Ok. . . This is terrifying.

[Gaspar]

Released yesterday by the Director of the Congressional Budget Office.  http://cboblog.cbo.gov/?p=1249

I wish our President and our Congress would listen to their own Budget people.

[we vs us]

A good first step might be to get the economy growing again.  Humming economy = more tax receipts.

[Conan71]

A good first step might be to get the economy growing again.  Humming economy = more tax receipts.

Do you think they are on the right track for that at the moment?

[Gaspar]

A good first step might be to get the economy growing again.  Humming economy = more tax receipts.

More jobs = More tax receipts.

More commerce = More jobs.

So, what can we do to increase commerce?

[Conan71]

More jobs = More tax receipts.

More commerce = More jobs.

So, what can we do to increase commerce?

Mo'h stimulus

[Gaspar]

What is holding back commerce right now?

[Townsend]

What is holding back commerce right now?

Graphs like the above being the only thing the public sees.

[Gaspar]

Graphs like the above being the only thing the public sees.

Ok.  What should the public see? 

What can be shown that will increase a businesses confidence in the economy?

[Townsend]

Ok.  What should the public see? 

What can be shown that will increase a businesses confidence in the economy?

I wasn't criticizing the graph.

It's the only thing I see all the time and it effects my spending.

If I saw some sort of positive outcome from something for more than one day...maybe a few weeks of something improving, I might increase my spending.

The constant negative graphs being what sells commercial time and the sky-is-falling economic outlook and "surprises" constantly coming at me kill it for me.

That's even with my knowledge that all of this is just someone's or some group's best guess.

[we vs us]

More jobs = More tax receipts.

More commerce = More jobs.

So, what can we do to increase commerce?

Good question.  Corporations are sitting on 100's of billions of $.  None are investing or hiring.  That's essentially where the stimulus has gone: into the stock prices of Fortune 500's.

I'm at a loss, really. I don't think tax cuts are the way to go. Why give corps more money they won't spend? I don't want to re-confiscate the money via huge taxes, though (Bush tax cuts are another issue, IMO . . . ).  I'd rather just the companies start hiring already. 

As I understand it, the stumbling block isn't so much an uncertain political and regulatory atmosphere as simple overcapacity in almost every industry.  Business has to work through its existing inventories before they can build/manufacture more. That's happening, but slowly . . . hence hiring is happening only slowly.  How to speed that up is beyond me.  Maybe we really do just have to wait it out, support people until hiring picks up. 

I think there are anecdotal indications that things are picking up, though.  My industry has been surprised by the suddenness of the turnaround, and I think that bodes well for the rest of the economy.  We're a bellwether of things to come.  I've stopped being a total pessimist, though nathan's deflation scenario is uber scary, and there are indications that that could be on the horizon.

[Conan71]

What if people are finally learning a lesson about a binge and purge economy and everyone (individuals and corporations) is simply starting to learn to live a more austere lifestyle?  What would happen in a scenario like that where unemployment remains in the 10% range (or 16% if you want to count those no longer looking for work).

[waterboy]

Just an idle thought.

Over capacity is the key. And the reason for that may be quite simple (Gaspar will love that!). Consider that the growth of the post WWII economy paralleled the Baby Boom generation. Now that my group is maturing and seeking more service than durable goods consumption, you see that the hospitality and medical industries are growing. But, we no longer are buying first homes, first refrigerators, lawn mowers, washer/dryers, cars etc. The truth is that the following generations are not consuming as much due to their decreased numbers. Family size is shrinking. Even though the large wage earning is being shifted to younger workers because of technology and age discrimination, it is not enough to make up for the BB's huge blip in consumption after WWII.

Take note that what used to be considered durable goods, those goods lasting more than a few years, like refrigerators, lawn mowers and washer/dryers, no longer last more than 2-3 years. They don't even outlast your typical car loan and aren't worth repairing. That is an effort by durable goods manufacturers to recapture losses in production due to shrinking first time buyers. A lot of economic forecasts take durable goods manufacturing into their projections. When the definition of durable goods has changed those forecasts are suspect. How many other definitions are changing?

If we want to survive this loss in commerce, we need to look back to our economic models from pre-WWII and see how they performed with smaller demographics. Then the sobering thought for stockholders that some industries just aren't going to be as profitable as they have been during the BB blip, regardless of how hard their management tries to cheapen their products, will become apparent.

[Conan71]

Just an idle thought.

Over capacity is the key. And the reason for that may be quite simple (Gaspar will love that!). Consider that the growth of the post WWII economy paralleled the Baby Boom generation. Now that my group is maturing and seeking more service than durable goods consumption, you see that the hospitality and medical industries are growing. But, we no longer are buying first homes, first refrigerators, lawn mowers, washer/dryers, cars etc. The truth is that the following generations are not consuming as much due to their decreased numbers. Family size is shrinking. Even though the large wage earning is being shifted to younger workers because of technology and age discrimination, it is not enough to make up for the BB's huge blip in consumption after WWII.

Take note that what used to be considered durable goods, those goods lasting more than a few years, like refrigerators, lawn mowers and washer/dryers, no longer last more than 2-3 years. They don't even outlast your typical car loan and aren't worth repairing. That is an effort by durable goods manufacturers to recapture losses in production due to shrinking first time buyers. A lot of economic forecasts take durable goods manufacturing into their projections. When the definition of durable goods has changed those forecasts are suspect. How many other definitions are changing?

If we want to survive this loss in commerce, we need to look back to our economic models from pre-WWII and see how they performed with smaller demographics. Then the sobering thought for stockholders that some industries just aren't going to be as profitable as they have been during the BB blip, regardless of how hard their management tries to cheapen their products, will become apparent.

Great point on shrinking consumption amongst baby boomers.  Even people my age (just shy of being a BB myself) are moving out of the aquisition phase of their lives.  Families are getting smaller, yet the overall population of the United States and globally keeps growing.  People who migrate to the States often arrive with little more than a suitcase of clothing.  They buy durable goods.

I don't really buy the notion that durable goods are made cheaper to recapture money lost due to a smaller buying pool.  It's got a whole lot more to do with consumers treating durable goods like commodities where price is the primary consideration. Consumers demand lower prices and you can no longer rely on a particular brand name, say like RCA or Whirlpool, to equate to quality like you used to.  I see it more as the Wal-Martizing of consumer goods.  Demand cheaper prices from vendors and they will start making cheaper goods. 

As far as companies and industries dealing with lower profitability, that's what the unemployment issue is all about, letting workers go so the company can remain solvent with lower demand for their product.

[Red Arrow]

Take note that what used to be considered durable goods, those goods lasting more than a few years, like refrigerators, lawn mowers and washer/dryers, no longer last more than 2-3 years. They don't even outlast your typical car loan and aren't worth repairing.

I hate that part. 

[we vs us]

What if people are finally learning a lesson about a binge and purge economy and everyone (individuals and corporations) is simply starting to learn to live a more austere lifestyle? 

Rofl! 

C'mon, really?  Austerity -- "learning to live with less" -- has no place in capitalism.  it contradicts a core value, which is the profit motive.  We will always want more, to do better, to be bigger and to control more.  That's the foundation of our system.  There's simply no way to discard that as a guiding macro principle and be successful within our world economy. 

And that's where we get all turned around when we try to put a moralistic, "didja learn that lesson yet, plebes?" filter on this stuff.  There's no lesson here.  The lesson is -- as it ever has been -- sell before the other guy, and buy before him, too.