economy is just fine. whether for gas or for taxes (and nothing i've read yet says it ISN'T for taxes), the increased consumer credit with flat total sales (incl gas) or declining sales (excl gas) is a BAD thing.

Jake

howard.....you did a good job...

if i could add one more stat...

over the last 2-years...

the national savings rate..has been..

negative..

that hasn't happened in back-to-back years since..

well...the depression...

"Mike K, do yourself a favor and don't expose yourself to ridicule by commenting on things you don't understand. "

Thank you, Howard. I'll leave it to titans of industry to explain economics to me. Are those bill collection calls getting to you again?

I'll let you know how France is doing this summer with Sarkozy. Last summer it was markedly friendlier than it has been the previous 30 years I've been visiting. Of course, you know that. I didn't run into any of those Bush hater friends of yours either.

Carry on, Big Guy.

I'm on my way over to Sharper Image to buy an electronic golf ball balancer or LCD toothpick or something.

I hear golf balls fly farther if you bathe them in negative ions.

Mike K, talk about not having anything to say! what the hell does France have to do with the bifurcation of the american economy? if you have actual facts to back up your claim that really, everything is going fine because of amazon, go ahead and cite them.

otherwise, as i say, you're simply exposing yourself to ridicule.

mr. irony, that is a good reminder about the negative savings rate; when your real income is flat to slightly negative and the society around you encourages consumption or tells you to buy a house because it's a guaranteed money-maker, there isn't a lot left over for savings, is there?

Jake, in case i haven't been clear, i agree: under the current circumstances, the ongoing reliance on credit cards to support consumption is a very dangerous matter.

osama_been_forgotten, you might enjoy following the insights about the housing market (and the many well-informed commenters) here:

http://calculatedrisk.blogspot.com/

here, for example, is a droll anecdote calculated risk picked up from the wsj:

After sitting on the market from June to December 2006, the Chungs' 1,200-square-foot Cambridge, Mass. townhouse condominium sold for $70,000 less than the asking price. "The number of condos in our price point was at some record high," Mrs. Chung says.

To attract a buyer, their real-estate agent suggested purchasing a flat-screen TV and including it in the price of the house. When the home finally sold, the buyer didn't want the TV.

http://calculatedrisk.blogspot.com/2007/05/unclear-on-concept.html

Joe Blow: Let's all wait until next month before we start wrining our hands here.

Every month is hand-wringing month.

Howard, have a nice weekend. I hope you feel better next week. Maybe Alka Seltzer would help.

Tripp, I actually did answer your question, but it was way down the thread. I am 64 years old.

Mike K, i just put together a set of remedial reading links for you so that you wouldn't embarass yourself in the future, but apparently if you put too many links into a post, it gets held for review by our host, so you'll just have to take my word for it (for now) that, while you're very droll in your attempt to cover for your ignorance of what you're talking about, my stomach isn't in the slightest upset! how could it be? the facts are on my side (fer instance, online sales as a percentage of total retail are somewere around 6 - 8%)....

When the economic news is good next month, how will you people spin then? Corrupt data from the Bush administration? "But Clinton was better"?

Pass the popcron.

egbert, i love your ability to see the future! why are you wasting your time with us.

still, let us be clear: real gdp growth was better under clinton. job creation was better under clinton. real household income gains were better under clinton. private investment was better under clinton.

exactly what economic news is going to be so good next month as to change any of that? we really want to know....

meanwhile, you're welcome to cite any actual facts in your possession that dispute the basic picture i identified at 2:34. do you have anything, egbert, or is this your typical empty piffle?

Gregory: Here in the real world, as nice as it might be to offer tax cut after irresponsible tax cut, Democrats have once again to deal with the Republican fiscal mess, which takes time and involves difficult choices that don't simply involve opening up the public trough to corporations and the wealthy. And howard is correct to indicate that simply electing a Democrat won't magically make things better overnight (a fact I'm sure our trolls will point out by Feb. 1, 2009).

It's looking as though the federal deficit will come to under 1% of GDP this year, and may be a surplus by the time the next president is sworn in. However, Democrat presidential candidates are promising to work for significant increases in federal spending (at least Edwards is), and Democrats in Congress are proposing to cut the AMT, which mostly affects people in the upper 20% or so of the income distribution -- people who are more "upper" than "upper middle".

the recession following the Bush-Clinton boom was unusually short and shallow, and the recovery has been modest (compared to the bottom of the slump) by historical standards as well. It's an exciting time. I can hardly wait to finde out where America's companies invest all of their record profits. As you know, I am rooting for substantially increased investment in domestic energy and fuel supplies. At close to $4 per gallon, I would prefer for the whole caboodle to stay here in the U.S.

