Yesterday one of those daily “financial report” blurbettes common to talk radio advised that Canada’s job making machine was continuing to create employment, despite the economic downturn in the US. It was no more that 15 seconds later that the same analyst offered that job growth figures just released in the US exceeded expectations, along with signifcant increases in wages.
That’s pretty typical. If you were walled off in a room somewhere in Chilliwack, with only the CBC and CTV as your sources, you could be forgiven for wondering if America will ever be released from a 7 year recession;
The pessimistas are a persistent bunch. In 2006, they were certain a recession was just around the corner. They were wrong. Instead, the economy posted two consecutive quarters of near or above four-percent growth.
[…]
Here are the facts: Americans are working. The 4.7 percent unemployment number remains at an historical low. On a three-month rolling basis, the U.S. economy has added over 100,000 jobs. Meanwhile, the household job count shows that an average of 303,000 jobs have been added in the last three months. This is noteworthy because it suggests that the job market is turning around.
Hours worked are growing more than 1-percent annually, while workers’ wages are running 3.8 percent, a full percentage point ahead of inflation. As for this week’s productivity report, it was nothing short of spectacular: the 6.3 percent productivity gain was the best in four years. A rise in productivity is good for growth. It’s good for profits. And it’s good for low inflation.
Speaking of inflation, business inflation is down from 3.5 percent just over a year ago to 1.5 percent today. Meanwhile, oil prices have retreated to $88. And, to top it all off, last night we received a tremendous new number showing household net wealth has headed even higher. It stands at a record $59 trillion dollars. That’s more than seven percent above a year ago.
The more things change…
In the 1980s, there was a consensus among the members of the national media that Ronald Reagan was going to fail and that he was going to bring on economic disaster. But…the economy didn’t collapse. In fact, it soared to unprecedented levels.
The media stubbornly refused to admit that “Reaganomics” was responsible. The drumbeat of negative opposition to the president’s policies continued through the 1980s. By 1986…the ratio of negative to positive stories was seven to one. In other words, as the economy was improving, media reports on the economy were becoming increasingly negative.
One of the most common allegations in these reports was that the poor got poorer under Reagan, even though the actual number of poor declined from 14 to 13 percent during his administration, and the average income for the lowest one-fifth of Americans rose from $7,008 to $9,431.
Inflation declined 48%, from 8.9 to 4.6%. Unemployment declined 45%, from 7.5 to 5.2.%. Interest rates declined 71.9%, from 21 to 5.9%. Twenty-one million new jobs were created. The so-called “greedy ’80s” witnessed the largest peacetime economic expansion in our nation’s history, yet the media remained deaf, dumb and blind.
I’ve long maintained that most of what you hear in media about the relative strengths of our economies can be dispelled by driving from Winnipeg to Fargo.
Let’s not forget the fabulous success that Bill Clinton enjoyed during his “It’s the Economy Stupid” tenure.
He actually did nothing but mind the store … He was the beneficiary of all the work done by Ronald Reagan to get the USA in good shape.
That’s why he has so much time to chase skirts and smoke cigars. By the time he was gone, the Islamic Jihad figure we were so soft that the White would be a mosque site within one more generations.
The didn’t count on Dubbya coming up next. They were primed for non other than that big fat naive idiot Al Gore.
I really need to start editing my comments. The typos are rampant, I am sorry.
Recessions occur when there is high unemployment, high inflation and only then is defined by two successive quarters of negative GDP. So, once again the MSM is writing to “fears” and not letting facts get in the way of a good story.
I just returned from 2 months in the south. The business activity is huge and thier local economies are on a role. What I don’t understand is why we here in Canada suffer the retail prices for exactly the same products that are sold for a far less price in the USA. For many years we had the excuse of a lower dollar. Now we don’t and the differences are staggering.
The big box stores are the worst thieves up here.
differences of 100 to 200 percent on many items are common.
The media analysts need to start cleaning thier glasses and report on real issues for real people.
As good as the state of the American economy is right now, I can’t help but think that Bush has already created a ticking time bomb in the form of that massive current account deficit. The Democrats are the party of professional spenders – anything the Republicans do in that regard is just an amateur imitation.
