economy on the rise

[strandinthewind]

Originally Posted by dissention

Just to lighten the hostile mood until I can blow Jason's arguments out of the water:

Hooray for Babs!!!!!!!!

BTW - us hostile - NEVER

[strandinthewind]

and another (albeit a skewed source - but the numbers support him):

http://www.nationalreview.com/kudlow...0406021034.asp

June 02, 2004, 10:34 a.m.
Up in Smoke Stacks
The old economy is on fire.

The much-maligned factory sector is booming. Not rising. Not improving. Booming.

According to just-released data from the Institute of Supply Management, which tracks the manufacturing sector, new orders, production, order backlogs, export orders, and employment were very strong in May. The industrial sector is so strong that the speed of supplier deliveries has hit its highest level since April 1979. This means that firms cannot produce fast enough to meet rising demand, which is why commodity prices continue to climb. As a result, capacity use keeps growing and inventories are still too low in relation to skyrocketing sales.

Meanwhile, new factory hiring has jumped to a 31-year high, the best since 1973. Of more than 400 industrial firms surveyed, 36 percent added workers in May while just 7 percent had fewer workers. This is another nail in the coffin of the jobless recovery. As the inventory-rebuilding process ratchets up over the next year, expect even more job creation to follow.

Election-year battleground states in the Midwest industrial heartland are reporting significantly lower unemployment rates compared to one year ago, according to the U.S. Bureau of Labor Statistics. In April, Michigan registered a 6 percent jobless rate compared to 7.2 percent in April 2003. Ohio’s jobless rate fell to 5.8 percent from 6.2 percent. Pennsylvania’s dropped to 4.9 percent from 5.4 percent. West Virginia reported 5.4 percent from 6.6 percent a year earlier. Missouri’s jobless tally dropped to 4.5 percent from 5.5 percent.

In view of the political significance of these states, it’s surprising that administration officials are not loudly commenting on the remarkable ISM manufacturing report, including its sensitive jobs component. Did anyone say outsourcing? Did anyone say “hollowed out”? The naysaying is nonsense. The ISM numbers are consistent with 7.3 percent breakneck growth of gross domestic product.

Rapid productivity gains in manufacturing — 5.3 percent over the past year — have enabled this sector to produce more with fewer workers. But while the manufacturing share of employment has declined over the past decade, the manufacturing share of GDP has risen.

With the economies of China, India, Japan, and the U.S. booming, the so-called “old” manufacturing sector will be a major contributor to American economic growth. So will the sector that produces basic materials.

Meanwhile, the energy-price boom is completely a function of surging world growth — not deliberate supply shortages such as occurred in the 1970s. Today’s fuel-price story is not an economic negative. Jobs and incomes are rising along with energy prices. Personal income has increased by an outsized 5.7 percent over the past year, while 1.1 million new payroll jobs have been created since last August. Higher profits are already attracting new investment that will increase energy production — especially if government policies keep out of the way. Attracted by big international profits, the Saudis, Russians, and others are rapidly expanding production.

In the U.S., low tax-rate and monetary-reflation policies have been the key stimulants to the boom. These pro-growth policy levers are not changing anytime soon. Neither will the booms in Asia.

Economists who today predict a second-half slowdown because of high oil prices and reduced tax refunds are out of their minds. Tax-rate incentives, not tax-refund cash flows, have created large pro-growth rewards to those who supply investment funding to the industrial sector (along with all the other sectors). It’s this funding that results in job creation.

As for money-creation and liquidity, there is good evidence (e.g., the steeply upward-sloping Treasury yield curve) of monetary abundance in the economy. A few quarter-point hikes in the Federal Reserve’s basic policy rate won’t change this.

Is there an inflation threat to the old-economy boom? Yes, but it’s mild. If the Fed doesn’t remove some of the emergency liquidity they created since late 2002, industrial price increases from production shortfalls in relation to rising demand will be monetized into a generalized inflation. The Fed must act to prevent this. They should remove emergency liquidity that is no longer needed by the booming economy.

That said, tax cuts, record productivity, and the growth inherent to the sparkling recovery of America’s smoke-stack industries are significant economic developments that are intrinsically counter-inflationary. The headline story is that global competition and technological innovation are creating the biggest old-economy revival in twenty years.

There is no need to fear foreign trade. Nor is there need to worry about outsourcing jobs — there are no Benedict Arnold corporations out there. There is also no need for protectionist penalties. Nor is there a place for big tax hikes on investment.

The economic patient is recovering beautifully. Senator John Kerry’s European-style witches-brew policy elixir of trade protectionism and tax hikes would be exactly the wrong shot in the economy’s arm. If it ain’t broke, Sen. Kerry, don’t try and fix it.

