The decisions over the past 30 years to pass huge huge tax bills to those in the future is unsustainable. Saying you cut taxes when all you actually do is postpone them is dishonest. However, many people go along with such false statements so politicians have learned to buy votes today by raising taxes on the future. Since the public keeps voting for such people when the facts are clear the only explanation is they support raising taxes, not today, but in the future (or, I suppose, they are not able to understand the clear implications of what they vote for). The Long-Term Budget Outlook
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For decades, spending on Medicare and Medicaid has been growing faster than the economy. CBO projects that if current laws do not change, federal spending on Medicare and Medicaid combined will grow from roughly 5 percent of GDP today to almost 10 percent by 2035. By 2080, the government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years.
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CBO projects that Social Security spending will increase from less than 5 percent of GDP today to about 6 percent in 2035 and then roughly stabilize at that level.
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Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.
The cost of paying for a dysfunctional medical system has been a huge drain on the USA economy for decades. But that is nothing compared to what the future holds if we don’t adopted sensible strategies that reduce the huge extra costs we pay and the worse performance we receive for that cost.
Social security is not the huge problem many think it is. Still I would support reducing the payout to wealthy individuals and bringing the age limits more in line with the changes in life expectancy. 12.4% of pay for low and middle wage workers (high income earners stop paying social security taxes so in effect marginal tax rates decrease by 12% for any income above $106,800). Medicare taxes add 2.9% bringing the total social security and Medicare taxes to 15.1% (including both the amount paid directly by the employee and the amount paid for the employee by the employer).
Related: True Level of USA Federal Deficit – USA Federal Debt Now $516,348 Per Household – quotations about economics – articles on improving the health care system – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007
Economists are raising projections for the USA economy in the second half of 2009. The predictions are still for an anemic economy growing at just 1.5% and with unemployment reaching 10.1%. Still I think if we achieve that we should feel lucky. Economists Raise U.S. Outlook as Recession Fades
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The economy probably shrank at a 1.8 percent rate from April to June, the latest survey showed, less than economists forecast last month. The U.S. will return to growth in the current quarter and expand 2.1 percent next year.
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A separate report from the Commerce Department today showed the trade deficit unexpectedly narrowed in May as exports jumped while imports of crude oil and auto parts slid. The gap between imports and exports decreased 9.8 percent to $26 billion, the smallest since November 1999, from $28.8 billion in April.
Unemployment will rise to 10.1 percent in the first quarter of 2010 from 9.5 percent last month, already the highest since August 1983, the survey of economists showed.
The trade deficit is still far to large. And the to move the economy in the right direction we need to continue reducing personal debt (and start reducing government debt).
Related: First Quarter GDP 2009 down 6.1% – When Will the Recession Be Over? – Warren Buffett Webcast on the Credit Crisis
Nonfarm payroll employment continued to decline in June (by 467,000), and the unemployment rate increased to changed at 9.5% (with a total of 14.7 million unemployed), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job losses were widespread across the major industry sectors, with large declines occurring in manufacturing, professional and business services, and construction.
Since the start of the recession in December 2007, the number of unemployed persons has increased by 7.2 million, and the unemployment rate has risen by 460 basis points (from 4.9% to 9.5%). The number of long-term unemployed (those jobless for 27 weeks or more) increased by 433,000 over the month to 4.4 million. In June, 30% of unemployed persons were jobless for 27 weeks or more.
Employment in manufacturing fell by 136,000 over the month and has declined by 1.9 million during the recession. Health care employment increased by 21,000 in June. Job gains in health care have averaged 21,000 per month thus far in 2009, down from an average of 30,000 per month during 2008.
The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in June at 9.0 million. Since the start of the recession, the
number of such workers has increased by 4.4 million.
About 2.2 million persons (not seasonally adjusted) were marginally attached to the labor force in June, 618,000 more than a year earlier. These individuals wanted and were available for work and had looked for a job sometime in the past 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
Related: posts on employment – Unemployment Rate Increased to 8.9% – Can unemployment claims predict the end of the American recession? – The Economy is in Serious Trouble – Over 500,000 Jobs Disappeared in November 2008
The economic clout of the USA has been huge since the end of World War II. The relative position has been decreasing recently with the rise of not only Europe and Japan but Korea, China, India, Brazil and many more. This means the risks to the USA of failing to deal with perennial problems (the most costly but not most effective health care system, spending beyond our means, weak diplomacy, excessive legal costs, poor management practices…) is higher today than it has been.
Fareed Zakaria’s Post American World is a good explanation of some of the current global economic forces in play. He comes to the same conclusion I do that the USA is still in the strongest position today. But the world is changing and the relative position of the United States is declining. The new world requires working with others and the USA needs to adjust to this reality. Too many think the USA can continue to act as though the rest of the world must comply with the wishes of the USA.