Howard writes:

a.)with the primary sources of job growth being retail/restaurant, healthcare, and government;

Healthcare is a high paying field - those are good-paying jobs.

b.) the employment to population ratio ..

What I've seen shows the numbers don't deviate much from the Clinton years. Define "a good measure."

Also, surely high household debt is a bad thing, but a lot of it is because of shady mortgage brokers. But individuals need to take some of the responsibility too - they were too willing to sign on the dotted line and cash in.

On the whole, this economy isn't as great as it was under Clinton, but c'mon, it's not that bad. 4.5% is still better than the 9% under Reagan, or 8% under Ford..

It's looking as though the federal deficit will come to under 1% of GDP this year, and may be a surplus by the time the next president is sworn in.

Your powers of prediction and analysis certainly are awesome. Do you remember writing this little gem?

If the Iraqi voters, representatives, and army continue to rise to their challenges (putting a brave face on things), American troops will begin leaking back to the US in dribs and drabs, and the Republicans will escape disaster in next year's elections. That is what I think will happen.

Posted by: MatthewRMarler on November 1, 2005 at 7:08 PM | PERMALINK

Just so everyone understands what a ridiculous boob you are.

It's looking as though the federal deficit will come to under 1% of GDP this year, and may be a surplus by the time the next president is sworn in.

And then there'll still be a whopper of a Federal debt to pay off -- when we're still paying off Reagan's running amok with the national credit card -- a fact you of course fail to mention, you mendacious jackass.

(And by the way, your assertion that "It's looking as though the federal deficit will come to under 1% of GDP this year, and may be a surplus by the time the next president is sworn in" isn't worth a bucket of piss; you're going to need to back that one up, hombre.)

I'm disgusted to see your characterization of the economy of the last six years, in which more and more Americans have been feeling the pinch of economic insecurity, as an "exciting time." I can imagine you twirling your mustache as you did so.

Matthew Marler, ladies and gentlemen. Just when you think he can't get any lower...

"ex-liberal" claimed: I am 64 years old.

And since you've established such a record of honesty here, we're going to believe you.

Not.

trex wrote of Marler: Just so everyone understands what a ridiculous boob you are.

I'm sure we do. ;)

matthew, the relevant consideration is the general fund deficit as a percentage of gdp, not the unified budget. the purpose of the social security surplus is to prepare for future spending, not to finance present spending.

meanwhile, your fantasy life is exceptionally rich, but in reality, the democrats intent is to let the bush tax cuts largely lapse and restore paygo; neither of these are in the republican plans, which, in conjunction with the general fund deficit makes your notion of a surplus by january 2009 about as meaningful as your notion that there's nothing to see here with gonzalez.

as for corporate investment, listen, son, if they were going to be investing, they would have done so already: we've had years of record profits, and they are being spent on stock buybacks, overpaying senior management, and building up cash.

Andy, being a doctor is a high-paying job; being a nurse is an increasingly well paid but still, in absolute terms, a modest paying job, and being an admninistrative aide in a hospital or similar (where most of the job gains are) is not a well-paid job.

as for the employment-to-population ratio, the peak under clinton was 67.3%; for at least the last 4 years of the clinton administration (the link i'm about to provide you has a graph that only extends that far back) it exceeded 66.5. the rate went down through january, 2005, hitting a low of 65.8, and the last date i have numbers for, Q3, 2006, is about 66.2. The average delta, eyeballing, is a little north of 1 percentage point, or, in real world terms, or in the neighborhood of 1.5M jobs.

that, in my estimation, is a "good measure" lower. we can confirm that by the absence of any indication of tightening wages, which economics 101 tells us is the result of a supply-demand imbalance and which we saw as the ratio increased during the later '90s.

now, as for household debt, i would give you a bunch of links but it turns out that if you overlink (as i noted above to mike k), your comment gets held, so let me make a couple of summary comments and then you can look the details up yourself.

