-US public and private debt are in the stratosphere, dwarfing 2008 levels.
-The Obama stimulus and Fed policies of the last 7 years have failed; the economy and employment picture are pathetic. 0.7 GDP growth last quarter. Labor participation rate at all time low. Most of the jobs that have been created since Obama took office are low paying, part time, independent contractor, babysitting type gigs.
-At this point, neither consumers nor government can withstand higher interest rates, and even this small rate hike recently sent the markets into a nose dive. If the Fed raises rates, a severe recession will ensue when debtors go bankrupt; but on the other hand, the markets now know that QE doesnât work, so lowering rates wonât revive the economy, will just bid up asset prices in nominal terms.
-China now has much bigger debt problems than it did when the last recession hit. As a result, they canât afford to bail us out again, leaving the Fed as the only buyer of US debt once the markets realize weâre headed into QE-infinity.
So where do we go from here? To Hell, thatâs where.
The US economy is inarguably in a better position today than it was at the onset of the Great Recession. Anyone who believes otherwise is an ideologue and/or doesnât have a rudimentary understanding of micro, macro, and international economics 101. Virtually all economic indices demonstrate that the American economy has recovered and is retooled for dynamic economic growth. The failure of other states to keep up with the United States economic recovery is what will limit the American economy more than anything. Could it be better? Of course. But itâs hardly the fire and brimstone that (non-economists) contend. For all of the myriad problems that face humanity, we still live in a golden age.
Top economistsâ take on the US economy at the recent Economic Associationâs annual conference.
Martin Feldstein
Harvard University economist and former chairman of the White House Council of Economic Advisers under President Ronald Reagan
âThe U.S. economy is now in very good shape. Weâre essentially at full employment, with the overall unemployment rate at 5%, and the unemployment rate among college graduates a remarkably low 2.5%âŠ.Looking ahead, the growth of GDP in 2016 will be limited by the absence of excess capacity in the economy rather than by a lack of demandâŠ.The primary risk to the U.S. economy in the coming year is probably the mispricing of assets and the provision of high-risk loans, both of which are the result from excessive reaching for yield by investors and lenders because of the very low interest rates at all maturities that have prevailed in recent years.â
Joseph E. Stiglitz
Columbia University economist and former chairman of the White House Council of Economic Advisers under President Bill Clinton
âI think there is a problem of underlying aggregate demand, that the headline unemployment rate disguises a lot of unemployment and that while it is very good newsâŠthere is essentially full employment of college graduates, there are large parts of the American labor market that [are] underemployed or unemployed. And thatâs reflected in inflation, inflationary pressures, and one of the reasons wages have been doing so poorly.â
Loretta Mester
President of the Federal Reserve Bank of Cleveland
âThe economy has made substantial progress toward the Fedâs goals of maximum employment and price stabilityâenough progress that in December the [rate-setting Federal Open Market Committee] moved its target federal funds rate up by 25 basis points from essentially zero, where it had stood for seven years. Even with this increase, monetary policy is expected to remain accommodative for some time to come and will continue to support the expansion. I believe this first step on a gradual path toward more normal policy should be viewed as welcome news. It is an indication of monetary policy makersâ confidence that the economic progress we have seen in recent years will continue.â
Betsey Stevenson
University of Michigan economist and former member of the White House Council of Economic Advisers under President Barack Obama
âItâs much harder to achieve sustained economic growth over 3% with declining labor-force participationâŠ.Nearly one in five prime-age adults are sitting on the sidelines today and not participatingâŠ.That points out just how the unemployment rate, the 5% unemployment rateâwhile itâs a terrific victory in terms of recovery from the recessionâit is only a small slice of the underutilized talent in the economy.â
Are these the same ivory tower eggheads who were telling Barney Frank, et al that the housing, mortgage and financial markets were healthy just weeks before the last crash?
Youâd have to speak with the parties concerned. Itâs unfortunate that anti-intellectual epithets are a substitute for discussion and articulated argument. Those cited are hardly âivory tower eggheadsâ disconnected from the practical concerns of everyday; all are former or current practitioners in a discipline that is eminently practical.
I suppose much depends on where one lives and what business they are in. In my area (north Texas) things are going very well. Every where you look construction is taking place, businesses are hiring, and wages are rising. Housing is at a premium and gas prices are below $1.50 a gallon. Although âWhite Collarâ jobs in energy are being shed; âBlue Collarâ jobs have rebounded and are in high demand. Anyone with meager skills, the ability to show up on time, and without a variety of felony convictions is working full time. The public debt issue goes back four decades. (Reagan from 1.0t to 2.9t) (Bush1 from 2.9t to 3.4t) (Clinton from 3.4t to 5.7t) (Bush2 from 5.7t to 11.8t) (Obama from 11.8t to 18t) The US started shedding MFG jobs in the 70s and has never stopped; the economy has been an artificial consumption over production economy for some time now. Iâm certain candlemakers resented the gas lamp back in the day. Iâm 53 and interest rates are lower now than at any point in my lifetimeâŠborrowing has never been cheaper! There is plenty more to be done; however we are certainly in better shape than we were six or eight years ago.
PushâŠ
The fact that the manufacturing exodus began in the '70âs and continues to this day doesnât make the 2016 economy more robust.
Another thing it does is force the US into even more active intervention around the globe in the effort to protect trade stability. Itâs more crucial than ever now that the World Policeman walk his beat and swing his batonâŠall at the expense of the service industry employed American taxpayer.
BCTâŠcareful Push; that sounds like an argument for safety-net governing.
Why is the manufacturing sector such a critical part is of evaluating the health of the US economy? Barriers of trade that are used to prop up some manufacturing industries, such as quotas and tariffs, are detrimental to domestic welfare, no?
How does does the manufacturing exodus lead to the United States to use force more frequently? Can you cite a specific example?