I agree with Rush L’s take on it. When Dem’s or Libs’s are in power the MSM paints everything rosy. It is sometimes hard to believe that the MSM could lie openly to the public about clear economic facts but they just can’t help it.
Eugene, you do know that at the current rate of growth, the deficit will be gone by the middle of 2008?
To borrow a phrase, our MSM have predicted nine of the last three recessions.
If the MSM was so good at gauging the economy, they would be making more than the sub 100k that most of them make.
The US employment statistics are heavily reliant on what they call the birth/death model. This is basically jobs that get added every month based on a statistical formula. The problem is that when the economy turns down the whole model gets skewed.
See here for more detail.
http://bigpicture.typepad.com/comments/2007/12/more-on-birthde.html
As well the total US unemployment picture is reported differntly than in Canada
These are the categories and the true numbers
http://www.bls.gov/news.release/empsit.t12.htm
Also, don’t forget that Mrs Thatcher inherited a 3rd economy from Wison/Callaghan
Kevin – don’t forget that noone is comparing US unemployment to Canadian. The comparisons are to previous US data; all based on the same model.
Not sure what your point is, Kev, but Canadian unemployment is reported on same basis as Australia and the Untied Kingdom, so it’s still inferior to non-socialist economies.
Looking for a new Canadian motto?
Even with a tory government – we’re still socialist!
Actually, they (both liberal media and liberal everything else) have been predicting a US recession for the last 4 years in a row. I was supposed to happen after the 2004 election. It was supposed to happen after the 2006 election. It was supposed to happen this year. It is supposed to happen Next year.
What I want to know is, how did anyone so OFTEN wrong as Krugman (not to mention all the rest) manage to get a JOB in the first place!?!
God Help Us if the dhimmicrats get into the WH and make the likes of him Chairman of the Fed.
The US is the most productive per capita country on earth and continues to improve upon it at a rate that will double that capacity in a little more than ten years – absolutely remarkable in what would normally be considered a ‘mature’ economy. With that kind of growth, who cares about the comparativly piddly trade and account deficits? (Canada contiues to lag in productivity and were it not for the bounty of natural resources we would be a nation in steep economic decline.)
And as for the sub-prime issue, look for there to be a flood of capital into those distressed properties within the next 24 months – picking up bargains and then investing in upgrading their quality. The same thing happened in the S&L ‘crisis’ during the reagan years. As many of those properties are in poor urban areas this will be looked upon as the next phase of the rejuvenation/regentrification of urban america ten yrs from now.
All of this revolves around the liquidity of capital and the US is far and away the juristiction that has the highest liquidity.
The Dems can coin a new motto.
“Its the carbon credits!– stupid!”
The point is that there are lies, damn lies and statistics. There are no true capitalist societies any more and that includes the United states which is now as socialist as all the other European democracies and Canada (just look at the mortgage bail out proposals for proof of a managed economy). Most of the statistics that are put out by the US government are changed to make them look better. This includes the last GDP report which used the lowest inflation rate since FDR was president to come up with 3.9%.
As someone who has a business I can tell you the cost of doing business in Canada is not easy.
These issues include wages, taxes, import/export requirements, administrative costs,Canada pension, corporate structure and bilingual labeling, just to name a few.
This is even more so when you have a mother Corporate company based in the U.S. Which my suppliers are.Everything I get wholesale comes from the U.S.
You’re way off by calling this a “bush boom” the average american has barely seen in gains to income after you take inflation into account inflation, all the (small) gains have gone to the rich.
…If you were walled off in a room somewhere in Chilliwack, with only the CBC and CTV as your sources…
little anecdote,
I know a university educated woman who was director of a well known school in Montreal and who has made a small fortune with books she wrote that “la commission scolaire du quebec ” bought by the truck load and that was used in schools across quebec for many years.
Her only source of news is Radio-Canada (the French CBC) she does not watch anything else ( she reads La Presse though ) and a couple years ago, when president Bush sent troops to Afghanistan and Irak, she told me that the USA’s economy was so bad that they had to steal oil to keep from going bankrupt.
