US Economic Recovery

IS  THE  RECOVERY  LOOSING  IT'S MOMENTUM?

*  All art courtesy "Google Images".  (About the Charts:  Up to date official
statistical charts are difficult to obtain.  The charts in this article are the
most representative of all the researched information available. FBN)

The puzzling US economy.  Many things affect the US economy:

GDP, US Debt, Banking, Wall St., and Government Spending to name a few.



By Felicity Blaze Noodleman

There were many news worthy events to write about this week; the conclusion of the summer games in London and the Mars probe landing on the “Red Planet” but since these like most other events take money to produce and that’s the subject of this week’s article.  The state of the United States economy.

Ben Bernanke

On Wednesday August 1, 2012 a story released through the Associated Press reported the Federal Reserve Chairman Ben Bernanke released a statement on the weakness of the US economy which sounded very alarming to me.  A weak economy in an already fragile economic recovery compounded by a poor employment report.  A triple play for the Obama administration.

 

Fed says US economy has slowed, takes no new steps

By MARTIN CRUTSINGER

The Associated Press

WASHINGTON — The Federal Reserve said Wednesday that the U.S. economy is losing strength and repeated a pledge to take further steps to stimulate growth if the job market doesn't show sustained improvement.

The Fed took no new action after a two-day policy meeting. But it acknowledged in a statement released after the meeting that economic activity had slowed over the first half of the year. It also said unemployment remains elevated and consumer spending is rising at a somewhat slower pace.

Stocks indexes turned slightly lower after the Fed didn't announce any new measures to stimulate the economy. The Dow Jones industrial average was down 30 points shortly after the Fed's announcement at 2:15 p.m. It was up 20 points immediately before.

The yield on the 10-year Treasury note increased to 1.52 percent after the Fed's statement was released.

The statement was nearly identical to the one issued after the Fed's June meeting, expect for language noting slower growth. The Fed repeated that strains in the global market pose a significant risk to the U.S. economy, the housing market is improving but remains depressed and inflation remains tame.

Policymakers also repeated their plan to hold short-term interest rates at record-low levels until at least late 2014.

The Associated Press    8- 1-12

Wall Street Slips After Fed Comments

By REUTERS

Published: August 1, 2012

Wall Street closed lower and the dollar rallied on Wednesday after the Federal Reserve stopped short of offering new monetary stimulus even as it acknowledged that the United States economic recovery has lost momentum so far this year.

Equities and the euro had gained lately on increased expectations central banks in the United States and Europe would take aggressive steps to stimulate their respective economies and contain a spreading debt crisis in Europe.

The Fed said after a two-day meeting it was prepared to do more to support an ailing economy but it disappointed some market expectations by taking no new action. Many economists had expected the Fed to push back its guidance for when it might start to raise interest rates but it stuck with its “late-2014” language.

Reuters "news agency" UK    8- 1-12

Four days later I’m seeing a story in the “Washington Post” about the latest jobs report and how the bureau of statistics calculates the figures they release.  But what about real jobs?  Good jobs with benefits and retirement plans.  For the most part they have moved away from the United States because of government regulations and unfair foreign competition.  When is the United States going to become a industrial nation again?  Those are the kinds of jobs I want to hear about, not some summer minimum wage service jobs.

Wait, the U.S. economy actually lost 1.2 million jobs in July?

Posted by Brad Plumer on August 5, 2012 at 10:18 am

The U.S. economy lost 1.2 million jobs between June and July. But that’s not how it got reported. When the Bureau of Labor Statistics (BLS) released its jobs figures for July, it said the economy gained 163,000 jobs. So what gives?

(Paul J. Richards AFP/Getty)

BLS isn’t hiding anything. The discrepancy just has to do with what’s known as “seasonal adjustments.” The U.S. economy follows certain predictable patterns in hiring and layoffs every year. School districts always let workers go for the summer and hire in the fall. Retailers always staff up for the Christmas holidays and lay people off afterwards. Students always flood the labor market in June.

So if we want to know how well the economy is doing, we want to know how many jobs were added after taking these predictable fluctuations into account. Some seasonal adjustments are necessary before the data can tell us anything useful.

And this is exactly what BLS does in its monthly jobs reports. As Jacob Goldstein of Planet Money points out, the U.S. economy had 1.2 million fewer jobs in July than it did in June. But, according to the bureau, the economy still had 163,000 more jobs than one would’ve expected, given seasonal trends. That’s a sign of a steadily recovering labor market. So BLS reported it as a 163,000 gain in jobs.

In theory, that makes sense. But some economists and analysts now wonder if the BLS seasonal adjustments are somehow off a bit. If the financial crisis and recession mucked with the seasonal ebb and flow of the economy, then the adjustments that BLS makes for its monthly reports might be a bit skewed. Some jobs reports might look much better than they actually are. And others might look worse.

