Wasn't the saving rate at depression levels? On Sun, Feb 04, 2007 at 01:35:39PM -0800, Jim Devine wrote: > I think the puzzle is solved when we realize that the stats aren't > very good. I think the fourth quarter 2006 stats for the US will be > much worse when the final estimates come out. It's quite likely that > 2007 will be a recession year. Consumer spending can't keep the US > economy going much longer. Of course, I could be wrong about 2007, but > if I am, it just pushes the problem back into 2008, which means a > steeper recession. > > On 2/3/07, Eugene Coyle <[EMAIL PROTECTED]> wrote: > > Paul, > > I was going to write the same post this morning myself. Auto sales > > are low and dropping, housing investment is low. We can't all work > > taking care of each other's portfolios. I'm puzzled. > > The newspapers keep remarking about the tight labor markets but I > > don't see it. A shortage of financial analysts? Yeah, that would > > strain the economy, the Fed must worry night and day about a tight > > market for stock brokers. > > > > Gene Coyle > > > > On Feb 3, 2007, at 3:40 PM, paul phillips wrote: > > > > > Ken Hanly questioned why the huge budget deficits for the war have had > > > so little negative effect on the American economy. I can > > > understand why > > > the war expenditures can have had a military-Keyensian effect > > > stimulating the economy but what I can't fathom is why the collapse of > > > the housing bubble and the slowdown in related industries plus the > > > real > > > problems in the North American auto industry, combined with the huge, > > > and rising, trade deficit have not prompted more of a slowdown in > > > the US > > > economy. Unemployment is up slightly last month but consumer > > > confidence > > > is rising despite an apparent savings rate that has dropped to the > > > lowest level since 1933 (if I remember the year correctly) at _minus_ > > > (-) almost two per cent. Which, as I understand it, means that > > > consumption is being increasingly financed by debt, both government > > > and > > > personal. Now American government debt, despite the size of the > > > recent > > > deficits, is not high as a % of GDP, at least as compared with say > > > Italy > > > or Japan but it is rising rapidly. At what point does interest on the > > > public debt begin to crowd out demestic program spending? And more to > > > the point, at what point does consumer debt payments begin to > > > undermine > > > consumption and produce a 'crisis of underconsumption'? In short, how > > > long can the American economy expand on a rising tide of debt? > > > > > > Paul P > > > > > > > > > -- > > > No virus found in this outgoing message. > > > Checked by AVG Free Edition. > > > Version: 7.5.432 / Virus Database: 268.17.22/666 - Release Date: > > > 2/3/07 3:31 PM > > > > > -- > Jim Devine / "The truth is more important than the facts." -- Frank Lloyd > Wright
-- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com
