Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

1.6%: Weak GDP Does Not a Weak Economy Make
Real Clear Markets ^ | 08/31/2010 | John Tamny

Posted on 08/31/2010 6:20:51 AM PDT by SeekAndFind

At present there's quite a lot to criticize President Obama about when it comes to his administration's economic policies. But with regard to last Friday's Gross Domestic Product (GDP) revision which allegedly points to a weakening economy, the anger should center on what a worthless number GDP is, as opposed to Obama's admittedly limited worth as an economic strategist.

One editorial that decried the revised number and the President's surely unfortunate policies noted a big drop in new home sales and weak manufacturing data as symptoms of those policies. It went on to say that during economic recoveries numbers like GDP are supposed to go up. That, of course, would be true if we desired a weaker economy.

A struggling manufacturing sector was cited as evidence of a depressed situation, but in an evolving economy like ours, rational thinkers would be more concerned with rising, as opposed to falling manufacturing activity. The latter surely mattered in the early part of the 20th century when General Motors was the world's most prominent company, but in the 21st a great deal of growth in the factory sector would suggest a move toward falling profit margins and economic backwardness.

Politicians and economic commentators love to romanticize manufacturing, and their elevation of it is most likely evidence that they've never worked in a factory before. Sure enough, there's a reason that the parts of the country reliant on what made us prosperous in the past are the most depressed at present. What this signals is that the best and brightest from those areas long ago migrated to the parts of the U.S. where service economic models dominate relative to the backbreaking - and less profitable - sectors reliant on the production of goods that could easily be made for us overseas.

(Excerpt) Read more at realclearmarkets.com ...


TOPICS: Business/Economy; Culture/Society; Front Page News; News/Current Events
KEYWORDS: 1pt6; economy; gdp; uncertainty; weakgdp
Navigation: use the links below to view more comments.
first previous 1-2021-37 last
To: SeekAndFind
"So while President Obama should certainly be criticized for policies that create barriers to economic activity, the use of GDP to unleash the criticism weakens the argument altogether."

Criticized? Try impeached.

21 posted on 08/31/2010 6:57:11 AM PDT by ILS21R ("Every night before I go to sleep, I think who would throw stones at me?", she said)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

John Tamny thinks everyone should be a “journalist” like him.


22 posted on 08/31/2010 7:08:51 AM PDT by Doohickey ("It Takes A Spillage." - Mark Steyn)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
What this article is saying in so many words is that abstracted generalized indices, such as GDP, or CPI, are virtually worthless. They are contrived playthings of pseudo-intellectual economists with an intrinsic desire to gain personal (juvenile) importance through sophistry. If one as an "economic" journalist gets paid to write such criticisms, one can easily make a career, albeit an empty one, from such, for there are no solutions.

The same goes for the "inflation" versus "deflation" argument. A selected algorithm can arrive at either result, say throwing in "housing," throwing out "energy," or whatever, all while the material prosperity, quality of life, and optimistic attitude, of the legitimate US taxpaying citizen is plummeting.

Is it not obvious now that academic economists, ala Obama's regime and planet wide Nobel-level (Krugman), have absolutely no idea what they are talking about?

The United States as "fortress America," could be paradise, not isolationist but conscientious; but the globalists, ala Rockefeller, Soros, and the Jewish world-Left (sinister), will fight to the end for this to not be. They atone for their own Greed through Obama's subversion and other people's money. That's why anti-Sarah.

Think in terms of John D. (Jay) Rockefeller IV, Democratic Senator of WV, a State for which he has NO empathy or connection, serving as infinitely financed, and (Harvard) elitist, majority Senator. God-is-Money has brought us here.

How obvious is it?

Johnny Suntrade, the Suntrade Institute

23 posted on 08/31/2010 7:13:40 AM PDT by jnsun (The Left: the need to manipulate others because of nothing productive to offer.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ILS21R
GDP IS the main factor. If we are in a steady, non-growth economy, we need at least 2.5% GDP to maintain it. The pathetic 1.6 we are now seeing is purely the result of business still making up inventory for the losses from 2008. They are also making this number with fewer workers, much higher efficiency and worker production. Most are not hiring and are requiring their fewer workers to produce about 120% of what they did prior to 2008.