it is true that, at the margin, several million households (largely in the "subprime" area) took on mortgages that probably shouldn't have been granted, but that mortgage is offset by an asset, the house, so while it's a problem, it's not the source of the household debt problem. the source is credit card debt (which you can track by looking at the federal reserve "flow of funds" report), and while of course some of that is being taken on irresponsibly, a good measure of it (as we know from studies of bankruptcy - see the work of elizabeth warren and others) is from emergencies (such as medical care emergencies) and a desperate attempt to support consumption in the face of stagnant real wages. in addition, although housing values have gone up enormously, there has been a tremendous tapping of household equity (see the work that alan greenspan himself did while at the fed on this matter) to support current consumption, leaving us, as i noted a while back in this thread, at a point where household equity ownership is at an historic low.

let me also note, again, that the definition of unemployment and how the unemployment rate is calculated has changed over time and is not a useful indicator across historic periods: job growth and the labor force participation rate (not to mention real household incomes) are much better.

but i'm not saying that this is the worst economy ever: that would be foolish. we've had 22 quarters of growth. what i'm saying, in conjunction with kevin and in opposition to the blind cheerleading of the egberts and ex-liberals, is that for all the stimulus, real gdp growth (as even quasi-cheerleader matthewrmarler notes) has been quite modest, job growth has been weak, household debt has grown, and so forth.

people get confused by the aggreagte stats: household wealth is up, for instance, as is household income, but these are aggregates. For examples, the top 1% of households own 30% of the assets in america and only 7% of the debt, which is to say that the other 99% of households own 70% of the assets and 93% of the debt.

and so sales are up at saks and nordstroms and down at target and walmarts: that's not a healthy economy for 22 quarters of growth. and when we slip into recession, as we inevitably will, it could get quite ugly given the debt loads and the beginnings of absolute price declines in the most important household asset, the home.

PS. if you want to really dig into household finances, the single best source is the survey of consumer finances the Fed does every 3 years (the most recent was 2004) that you can find here (i can safely give you 1 link!). it makes for very interesting reading:

http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html

PPS. i'm going to live dangerously here, Andy, and point you to a second link, the Fed's regular Household Debt and Financial Obliations Ratios, which makes for pretty scary reading in historic perspective:

http://www.federalreserve.gov/releases/housedebt/default.htm

Andy, sorry, i meant to link to the graph i mentioned on jobs/population ratios, which you can find here:

http://economistsview.typepad.com/economistsview/2006/11/what_level_of_j.html

Howard, if you would shut up about people who know as much as you do but disagree, maybe we could have a debate. But you won't allow that. That is why I asked you if the bill collectors calls were getting to you. You want to pontificate but you can't quote references. Sure you can say that the site won't allow enough links but that is a weak reed. You are blowing this stuff out of an orifice. Go for it but don't try to fool an old hand that you know what you are talking about. Abuse is not argument.

Try to calm down and I will give you a good thought while I am vacationing on the Riviera with the economic knowledge you say I don't have. Bon Chance.

Mike K, i literally have no idea what you're talking about. you made a foolish claim: that amazon explains the poor retail numbers. i've pointed out to you that online sales comprises roughly 6 - 8% of total retail. you want the link for that? fine, here it is:

http://www.intelligententerprise.com/showArticle.jhtml?articleID=175802726

beyond that, you rambled around on france and had nothing else to say.

as for the rest, tell me specifically what you think i'm "blowing out of an orifice" and i'll give you the specific cite; i'm not going to do a whole series of posts, one link at a time.

if you would demonstrate that you had any relevant knowledge or useful information, i'd be happy to talk about it, but you are simply spouting piffle (and if you'd care for real abuse, i'd be happy to oblige).

as for the notion that i'm making up the notion that the site holds comments with loads of links for editorial approval, nuts to you, pal. it's not a "weak reed;" it's a fact. notice, for instance, in my discussion about household debt above for andy, that i reference what the links would have been if i were to post them. try it yourself and you'll see....

howard: matthew, the relevant consideration is the general fund deficit as a percentage of gdp, not the unified budget. the purpose of the social security surplus is to prepare for future spending, not to finance present spending.
...
meanwhile, your fantasy life is exceptionally rich, but in reality, the democrats intent is to let the bush tax cuts largely lapse and restore paygo; neither of these are in the republican plans, which, in conjunction with the general fund deficit makes your notion of a surplus by january 2009 about as meaningful as your notion that there's nothing to see here with gonzalez.
...
as for corporate investment, listen, son, if they were going to be investing, they would have done so already: we've had years of record profits, and they are being spent on stock buybacks, overpaying senior management, and building up cash.

goodness, howard, there is no such thing as "the" relevant consideration. They all play parts. I just threw one into the discussion that right now isn't gloomy. There is also no such thing as "the democrats intent", as was discussed some weeks ago. diverse Democrats have diverse views, and right now some of them have the intention of reducing the AMT. And surely you do not mean to say that there is NO investment? Investors in Texas are building windfarms, and two large oil companies are expanding their refining capacity -- that's after the exhorbitant bonuses that they paid.