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The litigation system is now routinely referred to as a huge cost of doing business, but no one dares propose any reform of it. Our mortgage deduction for housing costs a staggering $80 billion a year, and we are told it is crucial to support home ownership. Except that Margaret Thatcher eliminated it in Britain, and yet that country has the same rate of home ownership as the United States. We rarely look around and notice other options and alternatives, convinced that “we’re number one.”
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America has become a nation consumed by anxiety, worried about terrorist and rouge nations, Muslims and Mexicans, foreign companies and free trade, immigrants and international organizations. The strongest nation in the history of the world now sees itself as besieged by forces beyond its control.
The book focuses quite a bit on the USA, China and India and provides good overviews of the economic strength and weaknesses of those countries. The USA is in a leadership position but the future requires an understanding that others deserve to be treated as partners not allies to be dictated to. If not they will just partially disengage with the USA and create stronger relationships with others. That would not be in the interests of the USA.
Related: Best Research University Rankings (2008) – Dr. Deming’s 7 Deadly Diseases of Western Management – Science leadership and economic growth – Easiest Countries for Doing Business (2008) – Top 12 Manufacturing Countries in 2007 – Why America Needs an Economic Strategy – Country H-index Rank for Science Publications – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007
Nonfarm payroll employment fell by 345,000 in May, about half the average monthly decline for the prior 6 months, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The unemployment rate continued to rise, increasing from 8.9 to 9.4 percent. Steep job losses continued in manufacturing, while declines moderated in construction and several service-providing industries.
According to the Household Survey Data, the number of unemployed persons increased by 787,000 to 14.5 million in May, and the unemployment rate rose to 9.4 percent. Since the start of the recession in December 2007, the number of unemployed persons has risen by 7.0 million, and the unemployment rate has increased by 450 basis points.
Unemployment rates rose in May for adult men (to 9.8%), adult women (7.5%). Among the unemployed, the number of job losers and persons who completed temporary jobs rose by 732,000 in May to 9.5 million. This group has increased by 5.8 million since the start of the recession.
The number of long-term unemployed (those jobless for 27 weeks or more) increased by 268,000 over the month to 3.9 million and has tripled since the start of the recession.
The civilian labor force at the end of May, 2009 stood at 155,081,000 (at the end of April was 154,731,000) growing by 350,000, employment stood at 140,570,000 down from 141,007,000 the month before. The ranks of unemployed grew to 14,511,000 from 13,724,000.
Related: Unemployment Rate Increased to 8.9% – USA Unemployment Rate Rises to 8.1%, Highest Level Since 1983 – Bad News on Jobs
The current economic climate is very bad and all car manufacturing in the USA has declined in the last 2 years. But the longer term trend is that foreign companies are manufacturing more and more here while the USA companies fail to. This year it is likely the “big three” will manufacture fewer than 50% of the cars manufactured in the USA (the “big three” have more production in Canada and Mexico than the “foreign” companies do).
They Can Build Them; Why Can’t We?
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This transplant industry is replacing Detroit’s manufacturing. Through mid May, all North American assembly plants (including Canada and Mexico) have built 2.77 million cars and light trucks, half the production level of the year-earlier period. Of these, Detroit’s Big Three have built only 1.5 million of these vehicles, just 268,000 more than the transplants.
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Toyota took over a badly managed GM plant in California; it was a joint venture, but the Japanese ran the plant. GM sent young executives to work there and learn Toyota’s manufacturing and quality techniques. They learned, but when they came back to GM, the GM bureaucracy would not change its ways.
Read about the joint Toyota – GM plant: Remembering NUMMI. The problems of GM, Ford and Chrysler are due mainly to long term failures or management. It is not impossible to manufacture in the USA. But it is difficult to maintain poor management systems, without overpaid executives when others manage better and don’t take so much of the profits into their own pockets.
Related: posts on manufacturing – Big Failed Three, Meet the Successful Eight – Leading Manufacturing Countries in 2007 – Honda has Never had Layoffs and has been Profitable Every Year – People: Team Members or Costs
Nonfarm payroll employment continued to decline in April, and the unemployment rate rose from 8.5 to 8.9 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Since the recession began in December 2007, 5.7 million jobs have been lost. In April, job losses were large and widespread across nearly all major private-sector industries. Overall, private-sector employment fell by 611,000.
The number of unemployed persons increased by 563,000 to 13.7 million. Unemployment rates for April for adult men reached 9.4% and for adult women 7.1%. The number of long-term unemployed (those jobless for 27 weeks or more) increased by 498,000 to 3.7 million over the month and has risen by 2.4 million since the start of the recession in December 2007.
