John Lott on the "recession"

[jimpeel]

http://www.foxnews.com/story/0,2933,343671,00.html

The 'Recession' Is a Media Myth
Monday, March 31, 2008

By John R. Lott, Jr.

During the 2000 election, with Bill Clinton as president, the economy was viewed through rose-colored glasses. According to polls, voters didn’t realize that the country was in a recession. Although the economy started shrinking in July 2000, most Americans through the entire year thought that the economy was fine.

But over the last half-year, the media and politicians have said we were in a recession even while the economy was still growing.

Gas prices are going up. The economy is slowing. Talk of recession is seemingly everywhere. While the majority of people rate their personal finances positively, consumer confidence in the economy has plunged to a 16-year low, well below what it was during the last year of the Clinton administration when we were in a recession.

A Google search on news stories during the three-month period from July 2000 through September 2000 using the keywords “economy recession US” produces 1,610. By contrast, the same search over just the last month finds 50,763. Or, even more telling, take the three months from July through September last year, when the GDP was growing at a phenomenal 4.9 percent. The same type of Google search shows 7,310 news stories.

Over 4.5 times more negative news stories discussed a recession when the economy under a Republican was soaring than occurred under a Democrat when the economy was shrinking.

A little perspective on the economy would be helpful. The average unemployment rate during President Clinton was 5.2 percent. The average under President George W. Bush is just slightly below 5.2. The current unemployment rate is 4.8 percent, almost half a percentage point lower than these averages.

The average inflation rate under Clinton was 2.6 percent, under Bush it is 2.7 percent. Indeed, one has to go back to the Kennedy administration to find a lower average rate. True the inflation rate over the last year has gone up to 4 percent, but that is still lower than the average inflation rate under all the presidents from Nixon through Bush’s father.

Gas prices are indeed up 33 percent over the last year, but to get an average of 4 percent means that lots of other prices must have stayed the same or gone down. On other fronts, seasonally adjusted civilian employment is 650,000 people greater than it was a year ago. Personal income grew at a strong half of one percent in just February.

Despite all that, this last week, Barack Obama proclaimed “As most experts know, our economy is in a recession.” Hillary Clinton made similar staements last fall. Yet, as any economist knows, a recession is two consecutive quarters of negative growth, and we haven’t even had one single quarter of negative growth reported. The economy slowed down significantly during the end of last year, but that was after a sizzling annual GDP growth rate of 4.9 percent in the third quarter.

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[jimpeel]

In the meantime, the Brits have leapt right over any manifestation of a recession and are saying that we are in a depression. This based solely upon the number of Americans on food stamps.

http://www.independent.co.uk/news/world/americas/usa-2008-the-great-depression-803095.html

USA 2008: The Great Depression

Food stamps are the symbol of poverty in the US. In the era of the credit crunch, a record 28 million Americans are now relying on them to survive – a sure sign the world's richest country faces economic crisis

By David Usborne in New York
Tuesday, 1 April 2008

We knew things were bad on Wall Street, but on Main Street it may be worse. Startling official statistics show that as a new economic recession stalks the United States, a record number of Americans will shortly be depending on food stamps just to feed themselves and their families.

Dismal projections by the Congressional Budget Office in Washington suggest that in the fiscal year starting in October, 28 million people in the US will be using government food stamps to buy essential groceries, the highest level since the food assistance programme was introduced in the 1960s.

The increase – from 26.5 million in 2007 – is due partly to recent efforts to increase public awareness of the programme and also a switch from paper coupons to electronic debit cards. But above all it is the pressures being exerted on ordinary Americans by an economy that is suddenly beset by troubles. Housing foreclosures, accelerating jobs losses and fast-rising prices all add to the squeeze.

Emblematic of the downturn until now has been the parades of houses seized in foreclosure all across the country, and myriad families separated from their homes. But now the crisis is starting to hit the country in its gut. Getting food on the table is a challenge many Americans are finding harder to meet. As a barometer of the country's economic health, food stamp usage may not be perfect, but can certainly tell a story.

...

OF COURSE FRAUD COULDN'T HAVE ANYTHING TO DO WITH IT, NOW, WOULD IT? --j

"They should be refilling it in the next three or four days," Liepnieks says. At times, he admits, he and friends bargain with owners of the smaller grocery shops to trade the value of their cards for cash, although it is illegal. "It can be done. I get $7 back on $10."