Federal and state revenues grow faster than the GDP in percentage terms. for myself, when I experienced a 3% pay raise my taxes went up 6%, and that 2:1 ratio works well for the economy as a whole. The federal budget is expected to grow about as fast as GDP, which means slower than the rate of revenue growth. Obviously this is not guaranteed, but the federal annual budget could be in balance by the time the next president assumes office; as it was when Bush took office. That isn't the salvation of the country or anything, but neither is it negligible.

I didn't say "there's nothing to see here with Gonzales", I said that there is a possibility of impeachment (remote) and an excellent campaign issue for the Democrats, worth a few %of the vote in each district where one of the popular attorneys was fired. His actions are not uniquely bad by historical standards, even if you focus attention on post-WWII.

Sorry. That's a lame use of selective data for a weak attempt to demonstrate a leftist point. Stick to the voluminous data that actually supports what you're saying.

Posted by: Mike K on May 11, 2007 at 3:14 PM

Wrong. Online retailers are suffering losses too.

matthew, when we are discussing the budget deficit, there is a "relevant" consideration: it's called the general fund. i'm not sure why you think otherwise: the money coming into the social security trust fund is being borrowed by the general fund. and that's why the budget isn't going to be balanced by january, 2009. (as a side note, as gregory divined, this isn't really a discussion of the budget deficit; no one here is saying the budget deficit is causing the bifurcated economy.)

as for democrats intent, yes, you're right that we don't live in a parliamentary democracy where one can speak of the "intent" of the parties, but in the terms that you used in the first place - democratic presidential candidates and democrats in congress - one can speak of their intent, and the intent is to restore paygo and allow most of the bush tax cuts to lapse. (by the way, the upper 20% of households by income begin somewhere in the mid-'80s: why do you call that "upper" income? while people can disagree about the precise cutoff points, calling a household earning $85K upper income is rather an exaggeration, and indeed, such a household is almost certainly not subject to AMT.)

now, as for your taxes, i've been sitting here and trying to puzzle out your tax situation and not having any success: you make $80K (i don't mean you personally, because of course i have no idea; i mean for example, one makes $80K) and pay an effective federal tax rate of, say, 22%, for a total federal income tax bill of $17,600 (i'm leaving state taxes out of this because they vary too much from state to state, and i'm leaving FICA out of this because below the threshold, it's a flat tax). you get a 3% raise to $82,400. your federal tax bill is now $18,128, or an increase of...3%! i mean, there must be some circumstances where a pay raise kicks you into a slightly higher effective tax bracket or something, or maybe you live in a state with a funky tax structure, or maybe your deduction status changed, or...something. but i don't see a hard-and-fast rule and have never heard of such.

i think what you mean is that gdp growth is not directly correlated to wage growth, and therefore not directly correlated to revenue growth, and i can't disagree, but a "balanced general fund budget" has two components: revenue and expenditures. the budget doesn't just get balanced because higher incomes lead to higher revenues.

finally, of course there hasn't been "zero" private investment, but private investment has been surprisingly weak given the tremendous increases in profitability in recent years. corporations don't invest as a public service; they do when they see a profit opportunity. their behavior suggests that they aren't seeing any, and it's not a requirement that they invest at all.

'Further, the wealth effect from the equity bubble has not been broadly distributed, resulting in a boom in the luxury consumer market catering to the beneficiaries of capital gain while the broad consumer market catering to wage earners stalls. The newly rich in the financial sectors are buying multi-million-dollar first and second and even third homes, while average workers are buying cheap t-shirts and sneakers made in China. The highest pay hedge fund managed took home $1.7 billion in 2006, while the average worker pay was $28,000 a year.'
Liquidity Boom Decouples US Equity Markets from the US Economy
By Henry C.K. Liu
http://henryckliu.com/page133.html

According to The Center for Economic Progress the average hourly earnings (caveat: 'averages don't really mean much since they ignore distributional inequities) for young college grads is currently $23/hour.