Yep the USA was going bankrupt and only stealing oil could save them.
That is what our tax funded television had put in her head.
True story.
It is strange that every time there are complaints about price differences in the US and Canada, the cost of bilingual labels never comes up.
I listened to the Saturday morning CBC propaganda, er political, program and it was all gloating how miraculously Canada has turned around while the US is going down the tubes economically. The national debt was ballooning and the economy was not healthy, unlike the good time sunder Clinton.
No bias there.
A bit O/T.
I laugh and cry when I hear the Liberals complaining that they are not being given any official role at the Bali all-inclusive vacation resort.
It’s clear that they still have not adjusted to their new role as NOT the {natural) ruling party. he he.
Chilliwack is practically a border town with lots of exposure to northwest Washington state. If you were walled off in Chilliwack, but had a tiny window, you could see the steady movement of trucks to and from the American border a few miles away. If you had an AM radio, you could hear the advertisements on Bellingham radio begging for people to apply for jobs. Of course, even with all that, there probably are some people in Chilliwack who have walled themselves off mentally and listen only to CBC.
As a Chilliwack resident. I can tell you that people here are aware of the lower prices in the US and their traveling there to shop has caused huge lineups at the border. Chilliwack is a conservative town and votes Chuck Stale back in by a large majority every election. We are probably one of the only towns in Canada to be dept free. We do have our share of pot headed loonies and moonbats writing letters to the editor of local rag though. And the policy of the rag is to publish them all as the local paper likes to copy the big MSN’s bias.
pete: I can believe that the _fiscal_ deficit will be gone by the end of Bush’s presidency (it’s been falling quite rapidly since its peak in 2004) but the US has been running a current account deficit since about the early 80s and it stands at somewhere around $800bn, last I heard.
Granted some of the current CA deficit is attributable to Clinton’s economic comfort in dealing with the Chinese but my point remains that Republicans trying to do their best imitation of Democratic spending is generally a bad thing.
It wasn’t just the liberals who got caught short by the 1980s – it was also the goldbugs. Few of them believed that Paul Volker would get away with squeezing double-digit inflation out of the U.S. economy. The rationale given was that the American public was too short-termist to see their way through the necessary wring-through.
Of course, the bulk of the public did see it through, in large part because of the alarm generated by those same goldbugs.
Interestingly enough, the goldbugs who didn’t bend with the new wind ended up going broke by underestimating the intelligence (and/or resolve) of the American public.
Actually, they (both liberal media and liberal everything else) have been predicting a US recession for the last 4 years in a row.
Like a stopped clock, they’ll eventually be right. The most offensive thing about the MSM is that they never admit to being wrong – but why should they? They’re selling our eyeballs to advertisers. *We* are the product they sell, the content/quality of their stories is largely irrelevant.
The joys of blogging… I can’t even pick a Canadian city at random to make a larger point, without being corrected by someone… LOL
You want to see who’s going to be in a recession Real Soon, its Europe. With a high Euro and super high costs of labor and regulation, who can afford their stuff?
Priced a bottle of French wine lately? Compare to equal quality plonk from Chile, California, and Oz. Or even good ol’ Niagara!
It ain’t easy being a Frog.
… massive current account deficit
Eugene at December 8, 2007 1:13 PM
I wish I understood this better, but I do believe that this is akin to worrying about the “massive” total of the debit column without reference to the exactly offsetting “massive” number in the credit column both of which add up to zero.
It ain’t easy being a Frog
And just wait until they become “Green Frogs”!!!
I’ve listened to Neil Cavuto on Sirius Fox for past 3 years and he’s been showing where the media has been wrong predicting (cheering on) a recession or any downturn in the economy. He’s proved them wrong every single time.
The EU has more worrying signs of trouble than the US.
Do the unemployment/employment stats take into account the illegal immigration figures? Those workers still spend most of their disposable income in the US as well. How do you count it all, really?
Glenn, US unemployment and employment statistics include the illegals. The surveyors don’t ask about immigration status, only employment.