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[jimpeel]

Dow starts 2nd quqrter with 391 pt gain.

http://www.foxbusiness.com/markets/article/prank-dow-soars-390-points-kick-2q_541980_2.html

No Prank Here: Dow Rockets 391 Points To Kick Off 2Q

Matt Egan
FOXBusiness

Wall Street shrugged off a series of potentially ominous headlines today, each of which could have triggered a sell-off: Two banking giants said they will have to write down the value of a combined $24 billion in assets, Lehman Brothers was forced to raise capital, U.S. construction spending declined for the 24th consecutive month and the nation's manufacturing sector contracted in March.

Only on April Fools' Day could all of those headlines be interpreted by Wall Street in a decidedly bullish fashion, sending beaten down stocks soaring, including a huge 391-point surge on the Dow.

Today’s Market

The Dow Jones Industrial Average soared 391.47 points, or 3.19% to 12654.36, the Standard & Poor’s 500 index jumped 47.47 points, or 3.59% to 1370.17 and the Nasdaq Composite Index picked up 83.65 points, or 3.67%, to 2362.75. The consumer-friendly Fox 50 gained 31.99 points, or 3.36%, to 983.74.

Wall Street was more than willing to turn the page on what was the ugliest quarter for stocks since 2002. During the first quarter, the Dow slid 7% and the Nasdaq Composite plunged 14% as a result of an economic slowdown (and potential recession), the ongoing housing slump and a credit crisis that froze financial markets.

But none of this translates into negative growth and hence no recession.

 

[Inkara1]

A little anecdote: I've been at the same hourly pay rate since October 2005 (when I came off my probationary wage). The minimum wage here has gone up twice since then. Plus, with my landlord going into foreclosure, the only place I could find is $110 a month more. So I asked about a pay raise (I think of it as a cost of living adjustment) a month ago, and finally heard back that there will be no raises until the economy rebounds and ad sales go up, which means I have to continue eating the costs of increased rent, increased gas prices, less buying power with a dollar, increased food prices, etc. with no more help from my employer. Additionally, the paper is cutting back on pages because of the general lack of ad revenue.

 

[Gonz]

with no more help from my employer

Who has to do the same thing. Probably with slowing revenue.

You do have an option. Suffer for your art or look elsewhere. It sucks having to look for a new job.

 

[Inkara1]

I'm keeping my eyes and ears open... I will mention that I'm not dumb enough to leave this job before having another lined up, much as I didn't put in my 30-day notice at the old place until I had the new one confirmed.

 

[SouthernN'Proud]

Food stamps are the symbol of poverty in the US.

Are they though? I see hundreds of people on public welfare, in public housing, getting food stamps handed to them at drive-through dole centers, as they sit in their air-conditioned Hummers and Jags and whatnot. Then I look at my 12 year old pickup truck with the dents and the scratches and the piece of plexiglass fitted into the rear window where it got broken by a piece of stovewood I was hauling because I could not afford electric heat and I wonder.

Guess those folks are just victims of white Southern racists huh? Wonder if any of 'em could tell a feller where he might buy some weed...

 

[2minkey]

Guess those folks are just victims of white Southern racists huh?

so, how does this idea stem from the hummer in the dole line? doesn't seem like they are victims at all. seems almost like you're the victim, here.

 

[SouthernN'Proud]

Ask our resident primate who received rudimentary first aid. He knows everything.

And FTR, would it help if I added [/sarcasm] at the end of the statement in question?

 

[2minkey]

yeah, um, that really wouldn't help. it was obvious it was intended as a clever remark, anyway.

 

[Gonz]

Once they began advertising to get new food stamp recipients it was all over.

 

[A.B.Normal]

Chances of the Dole Lines getting shorter if/when the an Economy gets better are slim to none.Most in line are there because their parents and grandparents were there before them.Its got little to do with economy and more to do with ambition (or lack there of).

 

[jimpeel]

A little anecdote: I've been at the same hourly pay rate since October 2005 (when I came off my probationary wage). The minimum wage here has gone up twice since then. Plus, with my landlord going into foreclosure, the only place I could find is $110 a month more. So I asked about a pay raise (I think of it as a cost of living adjustment) a month ago, and finally heard back that there will be no raises until the economy rebounds and ad sales go up, which means I have to continue eating the costs of increased rent, increased gas prices, less buying power with a dollar, increased food prices, etc. with no more help from my employer. Additionally, the paper is cutting back on pages because of the general lack of ad revenue.

You could advance from the printed page to IS/IT webmaster or you could simply saddle up for the demise of the printed page.

When I was on the board doing drawings with ink on mylar I never thought that computers would overtake my trade. Then came CAD and CADD and that was that. I was left behind because I stayed with the employer who continued to use the wrong media. By the time I started playing catch up I was way behind the curve.