Deflate that and you'll find that $23/hr in 2006 dollars equals $5.20/hr in 1974 dollars. That comes out to $10,200/year in '74 dollars which happens to be exactly what I earned in that year newly out of college.

So this is what the the trend line looks like 1974 -2006 in constant dollars:

___________________________________________

Yep. A flat line. Except that in 1974 you'd have gotten a relatively stable job, excellent and inexpensive health insurance, employer contributions toward a good COLA adjusted defined benefit pension, credit union participation and payroll and sales taxes at about 1/4 today's levels.

Marler wrote: diverse Democrats have diverse views, and right now some of them have the intention of reducing the AMT.

That's right, Marler, and good on 'em. But as howard pointed out, your lame-ass attempt to paint the Democrats as fiscally irresponsible budget busters -- leaving out the facts that, as howard again correctly noted, the Democrats are going to let Bush's tax increases take effect -- would be laughable if they weren't so nauseating.

Meanwhile, while Democrats to have a divergent agenda, the Republicans have but one: cut taxes and increase spending, and then cut taxes some more. This agenda is indisputable given the irresponsible governance of the last six years. It create another little budget item I noted but you failed to address: A burgeoning national debt and debt service as a massive chunk of the budget. This debt service is tax revenue that goes to banks, rather than to the public service it was intended.

You'd have to be a moron or an utter partisan tool to pretend that the Democrats are even faintly as irresponsible as Republicans indisputably are, and I'll concede at least that you aren't a moron (Mike K, not so much). Which pretty much leaves one possibility, doesn't it?

[Gonzales'] actions are not uniquely bad by historical standards, even if you focus attention on post-WWII.

And with this assertion, any claim Marler ever had to be an honest commentator -- talk about thin reeds! -- vanishes in a puff of GOP bullshit. You've got to be kidding me. Your condoning of the Bush Administration's effort to politicize the DoJ is utterly contemptible. (And besides that, I've already pointed out that the Democrats could both impeach Gonzales and use the GOP's corruption -- which goes way beyond the DoJ of course -- as a campaign issue, but that the key is getting Republican Senators -- that's your people, asshole -- to put country before party. But here's Marler, presuming that the GOP will continue to march in partisan lockstep (which, as I noted, might not happen, but who knows) and chuckling about the disadvantages for good governance that brings the Democrats as per usual.

That's disgusting, Marler.

And after this thread on top of all the others, you claim your arguments are never "destroyed"?

Shame on you, Marler.

More on NFP: More Recognition of Disbelief

http://bigpicture.typepad.com/

'• Q1 GDP growth was 1.3% -- a fraction of 2006 GDP -- compensation declined 1.5% in Q1; If Housing is in such a horrid slump, and Manfucturing has been slowing, why on Earth does BLS think small businesses created the most jobs ever for a single month in April? How did an unfathomable 49,000 construction jobs get created (via B/D), when the Net Construction jobs actually measured by BLS -- not merely hypothesized -- fell 11,000?

• Merrill’s David Rosenberg: “A point to note: fulltime jobs, the key generator of personal income growth, plunged by 687,000 in April. That was the largest slide since the economy was knee-deep in recession in August 2001. Such a decline has only occurred three times in the history of the Household Survey going back to 1968.” Mr. Rosenberg notes that “the employment-to-population ratio sagged to 63% from 63.3%....The last time the employment/population ratio fell that much in one month was in October 2002, when the Fed was consumed with deflation fear and was on the precipice of cutting the funds rate two more times.”

• A friend emails me this: "For years certain permabulls screamed that the Establishment Survey (CES) understates job growth and the Household Survey (CPS) is a more accurate depiction of the economy. For April the Household Survey shows a job LOSS of 468k! For 2007 the Household Survey has a net LOSS of 140k jobs. The Household employment adjusted to Payroll methodology (excludes the self-employed and counts each job a multiple-job holder has) fell by 70K."

• BLS continues to understate the unemployment rate, as it has been doing for most of the past 6 years, by reducing the ‘pool of available workers’. BLS reduced the labor force by 392,000 in April. This kept the Unemployment Rate from jumping higher than 4.5%. The ‘participation rate’ declined to 66% from 66.3%, which is an unusually large monthly decline. That's 0.3% times 143 million or so workers -- instead of rasisng the unemployment rate, we lower the labor participation rate by 429,000 workers.

