Economic forecast for 2004

[BTox]

From the Conference Board - more bad news for the dems:

Revising its year-end economic forecast sharply upward, The Conference Board today projected that real GDP growth will hit 5.7% next year, making 2004 the best year economically in the last 20 years.

The forecast, by Conference Board Chief Economist Gail Fosler, expects worker productivity, which set a 20-year record in the third quarter, to rise at a healthy 3.6% next year. That would follow a gain of 4.3% this year.

conference board 2004 forecast (http://www.conference-board.org/economics/press.cfm?press_ID=2284)

[Nasarius]

I think it's appropriate to mention that in "The Demon-Haunted World" (chapter 3), one of Carl Sagan's first examples of pseudoscience was long-range economic forecasting.

Just so ya know :)

[Drooper]

Originally posted by Nasarius
I think it's appropriate to mention that in "The Demon-Haunted World" (chapter 3), one of Carl Sagan's first examples of pseudoscience was long-range economic forecasting.

Just so ya know :)

I didn't read that, but long range economic forecasting is the most accurate kind.

[SlippyToad]

Originally posted by BTox
From the Conference Board - more bad news for the dems:



conference board 2004 forecast (http://www.conference-board.org/economics/press.cfm?press_ID=2284) Well, this would be good news for working Americans, except for the part you didn't repost:

While the U.S. economy is expected to generate more than one million new jobs next year, the unemployment rate will edge down only slightly, averaging 5.6% in 2004.

You see, the GDP only matters to voters if they get something from it. Generating one million jobs next year will just barely keep our collective heads above the water, and since healthcare costs will continue to skyrocket next year with nothing being done, those of us still employed will surely be wondering where all that growth is going.

[shanek]

Originally posted by Drooper
I didn't read that, but long range economic forecasting is the most accurate kind.

This is very true, because many of the factors that affect the economy in the short run get smoothed out in the long run.

[BTox]

Originally posted by SlippyToad
You see, the GDP only matters to voters if they get something from it. Generating one million jobs next year will just barely keep our collective heads above the water, and since healthcare costs will continue to skyrocket next year with nothing being done, those of us still employed will surely be wondering where all that growth is going.

So only generating one million new jobs is bad news for the repubs? OK. Do you think a booming economy will have any impact on raises?

And surely all those seniors getting prescription discounts will be furious...

[WildCat]

Originally posted by SlippyToad
You see, the GDP only matters to voters if they get something from it. Generating one million jobs next year will just barely keep our collective heads above the water, and since healthcare costs will continue to skyrocket next year with nothing being done, those of us still employed will surely be wondering where all that growth is going.
You realize that it is thought that unemployment can't fall much below that, don't you? Economists call it the natural rate of unemployment, it would more accurately be called full employment.

And what do health care costs have to do w/ it?

[spejic]

Originally posted by Drooper
I didn't read that, but long range economic forecasting is the most accurate kind. What makes you say that? I don't any evidence of that at all. Don't forget that the same people have been saying a recovery is 6 months away since Bush the Younger was first elected.

[jj]

And what we don't see behind this whole report is the slow and sure exporting of jobs to 3rd world economies, and the resulting shrinking of the internal workforce in first-earner jobs, which is creating a false measurement of higher efficiency AT THE PRESENT.

Until the people out of work start to make money, the enconomy is likely to stay stuck in the mud.

[reprise]

I suspect that voters in the US - like voters here - no longer see "economic growth" as a measure by which they can predict the likely quality of their own lives, and no longer believe that just because something is "good for the economy", it will be of benefit to the average citizen.

[shanek]

Originally posted by WildCat

You realize that it is thought that unemployment can't fall much below that, don't you? Economists call it the natural rate of unemployment, it would more accurately be called full employment.

Except that, judging by the last boom, the natural rate of unemployment was about 3%. Unless there's been something that affects that, it has some room to drop.

Of course, the government is raising the retrement age, and is talking about raising the minimum wage. Those two actions will cause natural unemployment to rise, but I don't think by as much as 2%.

[Jocko]

Originally posted by spejic
What makes you say that? I don't any evidence of that at all. Don't forget that the same people have been saying a recovery is 6 months away since Bush the Younger was first elected.

Baloney. The slowdown was only a year old at the time Bush was elected, and no one was seriously expecting things to be turned around that quickly. Besides, you may have noticed we had a little jolt to the ol' system around month 8 of his presidency?

Productivity is up, inventories are down and the GDP is blowing away records. If that's not fast enough for you, try parallel parking an oil tanker some time if you want to know how difficult and slow it is to move the economy.

In school, I was taught that 5.5-5.8% unemployment was full employment; that extra 5+% was largely accounted for by transient workers between jobs. So I don't see where there's any reason to complain... things only look to get better.

[shanek]

Originally posted by spejic
What makes you say that? I don't any evidence of that at all. Don't forget that the same people have been saying a recovery is 6 months away since Bush the Younger was first elected.

That's short-range forecasting, which is extremely difficult to predict. The long run in the economy covers years if not decades.

[shanek]

Originally posted by jj
Until the people out of work start to make money, the enconomy is likely to stay stuck in the mud.

