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Economy Hitting Its Groove

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February 23, 2011 – Comments (9)

In another classic quote from Moody's Analytics, concerning the rise in oil prices, Mark Zandi said "I would view this as a very serious threat to the expansion, just when the economy is hitting its groove"

Seroiusly?  This guy thinks as of two days ago the US economy was "hitting its groove".  What part of 10% unemployment, 400,000 + unemployed every week and GDP growth based solely upon gov't debt makes this guy think the economy was just "hitting its groove". Sounds like an excuse to me, as he needs one to explain the failure of Keynesian economics.  

In another classic quotes from Mark Zandi he said: "I've been a professional economist for nearly a quarter of a century."

As opposed to being just an economist.  Which makes one wonder if most economists aren't professional is that the reason they get it wrong 99% of the time, whereby "professional economists" only get it wrong 90% of the time.

 

 

 

9 Comments – Post Your Own

#1) On February 23, 2011 at 12:36 PM, davejh23 (< 20) wrote:

"Which makes one wonder if most economists aren't professional is that the reason they get it wrong 99% of the time, whereby "professional economists" only get it wrong 90% of the time."

It's probably the opposite...those that dub themselves "professionals" get in wrong 99% of the time, "unprofessional" economists get it wrong 90% of the time, and those with no economics training/study at all get it wrong 50% of the time.

After having watched several of Zandi's recent interviews, it seems hard to argue that he's a professional anything.  Maybe by "hitting its groove" he was referring to the consistently large number of people dropping out of the labor pool each month.  In any case, I think the rise in oil prices does bring double dip fears back into the picture.  For some reason, gas prices were stuck around $2.70 in my area for many weeks as prices nationwide crept above $3.  In the last week alone, prices jumped from $2.70 to $3.15...a pretty big shock...especially to those watching their budgets more closely these days.

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#2) On February 23, 2011 at 12:39 PM, alstry (36.32) wrote:

Bernie Madoff was a "professional" investor a lot longer than Mark Zandi has been a "professional" economist.

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#3) On February 23, 2011 at 1:10 PM, Valyooo (99.47) wrote:

GDP growing faster than treasury yields is economic growth.  I have always found unemployment to be a stupid measure of the economy...maybe when we had high employment, 5% of them were useless jobs for the sake of jobs.

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#4) On February 23, 2011 at 2:04 PM, davejh23 (< 20) wrote:

"GDP growing faster than treasury yields is economic growth.  I have always found unemployment to be a stupid measure of the economy...maybe when we had high employment, 5% of them were useless jobs for the sake of jobs."

A 10% hole in the economy is being filled with deficit spending.  I wouldn't say that 5% of jobs were "useless jobs for the sake of jobs" (most gov't jobs being supported by deficit spending would fit that description)...they were realtors, mortgage brokers, construction managers, etc... they were jobs that were needed to blow the housing bubble and rescue us from a depression that would have started 10 years ago.  I know many people that were working in these industries making $100K+ for several years.  Most have found new jobs, but they make 30-50% of what they made a few years ago and they will probably never make that much again...if gas prices continue to rise, consumers will get squeezed and they'll likely lose their new jobs as well. 

What would you say is a good measure of the economy?  What, right now, is showing you that we have a robust, sustainable economic recovery?

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#5) On February 23, 2011 at 3:44 PM, Valyooo (99.47) wrote:

Hey, I think we have  a stupid debt based system and its a mess.  I just mean that gdp growth > job growth.  Why do we want high employment?  Like David said, it is a fools dream.  You want more people working for the same gdp growth, or less people working aka more efficiency?

I did not say our economy is robust at all.  I am just looking at real  gdp growth mostly.

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#6) On February 23, 2011 at 4:19 PM, TDRH (99.49) wrote:

"I have always found unemployment to be a stupid measure of the economy...maybe when we had high employment, 5% of them were useless jobs for the sake of jobs."

 Not to single you out Valyooo, but in a consumer driven economy the unemployment rate is a critical measure.   The way it is calculated can be called stupid at times, but the measure itself, in an ideal form is an important economic indicator.

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#7) On February 23, 2011 at 5:14 PM, rexlove (99.57) wrote:

I have to agree with Valyhoo here. The unemployment rate is a stupid measure of the economy. it's a measure of employment.

The GDP is more a measure of the economy. Whether that GDP growth comes from goverment debt and thus is "less real" is debatable.

On a similar note - corporate earnings would be a measure of how well businesses are doing. In that respect - earnings have also been growing steadily and have "hit their groove".  

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#8) On February 23, 2011 at 8:52 PM, paperpump (95.78) wrote:

rexlove- earnings have been increasing but revenues have been decreasing. Increased profit margins and cost cutting cannot outweigh declining revenues indefinitely. GDP growth from government borrowing is less sustainable and "less real" taking into account our 1.5 trillion dollar deficit and the growing national debt circumscribing this issue.

valyhoo- I myself do not enjoy paying for millions of transfer payments in the form of unemployment benefits. it is not a zero sum issue- more employment does not inherently mean less efficiency. 

I was looking for s&p 500 historical revenue data and was unable to find it. anyone know where to find this information?

 

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#9) On February 23, 2011 at 11:06 PM, FreeMarkets (92.43) wrote:

GDP numbers can be fictitious. For example, retail sales (and 70% of our economy is consumer driven) are a huge part of our GDP.  If we handed out checks (e.g. GW Bush) that boosts GDP, even if 99% of the items purchased were made in China and all we did was go into greater debt to purchase them.

I don't like GDP as an economic indicator.  I like to look at Total GDP minus Trade Deficit minus Budget Deficit.  I think that is a fairer reflection on how much our economy is "growing" (which it isn't).

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