• BLS continues to overstate actual employment -- From BLS: “Household survey. The sample is selected to reflect the entire civilian noninstitutional population. Based on responses to a series of questions on work and job search activities, each person 16 years and over in a sample household is classified as employed, unemployed, or not in the labor force. People are classified as employed if they did any work at all as paid employees during the reference week; worked in their own business, profession, or on their own farm; or worked without pay at least 15 hours in a family business or farm. People are also counted as employed if they were temporarily absent from their jobs because of illness, bad weather, vacation, labor-management disputes, or personal reasons.”

In other words, if you “Worked without pay,” the BLS Household survey considers you gainfully employed. Beyond absurd . . . '

'This job-less recovery is still 6.7 million private sector jobs short of the typical recovery 67 months after a previous business-cycle peak.'
Liquidity Boom Decouples US Equity Markets from the US Economy
By Henry C.K. Liu
http://henryckliu.com/page133.html

Then there's this:

Is the Labor Department Reporting Phantom Jobs?
May 11, 2007

The new data on retail sales should give us grounds for concern. The issue here is the Bureau of Labor Statistics' imputation of jobs for new firms that are not included in the survey. This imputation was was very large in April, 317,000 to be exact. Since the establishment data showed a net gain of 88,000 jobs, this means that survey actually showed a loss of 229,000 jobs.

In fairness, most of this imputation is due to seasonal factors. Many new businesses open or expand in the spring. But, the imputation was 46,000 larger than in April of 2006 when the economy seemed to be growing considerably more rapidly by most measures.

One area that seems especially suspicious is restaurant employment. There was an imputation of 95,000 new jobs for the larger leisure and hospitality sector, which includes restaurants. The restaurant sector itself showed a gain of 25,000 jobs in April. Since the retail sales data from the Commerce Department show a nominal decline in sales of 0.1 percent from March to April, it seems implausible that the sector added 25,000 workers. Over the last year, restaurant sales are up by 4.9 percent in nominal terms, which translates into 1.6 percent real growth. (Inflation for food away from home is reported at 3.3 percent.) This seems hard to reconcile with the 336,400 jobs reportedly added to the sector, a gain of 3.6 percent.

The moral of the story is that it seems likely that the economy has hit a turning point, which causes the new jobs imputation to overstate job growth. Actual job growth is likely somewhat slower than reported growth. Since reported growth is already quite weak, actual job growth may now be close to zero, at least in the private sector. Of course, the good news is that productivity growth is somewhat higher than is being reported.

--Dean Baker
http://www.prospect.org/cs/blogs/beat_the_press

Here is a nice item on investment in ethanol.

of course there hasn't been "zero" private investment,

And yet that was what you said. You didn't say "surprisingly weak".

you make $80K (i don't mean you personally, because of course i have no idea; i mean for example, one makes $80K) and pay an effective federal tax rate of, say, 22%, for a total federal income tax bill of $17,600

You write as one who never fills out a tax return. Nobody with an 80k income pays the marginal rate on 80k. First, 16% goes to tax-free savings. Then a bunch goes to deductions for business expenses and donations. Then a bunch is deducted for property taxes. Then there are the "personal deductions". Then a bunch is deducted for mortgage interest. Of the $80k, about $40k is taxed at the marginal rate. After a 3% raise, $43k is taxed at a marginal rate. If the marginal rate is 16%, the first 80k is effectively taxed at 8% ($6400), and the 2.4k is taxed at 16% ($400, approximately 6% more than $6400).

there is a "relevant" consideration:

Agreed. but you formerly called it "the" relevant consideration.

one can speak of their intent, and the intent is to restore paygo and allow most of the bush tax cuts to lapse. (by the way, the upper 20% of households by income begin somewhere in the mid-'80s: why do you call that "upper" income?

We had a discussion on this some weeks ago, and the consensus was that the Democrats did NOT simply intend to let most of the Bush tax cuts expire. But they did not speak with one voice, and their true intent is not known. There is definitley a movement among the Democrats in congress to reduce the AMT.

I call the "upper 20%" "upper" because 80% are lower than that. It's pretty stupid to keep calling the upper 20% "middle"; the word "middle" ought at least to be in the middle (30%-70%, 25% - 75%, 40%-60%; something like that), and not at one end. This is actually an important point: lots of the "middle class" tax breaks that Democrats are fond of, like tuition credits, benefit the upper class: parents who send their children to Cornell benefit a lot, but those who send their kids to Monroe Community College and then SUNY Buffalo hardly benefit at all. People who are in the 35% - 45% of the income range benefit very little from the deduction for mortgage interest. But they are closer to the "middle" than are the upper 20% who reap the rewards.

lastly, here is an item on current revenue flows and projections:

http://biz.yahoo.com/ap/070510/federal_budget.html?.v=10

If current trends continue (the "projection") the federal budget will be in balance when the next president takes office. It might not happen, but that is the direction now.

Marler wrote: We had a discussion on this some weeks ago, and the consensus was that the Democrats did NOT simply intend to let most of the Bush tax cuts expire.

How disingenuous. True, the Democrats do intend to let the tax cuts aimed at the middle class -- originally added by Dems, in the first place -- continue.

But that still means most of Bush's tax increases will be allowed to take place after all.

It's cute and all that Marler continues to post as if he considers his opinion to have some kind of weight around here -- a true Republican, evidently, Marler seems to think that if he doesn't admit defeat while standing amidst the smoking rubble of his GOP apologia that he isn't really "destroyed" -- but it really just highlights how intellectually dishonest he is.

Tool.

oh yawn frickin' yawn, matthew: what a joke.

if you go back and look at my 2:34, you'll see i said "lack of private investment." I didn't say it ceased to exist. only a little game-player like you would try that one.

and apparently you don't understand the term "effective" tax rate either. i used 22% because, to be perfectly blunt about it, that's my "effective" federal income tax rate. your analysis isn't really useful, and it certainly doesn't prove that everone who gets a 3% pay raise sees a 6% increase in taxes. the marginal rates don't work the way you've invented them to (i.e., you don't jump from 8 to 16 at $40,001). still, let us give you partial credit (it's so rare, after all, as gregory knows!): increases in tax revenues do not track gdp growth.

in terms of relevant considerations, you misunderstand (perhaps deliberately). you said there are all sorts of relevant considerations: no, there aren't. there is only one, for which i used "the" in one context and "a" in another. they are, in context, interchangeable. a balanced budget is a general-fund balanced budget period, end of frickin' story. borrowing money from the social security trust fund doesn't balance the budget and can't be regarded as same.

i'm not sure why you keep bringing up the AMT: within a context of paygo, it doesn't matter if dems want to reduce the AMT, they will perforce have to reduce spending to offset. As for the Bush tax cuts, basically, the dems want to allow the bush cuts to lapse for most upper-income taxpayers, which is where the money is.

your discussion of income level betrays a lack of recognition of how income is distributed in america. the idea that someone making $85K is upper-middle income (or, indeed, "upper") is quite silly.

finally, your yahoo link ignores the use of the FICA surplus, does not claim that the budget will be in balance by january, 2009, and ignores how spending projections are made (for example, the war in iraq is not part of spending projections because the bush administration keeps treating it as an emergency appropriation). in short, it doesn't support your case one bit.

If current trends continue (the "projection") the federal budget will be in balance when the next president takes office. It might not happen, but that is the direction now.
Posted by: MatthewRmarler

A bit late for April Fool posting ain't it?

'Do those at the top pay their fair share of taxes? Middle class Americans, after nearly 30 years of tax-cutting, are now paying about the same share of their incomes in federal taxes that they paid before Ronald Reagan entered politics. In contrast, America's richest have seen the share of their incomes that goes to federal taxes cut by over half. That what happens in a failed democracy and the rich control the political system.' - Joel S. Hirschhorn

Kevin,

As a liberal who takes a backseat to no one in my objections to the current administration, you have this one all wrong. My wife is a retail executive, and I can tell you that the April results are almost entirely the result of Easter falling in week four of March this year, as opposed to week one of April last year. The relevant figure is to compare March and April 2007 to March and April 2006.

you said there are all sorts of relevant considerations: no, there aren't. there is only one, for which i used "the" in one context and "a" in another.

OK. for you there is only one relevant consideration.

i'm not sure why you keep bringing up the AMT

because the Democrats are talking about cutting it, and there is some debate about whether that will make it harder to balance the budget in the future.

your discussion of income level betrays a lack of recognition of how income is distributed in america. the idea that someone making $85K is upper-middle income (or, indeed, "upper") is quite silly.