Keep in mind, though, that the job market is "stickier" than GDP. GDP goes up when people start spending more, like they're doing now. But that takes awhile to have an affect on the job market. Production and consumer purchasing can easily fluctuate in the short run; employers look at more long-term prospects when they hire. So give it time. It takes a few months for the employers to realize that production is increasing enough to make it worth their while to hire new workers.

[jj]

Originally posted by shanek

It takes a few months for the employers to realize that production is increasing enough to make it worth their while to hire new workers.

Indeed, and where they hire them as well.

[T'ai Chi]

Originally posted by Nasarius
I think it's appropriate to mention that in "The Demon-Haunted World" (chapter 3), one of Carl Sagan's first examples of pseudoscience was long-range economic forecasting.


Then he was off base by far.

He was hardly anywhere close to anything resembling an expert in the area of economic forecasting.

(Correct me if I am wrong, please)

[reprise]

Originally posted by shanek


Keep in mind, though, that the job market is "stickier" than GDP. GDP goes up when people start spending more, like they're doing now. But that takes awhile to have an affect on the job market. Production and consumer purchasing can easily fluctuate in the short run; employers look at more long-term prospects when they hire. So give it time. It takes a few months for the employers to realize that production is increasing enough to make it worth their while to hire new workers.

In an increasingly global labour market, increased domestic spending isn't necessarily going to mean increased domestic employment, though.

[Drooper]

Originally posted by shanek


This is very true, because many of the factors that affect the economy in the short run get smoothed out in the long run.

In part, yes.

But the most important point is that the long-run is governed by the supply side (did you read my post in the Macro thread). The supply side is governed by relatively stable factors.

[Drooper]

Originally posted by spejic
What makes you say that? I don't any evidence of that at all. Don't forget that the same people have been saying a recovery is 6 months away since Bush the Younger was first elected.

By that I mean that I would place much tighter confidence limits around a forecast for an annualised rate of growth of, say, 3% over the next 10 years, than I would for a forecast for 3% annualised growth over the next 2 years.

[shanek]

Originally posted by reprise
In an increasingly global labour market, increased domestic spending isn't necessarily going to mean increased domestic employment, though.

Yes, it does. Where is the money going to go? There are really only two things you can do with dollars: spend them in the American economy, or invest them in the American economy. So unless Americans start paying for lots of things with pesos, their dollars are going to go back into the local economy and result in either more spending or more investment in the American economy. If the company runs a factory in another country, it has to either pay those workers in dollars or exchange them for the native currency—but the exchange just puts the dollars in someone else's hands who's going to either spend or invest them in the American economy.

I got flamed for making this point in another thread, even though—as the Macroeconomics thread proves—you'll learn this in an introductory macroeconomics class.

[shanek]

Originally posted by Drooper
(did you read my post in the Macro thread).

Yes, I just haven't had a chance to thoroughly read your source yet. I will.

[Luke T.]

Originally posted by reprise
I suspect that voters in the US - like voters here - no longer see "economic growth" as a measure by which they can predict the likely quality of their own lives, and no longer believe that just because something is "good for the economy", it will be of benefit to the average citizen.

Anecdote alert!

I was laid off from a really good paying job in July. I got a much lower paying job in September. This is probably the case for a lot of my fellow hi-tech employees. Our industry has been decimated. Probably even worse than decimated.

(Edited to add: And the hi-tech industry is taking advantage of the large number of unemployed hi-tech workers. The wages they are now offering are less than half of what they used to be!)

So I am no longer on the chart of the Unemployed statistics.

Now how about that quality of life? Well, mine is much lower than it was in July, I can tell you that. Add a new baby to the picture and you get an idea. Things are so tight they squeak. Eating a meal from Burger King is a major financial decision.

But offer me that or staying on unemployment and guess which option I will go with. If I was still unemployed, my family and I would have had to move to much lower living conditions by now. A serious step backward.

We would have had to sell our house, instead of considering just refinancing it. We would probably be living in an apartment.

So, yeah. I think we are on the road to recovery. It will be a while before we are back to where we were, but I am confident we will get back to where we were.

Christmas this year is really going to suck, though.

[Luke T.]

The thing that really sucks about being unemployed is that the effects are felt long after you are re-employed because it wipes out your savings. Really, really fast.

[Frank Newgent]

Originally posted by shanek

There are really only two things you can do with dollars: spend them in the American economy, or invest them in the American economy.
You can also bury them in the back yard. While ensuring that you spend all the counterfeit ones.

Are you not perturbed at the loss of manufacturing jobs in the US?

[shanek]

Originally posted by Luke T.
I was laid off from a really good paying job in July.

Just to jump in with an old saying: "A recession is when you lose your job; a depression is when I lose mine."

[shanek]

Originally posted by Frank Newgent

You can also bury them in the back yard. While ensuring that you spend all the counterfeit ones.

There are non-counterfeit ones???

Burying it just takes it out of circulation for awhile. If enough people do that, it will curb inflation; other than that, it doesn't have that much of an effect.

Are you not perturbed at the loss of manufacturing jobs in the US?

Of course I am. My home county was pretty much all manufacturing jobs and there are precious few of them left. Our government gave them away with the "free" trade agreements that it made (which in no way resemble free trade), have worked to devalue the dollar (ostensibly to get more people to buy domestic goods but which really results in capital flight), and instigated regulations like the minimum wage which virtually guarantee these jobs are going to go overseas eventually.