Which makes the whole thing even more remarkable, if you think about it. Not only are we maintaining a level of unemployment any economist would’ve told you was impossibly low as recently as fifteen years ago… we’re doing it while absorbing three to five million illegals a year.
And the cost is genuinely minimal, despite severe dislocations in a few local places. Most important for politics, there is *no* cost to the urban elite — in fact, they receive a net benefit. The brunt of the cost is being borne by plumbers, truck drivers, and other rednecks, and as far as the Deciders are concerned they either deserve it or can be persuaded it’s all Bush’s fault.
In a way you have to admire it. The blue-state urban elites get cheap nannies and groundskeepers, and the resulting depression of middle- and lower-middle-class wages gets blamed on The Rich (which, conveniently, does not include their prosperous selves). Convenient, no?
Regards,
Ric
@Kate:
Who corrected you, and over what?
Yeah, that darn MSM. Of course the US is booming, just look at the housing market!
teddy reminds me of the story of the Three blind men and the Elephant. ‘Cept teddy is Willingly blind.
My comment about Chilliwack was challenged.
I can hardly believe the ignorance on this thread. The United States is already in a recession all one has to do is look at the 2year treasury bill and the 4 year treasury bill the spread is less than 1% and the yield curve has been inverted for some time now.
The 4% growth that everyone is championing is only made possible by understating the inflation number. Google shadow economics if you don’t believe me.
True inflation is running at about 10% per annum which is not properly factored into GDP. That puts the U.S. at about -6% GDP growth last quarter.
The job number is all lies. The official government number when compared to the household survey is the exact opposite. Look at the actual number you sheep. If the worst housing recession in U.S. history is occurring how can there be a gain in construction jobs? Also, did you know that the government statistics now consider someone working at McDonald’s making a burger is for statistics purposes a manufacturer. LIES
Illegals are not counted in the job numbers. Remittances to native countries are down dramatically. Recession.
The U.S. is already in recession. Anyone on the thread that bashes MSM and yet believes government statistics is out of there mind.
Think for yourself.
I can hardly believe the ignorance on this thread. The United States is already in a recession all one has to do is look at the 2year treasury bill and the 4 year treasury bill the spread is less than 1% and the yield curve has been inverted for some time now.
The 4% growth that everyone is championing is only made possible by understating the inflation number. Google shadow economics if you don’t believe me.
True inflation is running at about 10% per annum which is not properly factored into GDP. That puts the U.S. at about -6% GDP growth last quarter.
The job number is all lies. The official government number when compared to the household survey is the exact opposite. Look at the actual number you sheep. If the worst housing recession in U.S. history is occurring how can there be a gain in construction jobs? Also, did you know that the government statistics now consider someone working at McDonald’s making a burger is for statistics purposes a manufacturer. LIES
Illegals are not counted in the job numbers. Remittances to native countries are down dramatically. Recession.
The U.S. is already in recession. Anyone on the thread that bashes MSM and yet believes government statistics is out of there mind.
Think for yourself.
Which is to say, traders expect the deficit to continue to fall and are expecting that the Treasury will no longer need high interest rates in order to sell bonds.
Yeah. Almost as funny as Iowahawk, if you know what you’re reading.
If you’re innumerate enough to mean that seriously, why would anybody pay any attention to you? Other than the equally pig-ignorant and malicious, I mean?
Examine your assumptions. In fact, turn it around: how can there be “…the worst housing recession in U.S. history…” if there’s a gain in construction jobs? There’s a problem with some financing schemes, which the Government is about to make worse by introducing price controls. But if you want a job, learn to use a hammer.
Bullshit. It can be inferred that illegals are not counted in the household survey. They are definitely counted in the employers’ survey… which neatly accounts for the discrepancy.
Look in the mirror, hysterical loon.
Regards,
Ric
Hey RIC,
High interest rates are you our of your mind. The only people that think 3% interest rates are high would be the Japanese.
What deficit are you referring to? The emphasis are on which one. Moral, Financial, Trade, intelligence, the list goes on.
If you googled shadow economics then can you tell me how, a government can increase money supply at a rate of over 10% can say inflation is only 2%. Wake up. Money supply growth is inflation.
Trouble with a few financing schemes.The dire bank situation is an order of magnitude worse than what was seen in the 1989 Savings & Loan crisis. This crisis is much worse, yet to be recognized. The 1991 Resolution Trust Corp was designed to deal with liquidated failed banks. The 2008 Resolution Trust platform will be an order of magnitude more grandiose in its design and execution.
Look at the performance of the home builders, financial institutions, and re-insurers.
I don’t really understand what you mean by discrepancy regarding the job numbers. Please explain.
If everything in the U.S. is ok then why do you presume the US Dollar index is at an all time low? Good for shopping oh so bad for pensions and investments denominated in U.S. fiat currency.
Now let us see,
The comment just above is saying that US is already in recession as per his/hers parameters.
The fact that US was and is in constant growth is somewhat irrelevant to the commenter
The 4% growth is what it is, if somebody wants to cook it that can be done to death with no valid results.
The inflation is what it is regardless of somebody thinking it is different.
The statement that ‘The job number is all lies’ is patently stupid, it’s like saying ‘It’s windy’, it is of no consequence whatsoever.
The US government considers the making of hamburgers a manufacturing job; without deviation from the past consideration, no change in the status. Seems lies on the part of the comment.
Remittance to the native countries is no factor in US statistics, it is an illegal activity.
If US was in recession, we don’t have to look forward to anything good as much as the commenter would like to have us, thanks goodness the US is likely better than even.
As for CBC, it is no contest, they favor totalitarians 100%.
I suggest you think for yourself. Perhaps get some medical help, the likes of your self are fond of.
Peace be with you and may the earth enjoy you walking on it, sucking the good air and exhausting that dreaded CO2.
Ah. So what you are is a “hard currency” nut, a.k.a. “gold bug”. Making a lot of money at it, are you?
If bond traders didn’t think they’d be paid, they’d bid the price up — or, rather, they wouldn’t respond until the Treasury raised their return. If bond rates are low (which they are, as you note) it means there’s confidence they’ll be repaid.
The household survey presumably includes households of illegals. It stands to reason they wouldn’t be particularly frank with the surveyors. The employment survey simply asks employers how many are on the payroll, without noting immigration status. Both are about equally “accurate” because they measure different things.
And yep, there’s gonna be an almighty crunch. Price controls will make it worse. Recession? It is to laugh. Like I say, learn to use a hammer and a circle saw. There are plenty of jobs. (As a bonus, learn a few words of Spanish. Then you can be a supervisor.)
The low dollar says that (1) we have moved too much of our manufacturing overseas, (2) there are malicious powers doing everything they can to drive the dollar down, and (3) thanks to confidence in the system interest rates are too low to attract foreign buyers. All but #2 are real but short-term problems. Isn’t it interesting to note that even as the dollar falls, the current-account deficit (=”foreign trade deficit”) is decreasing as well? If it weren’t for “non-tariff trade barriers”, for which read deliberately induced red tape and bureaucratic requirements, American cars (e.g.) would be so cheap in Europe nobody would buy an Audi. And a lot of the construction jobs aren’t in housing — they’re building light manufacturing plants, three in my small town alone. I even know an American company that exports steel and manufactured steel products. That’s been a while.
There’ll be a good bit of pain in a few places over the next few years, and you and the Press will talk it up to the max. It won’t amount to recession, though.
Regards,
Ric
the true sign of recession is consumer spending. When consumer spending slumps, it’s truly a recession. And all indicators right now are showing continued consumer spending. Spin whatever numbers you want to forcast an imminent recession, but if shoppers keep shopping, there’s no recession.
Thanks, Kate. I missed the Chilliwack part of the post (which could be held as evidence that it wasn’t much of a dig at Chilliwack.)
There seem to be two issues at play here. One is the insane comparison drawn between Canada and the US, as in, ‘OMG people think Canada is doing so good and the US is doing so bad so why is the US really doing so much better, ZOMFG!! Just drive down south and go shopping and then tell me who has the better economy suckers@!!!’ That’s enclosed in single quotes, because I can’t remember Kate’s exact phrasing and don’t want to scroll up to the top. But anyway, not being an expert I can’t say for sure, but I would guess that a drunken and stumbling American economy would still outperform a fairly solid Canadian economy. Maybe Canada would even start to look good, what with the Beer Goggles. But sooner or later America will sober up, mumble something about Iraq and then never call. And it will be just fine.
Which brings us to point two. American economy is not all roses. A lot of things are happening that are worrisome, and need to be kept in check before they get out of control and lead to real problems. I’m talking a full on bender here that would leave even a smoking hot Canada feeling like crap in the morning. Ric Locke at least sees the dangers, and feels (like the Fed I think) that it likely won’t come to pass. Oh, and that’s K-Fed. I don’t know what Bernake (or soemthign) thinks about things.
nanoix, the mtg problem in the u.s. sffects about 5% of the total realestate market. as far as jobs go, if more people are working then more people are working, no matter what the job.
People like nanoix could do us all a service if they would read Capital, learn the keywords, and go into competition with the Leninist elitists who have taken over the concepts of Marxism and twisted them to their own political ends.
The core of Marx’s work is a genius-level analysis of “classical” economics and the inevitable result(s) thereof. The basic concept of classical economics is “hard money”, the notion that money itself must and does have value. Anybody who believes in hard money and does not agree with Marx on the fundamental level hasn’t thought things through.
Modern economics, by contrast, regards money as a symbol of wealth, analogous to the use of character-glyphs as symbols representing phonemes and words as symbols for ideas and concepts. Money is the language by which wealth is communicated, and just as we have “variables” and “operators” by which we can manipulate mathematics, there are rules by which we can manipulate money. One of the surprising things about mathematics is that manipulating it gives results that represent real effects in the physical world — and, in the same way, manipulating money as a symbol of wealth allows us to control and direct wealth itself to a certain degree. This is not to say that we know all the possible manipulations or can completely predict all the outcomes, but, then, we’re constantly learning new things about mathematics and physics, too.
The grunts and buzzes by which we represent the word “money” are not the thing itself, but neither are the colored slips of paper we carry around or the shiny disks nanoix and his fellows would probably prefer. There are and will continue to be screwups in the symbolic manipulation of money, but the basic concept is clearly sound. If it is not, what the Hell are six and a half billion people eating?
Regards,
Ric
The US economy and many other western countries economies are built on larger and larger amounts of debt.
If your next door neighbor continually borrowed money to fund his lifestyle higher than his income it would look to everyone like he was rich but it would eventually catch up to him. Just as no individual can continually borrow more money each year without eventually getting into trouble neither can a country. The US dollar is the world reserve currency which allows them to get into more debt trouble than other countries would be allowed to before they had consequences.
The US debt levels are unsustainable and the US GAO office is saying so itself.
David M. Walker
Comptroller General of the United States
http://www.house.gov/budget_democrats/hearings/2007/725walker_testimony.pdf
Sorry, but do the people posting that the American economy is rosy ever look up the figures? Reagan preached fiscal conservatism, but he actually ran huge deficits. GW is doing the same thing. It’s not that difficult to achieve full employment when you’re spending money like a drunken sailor. However, the US dollar is dropping like a stone (the US dollar index has dropped from 120 to 76), and the housing ATM has been shut down. That means fewer cars being bought (GM has already cut shifts in Oshawa), and fewer trees being cut (Canfor and Norbord have closed plants due to lack of demand).
The US government stats on inflation are a crock. For one thing, they exclude food and energy costs, and for another, they are subject to “hedonic adjustments”, which is essentially tinkering to lower the number because this year’s computer has a faster processor. The US government (and Canada’s too) has a vested interest in keeping the official CPI number low, as many cost of living adjustments are tied to it.
As I’ve noted here previously, the US government stopped publishing M3 stats a few years back; they don’t want to publicly acknowledge how much they are pumping up the money supply. The incredibly accomodating Federal Reserve will probably cut interest rates next week, and already pundits are forecasting further cuts in the new year. Never mind that Japan has been trying the same strategy for over ten years, without success.
You can’t borrow your way to prosperity. There’s a hard rain gonna fall.