Indeed, I use the word middle to mean middle. the middle of the income distribution is the median, not the 80th percentile.

Marler wrote: because the Democrats are talking about cutting it, and there is some debate about whether that will make it harder to balance the budget in the future.

So they are -- fixing the AMT is the right thing to do. (I note that in the six years the Republicans were running things, they never got around to fixing this one.) And yes, it probably will make it harder to balance the budget. What of it? As howard noted, they'll have to offset it via paygo; as I noted, letting Bush's tax cut lapses take effect would also go toward offsetting it.

Meanwhile, once again, the GOP has one agenda: Cut taxes and spend. As you concede, the Democrats do intend to balance the budget -- although they may not succeed, particularly given Bush's reckless war spending.

I used to have this debate -- well, no, it isn't a debate -- with tbrosz back in the day, you disingenuous tool. I pointed out that the Democrats are the only party even approaching fiscal responsibility; the Republican record and undeniable agenda is of reckless (but voter pleasing) tax cutting and vast spending. Ol' tbrosz never could refute that basic point -- he'd grumble up some straw man about how Democrats would love to raise taxes to 99%, a laughable prospect since voters would toss 'em out on their ear -- and neither can you. You're here with just another lame-ass set of straw men and smokescreens.

All in the service of carrying water for the Republican Party. And let's come clean, Marler ol' pal -- it's because the Republicans cut your taxes, and you know the Democrats won't.

Well, one can't fault you for arguing in your own self interest, Marler. One can and does fault you for doing so dishonestly.

Tool.

howard, you might be illustrating something about political/economical dialogue. I have met a lot of people who consider themselves "middle class" while actually ranking in the upper 16% of the income distribution. The income distribution has a long right tail, and the news of the "rich and famous" surrounds us always, almost like air. It is very easy for someone at about the 80th percentile to lose sight of the fact that a much larger number of people have lower incomes than have higher incomes, by a ratio of about 4:1.

Some government programs have the effect of transferring wealth from the upper 1% to the people in the 80th - 90th percentiles. Tuition tax credits have that effect. Such programs do not in fact help the people in the "middle" of the income distribution.

I have met a lot of people who consider themselves "middle class" while actually ranking in the upper 16% of the income distribution.

So what? First of all, Marler, your anecdotal evidence isn't worth a bucket of piss. Secondly, that perception actually the other way...if memory serves me right, many voters not at the extreme percentile of wealth -- i.e. the Republican base, as Bush noted -- believe they must be so.

Gregory: So what?

so, it supports howard's idea that the perceived "middle" is actually the upper fifth or sixth. Whereas when I use "middle" I mean a symmetric interval about the median -- the actual middle.

Gregory: Meanwhile, once again, the GOP has one agenda: Cut taxes and spend. As you concede, the Democrats do intend to balance the budget -- although they may not succeed, particularly given Bush's reckless war spending.

Like you, I worried about Bush's spending, but the facts and figures are proving that Bush was right. The deficit is falling even faster than he predicted.

In fact, the federal government just posted a surprisingly big $177.7 billion budget surplus in April, a 50 per cent increase over April last year and the second highest on record, the Treasury Department said.

Impressive results for Mr. Bush's economic approach.

ex-lib: Impressive results for Mr. Bush's economic approach.

for one month.....

now for gwb's whole record...

top-4 budget deficits:

1. 2004 (George W. Bush) $413 billion

2. 2003 (George W. Bush) $378 billion

3. 2005 (George W. Bush) $318 billion

4. 2006 (George W. Bush) $260 billion

....i can't use 2007...because the GOP controlled congress last year didn't find time to pass a budget....

elsewhere, the national debt...

at $8.8-trillion and growing...is more than 50% higher than when gwb came into office..

meanwhile, all we got was 2-lousy invasions...

and our troops got walter reed and ...

“The Pentagon acknowledges that Army National Guard units currently had only 56% of their required equipment,” down from 75% prior to Sept. 11. - LA Times 5/9/07

The deficit is falling even faster than he predicted.

Because, as was noted at the time, he gamed the predictions. Duh.

Impressive results for Mr. Bush's economic approach.

Only to a dishonest partisan hack like yourself.

so, it supports howard's idea that the perceived "middle" is actually the upper fifth or sixth.

If your anecdotes -- indeed, your word in general -- were worth a damn, Marler, maybe it would. Sadly, that is not the case, so you have nothing.