 

[jimpeel]

Are they though? I see hundreds of people on public welfare, in public housing, getting food stamps handed to them at drive-through dole centers, as they sit in their air-conditioned Hummers and Jags and whatnot. Then I look at my 12 year old pickup truck with the dents and the scratches and the piece of plexiglass fitted into the rear window where it got broken by a piece of stovewood I was hauling because I could not afford electric heat and I wonder.

Guess those folks are just victims of white Southern racists huh? Wonder if any of 'em could tell a feller where he might buy some weed...

Apparently, that's exactly what the Brits at the Independent think.

 

[spike]

Wow, everyone in Tennesse on food stamps drives Hummers or Jaguars, smokes, weed, and isn't white.

 

[Inkara1]

You could advance from the printed page to IS/IT webmaster or you could simply saddle up for the demise of the printed page.

When I was on the board doing drawings with ink on mylar I never thought that computers would overtake my trade. Then came CAD and CADD and that was that. I was left behind because I stayed with the employer who continued to use the wrong media. By the time I started playing catch up I was way behind the curve.

Actually, weekly community newspapers aren't in the free-fall that large dailies are in. Community papers don't have the same sort of competition... the LA times is competing with other dailies, the internet, TV news, etc. Hometown news, hometown sports, etc. aren't the kind of thing you'll find on Yahoo news.

The point was that local businesses are seeing the need to save money, and usually one of the first things to go is advertising. Even though that starts a vicious circle because less advertising means less business coming in, the point remains that the businesses feel a need to tighten their belts.

Also, I just had to move because my landlord at the old place wasn't paying the mortgage, even though I was paying my rent every month.

But there is nothing wrong with the economy. After all, jimpeel says it, so it must be gospel.

 

[2minkey]

When I was on the board doing drawings with ink on mylar I never thought that computers would overtake my trade. Then came CAD and CADD and that was that. I was left behind because I stayed with the employer who continued to use the wrong media. By the time I started playing catch up I was way behind the curve.

kinda surprising that you got bit by that one, given you near limitless ability to reckon what is really going on in virtually every situation.

 

[spike]

I used to use CAD at a job awhile back. It was fun.

 

[chcr]

I've been accused of being a cad from time to time. I no longer bother to deny it.

 

[jimpeel]

Also, I just had to move because my landlord at the old place wasn't paying the mortgage, even though I was paying my rent every month.

But there is nothing wrong with the economy. After all, jimpeel says it, so it must be gospel.

That is what is known as an anecdotal story. You are affected so the entiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiire economy is in the toilet. Can't ya just feel the pain?

Your landlord was a dishonorable person for taking your money and failing to place it where it belonged. He supplanted the money elsewhere -- drugs gambling, excessive credit card debt, who knows -- and took you for a sucker. Because he ripped you off the fault is the entire economy instead of the act of a singular individual.

On top of that, I posted on this board a while back on how the unintended consequences of "bankruptcy reform" has affected the way people structure their indebtedness. It is HERE if you care to read it but in any case, here are some excerpts.

The largest U.S. savings and loan didn't count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank.

``Be careful what you wish for,'' Westbrook said. ``They wanted to make sure that people kept paying their credit cards, and what they're getting is more foreclosures.''

Washington Mutual, Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. spent $25 million in 2004 and 2005 lobbying for a legislative agenda that included changes in bankruptcy laws to protect credit card profits, according to the Center for Responsive Politics, a non-partisan Washington group that tracks political donations.

The banks are still paying for that decision. The surge in foreclosures has cut the value of securities backed by mortgages and led to more than $40 billion of writedowns for U.S. financial institutions. It also reached to the top echelons of the financial services industry.

...

People are putting their credit card payments ahead of their mortgages, said Richard Fairbank, chief executive officer of Capital One Financial Corp., the largest independent U.S. credit card issuer. Of customers who are at least three months late on their mortgage payments, 70 percent are current on their credit cards, he said.

``What we conclude is that people are saying, `Honey, let the house go,''' but keep the cards, Fairbank said Nov. 5 at a conference in New York sponsored by Lehman Brothers Holdings Inc.

The new bankruptcy code makes it harder for debtors to qualify for Chapter 7, the section that erases non-mortgage debt. It shifted people who get paychecks higher than the median income for their area to Chapter 13, giving them up to five years to pay off non-housing creditors.

Perhaps this is what happened to your landlord. He used your rent money to pay the credit cards and simply let the house go because he can't include the credit cards in the bankruptcy. Now if you want to blame the government for that then do so with my blessing. It is not, however, the general economy which is causing Everyman America's problems.