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Old 08-02-2002, 11:59 PM
Posts: n/a
Default You always go too far

First of all, the "clearly wrong" idea is absolutely ridiculous. You are assuming things because of your self-pity or something. How can you say that the economy won't grow 3%? You don't know that just as much as the Fed doesn't know it. They are called projections and at the time that seemed to be the case. You gonna tell me you are smarter and wiser than Greenspan next? Come on, grow up. What is your economic training that makes you the expert here? I marvel at the outright number of economic "geniuses" downturns create. Every guy on the TV thinks he has it figured out. If you step back and look at things from different angles nothing plays out right. Simply put its because the media right now loves to hype this crap up. Stock prices have a very modest effect on the economy. The whole "wealth" effect of the late 90s was overstated to a large degree, history now shows, and yet people want to think there is a negative wealth effect too. As plenty of economists have said, but got drowned out by all the armchair naysayers, 3% average for the year is quite good and what clearly drove the divergent numbers was good winter weather that borrowed a lot of activity from the spring and spent a lot of pent up demand from the recession of 2001.

There are just as many good signs as bad signs out there. The supposedly bad ISM wasn't all that bad, after all the number is over 50 so that means there is still no CONTRACTION as a whole in the manufacturing sector. This was a number that for almost 3 years was showing contraction and now its positive and people are going to call that bad? Personal income is up a whopping 2.5% in real terms, this is a number that you can't just write off as it is extremely rare to have periods of over even 1% for extended times. As most experts will tell you, people say one thing (consumer confidence surveys), but spend another (based on their income). They essential spend what they got and then some. Right now they got a whole lot in general because unemployment isn't unbearable at 5.9% and inflation is pretty much non-existant. I won't be a fool and try to nail the economic growth for the second half of the year, but I will say its 95% likely to be at least 1% and probably about 50/50 to be about 2.5% or better. If you want to believe there is a double dip and that growth is going to flat out stall, well you probably have been watching too much TV because there is no evidence or drivers that are out there to cause that short of war or major terrorism.

As for your fiscal policy piece, I thank whoever is responsible for keeping it from being spent. Government putting more dollars into the economy would be wasteful. The government's contribution to the GDP is already up double digits this year, we don't need any more. The whole tax cut/stimulus arguments are wasting too much energy. Lawmakers are getting too involved in trying to play God for the economy instead of getting out of the way and letting it go its course. Lawmakers have never been able to turn something around once its been going in a certain direction, yet they act like they can do it. Whatever. The economy is doing fine, things are slowly improving and improving at a pace that is sustainable and will not create another quick rise and fall.
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