There’s some reason to suspect this is happening. For the past few years, as the chart below from Kevin Drum shows, the BLS jobs reports have followed an odd pattern each and every year (the chart shows new jobs gained in excess of 90,000, in order to take into account population growth):

The summer jobs reports are typically lousy while the fall and winter jobs reports are often much, much stronger. Maybe that’s because the U.S. economy is following a roller-coaster pattern–healthy in winter, sick in the summer. Or maybe, as Floyd Norris suggests here, the economy is actually making slow, steady progress and the seasonal adjustments are just making things appear topsy-turvy.

Over the longer term, these fluctuations shouldn’t matter much. Inaccurate seasonal adjustments might make some jobs reports look unduly pessimistic and others unduly optimistic. But they can’t mask the overall health of the economy for too long. Eventually, the jobs reports balance out.

So look at the long-term trends. For the past one-and-a-half years, the U.S. economy has added about 152,000 jobs per month on average. It’s a modest, but certainly not terrific jobs recovery: According to the Hamilton Project’s jobs calculator, the U.S. economy won’t get back to full employment until 2025 at this pace. Still, it’s probably more accurate to watch that long-run average than to fixate on any one monthly jobs report.

The Washington Post    8- 5-12

Is it possible that the “Stimulus” needs a stimulus?  How about somebody new to administer the stimulus.  Since the housing bubble burst back in 2008; a bad economy has only become worse and is for the most part stagnant. 



Trillions of dollars in stimulus to the US economy.

Real federal deficit dwarfs official tally

By Dennis Cauchon, USA TODAY

Updated 5/24/2012 12:46 AM

The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds.

Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.

A U.S. household's median income is $49,445, the Census reports.

The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.

The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government's books.

Deficits are a major issue in this year's presidential campaign, but USA TODAY has calculated federal finances under accounting rules since 2004 and found no correlation between fluctuations in the deficit and which party ran Congress or the White House.

Key findings:

•Social Security had the biggest financial slide. The government would need $22.2 trillion today, set aside and earning interest, to cover benefits promised to current workers and retirees beyond what taxes will cover. That's $9.5 trillion more than was needed in 2004.

•Deficits from 2004 to 2011 would be six times the official total of $5.6 trillion reported.

•Federal debt and retiree commitments equal $561,254 per household. By contrast, an average household owes a combined $116,057 for mortgages, car loans and other debts.

"By law, the federal government can't tell the truth," says accountant Sheila Weinberg of the Chicago-based Institute for Truth in Accounting.

Jim Horney, a former Senate budget staff expert now at the liberal Center on Budget and Policy Priorities, says retirement programs should not count as part of the deficit because, unlike a business, Congress can change what it owes by cutting benefits or lifting taxes.

"It's not easy, but it can be done. Retirement programs are not legal obligations," he says.

USATODAY  5/24/12

The two above charts illustrate the growing Federal Deficit.



The President



What is the president’s plan for dealing with the Federal Deficit?  All I’ve heard him talk about is taxation and raising  taxes for the wealthy.  One thing is for sure, “we cannot tax our way to prosperity”!  The country, according to graphs which track economic growth and employment rates, seems to be in a trend which economists have coined as “Stagflation”.  This economic situation occurs "when inflation is high and the economic growth rate slows down while the employment statistics remain high and essentially unchanged".  

Something which is hardly mentioned is what happens when the Government is borrowing huge amounts of money to meet US obligations.  Known as the "Debt Sealing", Congress must approve this borrowing.  In today's economic climate this creates a situation known as "Tight Money".  Tight money affects borrowing rates for everybody and pushes up the banks prime lending percentages making it much harder to buy homes, automobiles, financing college educations and loans for small and big business.  The cost of every goes up dramatically, that is if these kinds of loans can be obtained!

There are many very good reasons for paying down the Federal Deficit.   It really has become a matter of national security.   I hate to think of what could happen if the country had to face the kind of situation we were confronted with at the beginning of WWII. The Unites States needs to be debt free!  The numbers are very big, but the US has a very big economy and with careful management and a dedication to reducing the federal deficit the country will secure a much brighter future with endless possibilities.

(Above) Historical unemployment statistics.  Notice the spike during

the Obama administration.  These numbers do not account for the people who
have exausted their benifits and have applied for General Assistance and Food Stamps.
(Below) Food Stamp projections from "The Bussiness Insider". 

As the Obama administration continue to live in its own dream world making up its own statistics and moving along with no real direction except down ward in every direction the President is now asking for another four years in the White House with the campaign slogan “Forward”!  As for me I’ll take the previous Bush administrations plan or even the “Trickle Down” of “Reaganomics” to Obama Stagflation.  Why are they calling him "The food stamp President"?



Don't get confussed - this is not a line chart.  The purple section

extends down to "0".  It runs behind the other sections.

I’m Felicity Blaze Noodleman and I approved this Article!  Next week we will be writing about the weather.  See you then!



Nothing in the hat, nothing in the head.