This cannot be sustained for much longer. The actual numbers will eventually catch up to reflect the real statistics.

Add to that, the fact that manufacturers are closing, moving out of country and are contracting foreign companies to manufacture for them which they then tack on to the US GDP numbers.

It's all smoke and mirrors, presented by the MaObama admin., to make this disaster appear as “not so bad”.

(I agree, we need to IMPEACH this bastard ASAP!)

24 posted on 08/31/2010 7:16:48 AM PDT by PSYCHO-FREEP ( Give me Liberty, or give me an M-24A2!)
[ Post Reply | Private Reply | To 21 | View Replies]

To: muawiyah

>> I do recall having to sell old clothes on the streets

In 2005? I thought you were a postal service bigwig, either pulling down a nice salary, or a steady retirement income.

Or are you saying that tongue-in-cheek?


25 posted on 08/31/2010 7:24:56 AM PDT by Nervous Tick (Eat more spinach! Make Green Jobs for America!)
[ Post Reply | Private Reply | To 15 | View Replies]

To: SeekAndFind

>> Politicians and economic commentators love to romanticize manufacturing, and their elevation of it is most likely evidence that they’ve never worked in a factory before. &etc bla bla bla

That paragraphload of BS exposes the author as one who is pretty ignorant of manufacturing in America himself.


26 posted on 08/31/2010 7:26:35 AM PDT by Nervous Tick (Eat more spinach! Make Green Jobs for America!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: jnsun
Good points. I admit I am reluctant to say that all the algorithms are bogus -- but I know they alter the formula for unemployment or inflation (just two examples) from time to time. I think there is real creedence to your point that they have no idea what they're talking about. It really is smoke and mirrors.

I always come back to the same place: Our problems are because government is so big, so impersonal, so corrupt. There's just too much money in it.

If government were small and limited (as it is supposed to be) then it couldn't do as much damage. Then the people making day to day decisions (you and me) would understand problems and be in a position to do something about the problems in front of us. As it is now, Barney Frank solves all my problems (and that's not working out so well).

27 posted on 08/31/2010 7:29:20 AM PDT by ClearCase_guy
[ Post Reply | Private Reply | To 23 | View Replies]

To: Nervous Tick
Tongue in cheek ~ you forgot that back in 2006 the Leftwingtards were running against "the worst economy since the Depression".

So of course WE WERE ALL lined up along I-95 selling our possessions to buy potatoes to bake in roadside firepits provided by the ladies relief society!

28 posted on 08/31/2010 7:31:15 AM PDT by muawiyah
[ Post Reply | Private Reply | To 25 | View Replies]

To: SeekAndFind
Tamny's one of the better economic commentators, but he's not always right.

Despite the fact that manufacturing comprises a smaller percentage of GDP than it used to, it is still crucially important. An increase in manufacturing is a necessary precursor to recovery and the wealth created by manufacturing allows the rest of the economy to function.

I do, however, agree with him on the imports. Increasing imports can be a sign of recovery. Don't forget that many of those imports are not cheap trinkets from China but crucial raw materials and technology for industry.

He's also right that GDP is a terrible measure of the economy's health. Just the fact that increased government spending can make GDP appear stronger is enough to distrust it.

29 posted on 08/31/2010 8:10:52 AM PDT by BfloGuy (It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect . . .)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Take away the trillions in debt spending by the governments and what is the GDP? Negative. Highly negative.


30 posted on 08/31/2010 9:04:02 AM PDT by CodeToad (Islam needs to be banned in the US and treated as a criminal enterprise.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: frogjerk

Honestly, I really don’t care if the piece of furniture is made here or in China, or in Indonesia or wherever. Nor do I care about T-shirts, apparel, or any such small consumer product.