The civilian labor force participation rate rose in April to 65.8 percent, and the employment-population ratio was unchanged at 59.9 percent. The employment-population ratios for adult men and women showed little or no change over the month. However, since December 2007, the men’s ratio was down by 440 basis points, while the women’s ratio was down by 130 basis points. Since those that stop looking for work (retire or just stop actively looking) are not counted as unemployed the participation rate is a useful statistic to examine in conjunction with the unemployment rate.
Much of the commentary on the April job losses have been that the decrease in the number of job losses from previous months shows the economy is stabilizing. While it is true losing 611,000 jobs is better than losing 700,000 jobs, losing 611,000 is still very bad. The unemployment rate increased to 8.9% and long term unemployment is increasing drastically. This is hardly good economic news. It is true that there is hope that the economy is turning around, but the employment data we have so far is hardly positive (employment data is a lagging economic indicator so it is not surprising employment data does not recover before other signs point to improvement).
Related: Another 663,000 Jobs Lost in March in the USA – USA Unemployment Rate Rises to 8.1%, Highest Level Since 1983 – Over 500,000 Jobs Disappeared in November – What Do Unemployment Stats Mean?
U.S. Gas Fields Go From Bust to Boom
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Huge new fields also have been found in Texas, Arkansas and Pennsylvania. One industry-backed study estimates the U.S. has more than 2,200 trillion cubic feet of gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural-gas demand.
The discoveries have spurred energy experts and policy makers to start looking to natural gas in their pursuit of a wide range of goals: easing the impact of energy-price spikes, reducing dependence on foreign oil, lowering “greenhouse gas” emissions and speeding the transition to renewable fuels.
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new technologies and a drilling boom have helped production rise 11% in the past two years. Now there’s a glut, which has driven prices down to a six-year low and prompted producers to temporarily cut back drilling and search for new demand.
The natural-gas discoveries come as oil has become harder to find and more expensive to produce. The U.S. is increasingly reliant on supplies imported from the Middle East and other politically unstable regions. In contrast, 98% of the natural gas consumed in the U.S. is produced in North America.
Related: Oil Consumption by Country – posts on energy economics – Forecasting Oil Prices – South Korea To Invest $22 Billion in Overseas Energy Projects – Wind Power Provided Over 1% of Global Electricity in 2007
It’s Now a Renter’s Market by Prashant Gopal
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Oklahoma City, where people spent just 12% of their income on rent, was the most affordable. Other cheap markets included Indianapolis, Denver, Fort Worth, and Cleveland. The least affordable market was New York, where people spent 57% of their income on rent.
Rental markets are driven largely by 2 factors, vacancy rates and jobs. If jobs in a metropolitan area are increasing rents usually increase. If more new apartments are added to the market than jobs (which then increases vacancy rates) this will push down rates. Other factors influence vacancy rates (such as people moving back in with parent, people sharing apartments…). Those factors often are largely influenced by losing jobs in an area.
D.C. apartment market remains strong
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Rent increases over the past 12 months for all investment grade apartments kept under the long-term average of 4.2 percent per annum, at 0.5 percent since March 2008.
Related: Housing Rents Falling in the USA – Home Values and Rental Rates – Real estate investing articles – Urban Planning – Longer Commutes Translate to Larger Housing Price Declines
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663,000 jobs were lost in the USA in March and the unemployment rate rose from 8.1 to 8.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Since the recession began in December 2007, 5.1 million jobs have been lost, with almost two-thirds (3.3 million) of the decrease occurring in the last 5 months. In March, job losses were large and widespread across the major industry sectors.
In March, the number of unemployed persons increased by 694,000 to 13.2 million, and the unemployment rate rose to 8.5 percent. Why is that different than the numbers above? The numbers are from different sources of data, the first from BLS surveys of businesses and the 694,000 from household surveys. This reminds us that this data is approximate, not exact. Undoubtedly the figures will be revised as more data is analyzed.
Over the past 12 months, the number of unemployed persons has grown by about 5.3 million, and the unemployment rate has risen by 3.4 percentage points. Half of the increase in both the number of unemployed and the unemployment rate occurred in the last 4 months.
The unemployment rates continued to trend upward in March for adult men, 8.8%, adult women 7.0%, whites 7.9% and Hispanics 11.4%. The jobless rates for African Americans, 13.3% and teenagers 21.7% were little changed over the month. The unemployment rate for Asians was 6.4% in March, not seasonally adjusted, up from 3.6% a year earlier.
Related: Over 500,000 Jobs Disappeared in November – Manufacturing Employment Data – 1979 to 2007 – What Do Unemployment Stats Mean?