— Larry Kudlow, NRO's Economics Editor, is CEO of Kudlow & Co. and host with Jim Cramer of CNBC's Kudlow & Cramer.

[strandinthewind]

Here is the CBO's site:

http://www.cbo.gov

Interestingly, they predict that if the current tax system stays the same the deficit has peaked in 2004 and will decline over the next ten years. They also are worried about the retirement of the BB and its effect on SS, Medicare, etc. To wit:

The Budget Outlook
CBO projects that if current laws and policies remain unchanged, federal deficits will begin to decline after this year. In the ensuing years, under CBO's baseline, deficits drop as a percentage of GDP, from 4.2 percent in 2004 to 3.0 percent in 2005 and 1.7 percent in 2010. After 2011--if the tax cuts enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) expired as scheduled, growth in discretionary spending continued to be limited to the rate of inflation, and other policies stayed the same--the budget would essentially be in balance.

Over the 2004-2014 period, outlays are projected to grow at an average annual rate of 4.7 percent and to
remain near 20 percent of GDP. That level would be slightly below the average share of the economy devoted to federal spending since 1962 (see Summary Figure 1).

________________________

http://www.cbo.gov/showdoc.cfm?index...uence=1&from=0


I do not see how this supports any argument that the current economic recovery is grossly inadequate or a temporary band aid

[dissention]

Originally Posted by strandinthewind

Here is the CBO's site:

http://www.cbo.gov

I know, but the site won't load on this ****ty computer. Wait until I'm home tonight and have my real computer in fornt of me.

It's ChimpCo's fault, you know. He specifically made that site like that so us poor liberals with old and ****ty computers couldn't log on. Only the rich ones can.

[strandinthewind]

Originally Posted by dissention

I know, but the site won't load on this ****ty computer. Wait until I'm home tonight and have my real computer in fornt of me.

It's ChimpCo's fault, you know. He specifically made that site like that so us poor liberals with old and ****ty computers couldn't log on. Only the rich ones can.

Well, he does want everyone to have DSL or whatever. I think the DSL industry offered him a job come January 2005

[dissention]

Originally Posted by strandinthewind

Well, he does want everyone to have DSL or whatever. I think the DSL industry offered him a job come January 2005

Let me know which company so I'll know not to give them my patronage.

[strandinthewind]

Originally Posted by dissention

Let me know which company so I'll know not to give them my patronage.

well, if it gets him out of the WH . . . . I'd support them

[gldstwmn]

Originally Posted by strandinthewind

and another (albeit a skewed source - but the numbers support him):

http://www.nationalreview.com/kudlow...0406021034.asp

June 02, 2004, 10:34 a.m.
Up in Smoke Stacks
The old economy is on fire.

The National Review is a right wing cheerleader that would sell their granmother to the devil for these 'Cons. How do I know this? The editor used to be the editor of my hometown newspaper.

[gldstwmn]

[QUOTE=strandinthewind] This adds or at least continues the new money supply and is a direct effect of the tax cuts, i.e. people spent money - the factories need to produce more - they hire more - QUOTE]

Yes, overseas. Those jobs are being outsourced.

[gldstwmn]

[QUOTE=strandinthewind]Prove it. You cannot and you know it. Moreover, please show me where credit card and other loan companies have loaned ThAT much money and that money is being spent. [QUOTE]

I actually can access that info but I don't have time to do it right this minute.

[gldstwmn]

Originally Posted by strandinthewind

LOL - cut and paste it. And then juxtapose it with the June and other numbers indicating economic growth.

You're hoping? May's numbers were just put out in the last two days.

[gldstwmn]

Originally Posted by strandinthewind

That way we will have it all in the open. Again, most economic indicators, including Greenspan and his posse, state the economy is recovering and that the largest danger to that recovery is the huge federal deficit.

Would you like me to post his speech from yesterday? I have it.

[gldstwmn]

Originally Posted by strandinthewind

Well, he does want everyone to have DSL or whatever. I think the DSL industry offered him a job come January 2005

But can he pass the drug test?

[dissention]

Originally Posted by gldstwmn

The National Review is a right wing cheerleader that would sell their granmother to the devil for these 'Cons. How do I know this? The editor used to be the editor of my hometown newspaper.

Not to mention he was on Dennis Miller last week and said his paper was conservative.

[dissention]

Originally Posted by gldstwmn

Would you like me to post his speech from yesterday? I have it.

I started to read about this morning, but this computer kicked me off and wouldn't let me read it.