We make a lot of things in this country - from advanced polymers, insulation, to biotech, drugs, and really heavy machinery. We actually make more than Japan, Germany and China combined in actual USD value - about 20-25% of the world manufacturing output.

The bitching here is that the jobs went. Well - not really - it’s just now you need a college degree to be in manufacturing. A furniture shop has long closed its doors and a biotech lab sits on top of it. That lab creates more value than five crappy old textile mills.


31 posted on 08/31/2010 9:22:01 AM PDT by farlander (Sic Semper Tyrannis)
[ Post Reply | Private Reply | To 3 | View Replies]

To: pnh102
I wonder how much of that 1.6% growth came from truly private spending or investment.

IIRC 1.4%
32 posted on 08/31/2010 9:28:40 AM PDT by algernonpj (He who pays the piper . . .)
[ Post Reply | Private Reply | To 5 | View Replies]

To: PSYCHO-FREEP

“The reasons are so simple. So simple in fact, that they will never see it for what it truly is.”
////////////////////////////////////////////////////////////

For a long, long time I have had the notion that many or maybe most people have a way of pretending that really complex issues are simple while refusing to understand things that are really simple and I mean things as simple as, “There is no free lunch”.


33 posted on 08/31/2010 10:42:36 AM PDT by RipSawyer (Trying to reason with a leftist is like trying to catch sunshine in a fish net at midnight.)
[ Post Reply | Private Reply | To 20 | View Replies]

To: muawiyah

:=)


34 posted on 08/31/2010 12:22:35 PM PDT by Nervous Tick (Eat more spinach! Make Green Jobs for America!)
[ Post Reply | Private Reply | To 28 | View Replies]

To: frogjerk
Made in America vs. Made in China. Which is the better product overall.

The simple answer is that neither is inherently better. All other things being equal, most Americans would prefer a product made in America, but it is rare that everything but the place of manufacture is equal.

To some extent it is better for all Americans to buy products manufactured in America, but the point of diminishing returns is reached rather quickly and instead of helping themselves by buying a higher priced American product, the extra amount of wealth they are transferring to the producers of the American product far exceeds what they gain from buying American.

In some cases Americans working in manufacturing seem to think that American consumers owe them a very high standard of living at their own expense.

However, in many cases labor and other expenses are just to high in America for a product to be competitively manufactured here. Companies just can't make a profit while paying workers a reasonable wage for the work they do.

The cost of living is much lower in other parts of the world, and less and less of manufacturing relies on skilled trades. Workers in other areas can be paid a reasonable wage, and the companies can still produce the products far cheaper than it can be done here.

Asking people to buy a considerably higher priced American products of equal quality is asking them to lower their own standard of living in order to subsidize the standard of living of the relatively few working in those manufacturing jobs. Those people are especially unwilling to pay more to subsidize workers that make more money and have far better benefits than they do.

Just like the union workers is skeptical of the worth of the executive that makes more than them, the common consumer is skeptical of why a union line worker should make far more than them.

35 posted on 08/31/2010 12:26:21 PM PDT by untrained skeptic
[ Post Reply | Private Reply | To 3 | View Replies]

To: muawiyah; Nervous Tick
So of course WE WERE ALL lined up along I-95 selling our possessions to buy potatoes to bake in roadside firepits provided by the ladies relief society!

So that is where you guys were! I wondered where everybody went!

36 posted on 08/31/2010 12:47:14 PM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government)
[ Post Reply | Private Reply | To 28 | View Replies]

To: Mind-numbed Robot
You heard? The death of printing finally happened ~ old guy from Readers Digest used to tell us "The day I can sit on the cr&pper and read an electronic magazine, printing is dead".

It's dead ~ so yeah, that's where we all were, out there on I95 selling stuff to passersby ~ I had a whole bindery line that strapped stuff out at 48 copies ~ just beautiful and you know what those people offered for it?

NOTHIN!

I finally had to just push it off into the Potomac ~ let the tide take it out.

37 posted on 08/31/2010 1:37:57 PM PDT by muawiyah
[ Post Reply | Private Reply | To 36 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-37 last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson