What's going on with our "recovery"?

Discussion in 'Politics, Religion, Social Issues' started by appleisking, Sep 19, 2013.

  1. appleisking macrumors 6502a

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    #1
    Opinions, statistics, facts whatever you guys want to contribute I thought I'd set up an interesting consolidating thread from the people most affected, the middle class. Economists largely agree that the recovery will not get close to pre-recession production and employment levels for another 2-3 years. That makes this a near 6 year recovery. So, what's going on why are we so stagnant?
     
  2. samiwas Suspended

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    #2
    I am not rich by any means. And I certainly wasn't in 2007. That being said, between October 2007 and February 2009, I lost an estimated $140,000 in the value of stocks, mutual funds, and other accounts. That's a very hard number to swallow.

    What this means is that money available to me was gone. And while all of those accounts have mostly rebounded, that was a huge hit to take, and put a lot of things on hold. It also made me a lot less free with the money I did have. And I'm just one in a sea of millions. You take that much money out of that many people's pocket, and few people will be spending. Less spending, slower recovery.

    You want a recovery...the middle class and lower classes need something to spend.

    However...I see plenty of signs of recovery. All around Atlanta are large construction projects which have started back up or come back from the dead. New shopping centers. New residential buildings. It seems like every few days is another story about a company moving in and providing hundreds of jobs. Film work is booming.

    Things are definitely looking up.
     
  3. Eraserhead macrumors G4

    Eraserhead

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    #3
    If you have $150,000 to lose you are rich.
     
  4. ElectronGuru macrumors 65816

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    #4
    Couple of separate thoughts...

    I recently saw the first help wanted sign I've seen in some years. It was still there a week later and may still be there. This was in a light manufacturing area I drive through often.

    Some of the feel of the current strength is from the housing sector. The housing sector is improving in part because investors (individual and institutional) are seeking a fix for low interest rates elsewhere and are trying to grab undervalued properties. This is not as meaningful as first time home buyers with new carriers.

    The way out of recessions is usually to lower interest rates. But the boom that preceded this one was itself fueled by low interest rates, so there wasn't a place for them to really go. Without this key tool, we are having to reinvent the recovery wheel.

    The engine of the economy is consumer spending. But again, during the last boom, folks were increasing spending (look at all this equity I have, lets borrow some). So we entered the recession with products we then didn't need to buy/replace and the debt that paid for it. It takes time to pay off the debt and for things to wear out and need replacing.
     
  5. elistan macrumors 6502a

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    #5
    Here are some actual numbers to help with the discussion.
    http://www.federalreserve.gov/releases/g17/current/
    For one, looks like we already are at 2007 levels of production.
     
  6. localoid macrumors 68020

    localoid

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    #6
    As a recent CNN article pointed out, a Congressional Budget Office (CBO) report from late-2012, entitled "What Accounts for the Slow Growth of the Economy After the Recession?" indicated that the U.S. economy has gone through a dramatic structural change since the recession: a reduction in our capacity to grow.

    The CBO report provides detail of how disappointing this recovery has been thus far. "In the three years following the end of the recession, from mid-2009 to mid-2012, the economy grew less than 7% in total, a remarkable 9 percentage points below the average surge of 16% in previous recoveries."

    According to the CBO, that disappointing record has two explanations.

    The full CBO report (PDF, 24 pages, ~40k) is an interesting read...

    The CNN article then goes on to "pitch" a solution offered by one major players in the management-consulting-services game, the McKinsey Global Institute (MGI) entitled "Game Changers: Five Opportunities for U.S. Growth and Renewal," which supposedly offers ways that America can reestablish a strong growth trajectory.

    The following video that offers a brief overview of the five "game changers" that MGI believes can accomplish that end:

     
  7. ThisIsNotMe macrumors 68000

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    #7
    The biggest issue with stagnate job growth is that people expect a job to be handed to them. Roll up your sleeves, start your own company, and create your own job.

    As an employer, I can tell you that the jobs are not coming back. As people vote for politicians who enact entitlements that impose heavy tax and regulatory burdens, I have no incentive to reward a population who actively seeks to vilify me(as an employer) and take the fruits of my hard work.
     
  8. samiwas Suspended

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    #8
    Heh...point taken. Most of that money was in stocks that were given as gifts when I was much younger, and that I have never touched in some 20-25 years. Much of the rest is in retirement. I most certainly don't live the life of a rich person.
     
  9. ThisIsNotMe macrumors 68000

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    #9
    You are not 'rich'.
    That is just a construct by the progressive to vilify you. $150,000 is no where near 'rich' in an meaning of the word (within the United States).
     
  10. Bug-Creator, Sep 20, 2013
    Last edited: Sep 20, 2013

    Bug-Creator macrumors 6502

    Bug-Creator

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    #10
    He wrote he had lost 140.000 in the value of his stock which suggest that he would own around 500.000 in stock (wether he has other holdings is unknown). You may or may not want to call it "rich" or "wealthy" it sure is far more than average.

    As for your "start your own company", are you suggesting a society of the selfemployed ? Hmm sure those do exist, all in 3rd world countries (and even the poorer ones).

    "The solution" lies more in the ByTheNumbers video posted above, better (and more useful) education improved infrastructure to make the economy more competetiv. The whole shale-gas think won't provide more than a short time boost with massive costs coming much later.

    Offcourse this doesn't solve the fundamental problem:
    Worldwide productivity * available workforce by far outstrips worldwide demand by consumers and that gap is growing both by increased productivity and the growing income-gaps.
     
  11. Eraserhead, Sep 20, 2013
    Last edited: Sep 20, 2013

    Eraserhead macrumors G4

    Eraserhead

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    #11
    $150,000 in cash, stocks and shares is definitely rich. Only a tiny fraction of the population has such wealth - certainly outside of a pension fund.

    And certainly the half million in cash stocks and shares you'd need to have to have lost $150k is rich.

    Oh and I don't think being rich makes you a bad person. I just think we should be honest about our wealth - at least with ourselves.
     
  12. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

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    #12
    If you haven't seen the (David Suchet) Poirot mystery "The Dream" (Season 1) you should. You don't happen to own a pie factory by any chance?

    Depends on whether we are talking median wealth or average wealth. The median family wealth in the U.S. is only around $57,000.

    http://www.dailyfinance.com/2012/11/28/median-family-wealth-is-at-a-43-year-low-study-finds/

    The average family wealth is more like $539,000.

    http://www.oregonlive.com/business/index.ssf/2013/05/average.html
     
  13. samiwas, Sep 21, 2013
    Last edited: Sep 21, 2013

    samiwas Suspended

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    #13
    I'm also quite "progressive", with barely a conservative bone in my body. I should be vilifying myself!

    I guess my point in the original post was that if I still had what might have been $250k in 2007 (most certainly not $500k), which could be $400k by now if the recession hadn't eaten most of it, I could have spent a lot more over the past few years. I'm not a hoarder. I like to spend. But these days, I can't as much as I used to. I don't have millions or even close to half a million behind me. A lot of people lost a lot of money, and they can't spend. When they can't spend, things will become stagnant. Unfortunately, the rich have used this as a time to say "You need to give us more money or nothing can happen!" I think we're caught in a mobius strip.
     
  14. Eraserhead macrumors G4

    Eraserhead

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    #14
    Certainly the latter includes ones house - which I was excluding ;).
     
  15. citizenzen macrumors 65816

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    #15
    My view from 5,000 feet [100% pure personal opinion] ...

    Post World War II, the U.S. experienced an bubble of economic prosperity that set a tone for what we could and should expect as Americans. But bubbles don't last, and this one was burst with advances in technology and transportation allowing for global markets to compete for labor and manufacturing, taking a huge number of good paying jobs away for Americans.

    The United States will never return to it's high perch of economic dominance, nor should it. We should never have expected that we could hog the lions share of the world's wealth and prosperity, and I actually welcome—as hard as it is for some people to endure—a more realistic and sustainable standard of living. We are in the midst of transforming to the new "normal" and I suspect that we have a ways to go downward still.

    Add to that general trend an aging Baby Boomer generation that will become less productive and more of a drain on resources in the coming years and you have the ingredients for a protracted period of economic malaise.

    And that doesn't even take into account an infrastructure desperately in need of repair and the increased costs in dealing with Climate Change and the questionable nature of our energy supplies. Don't count me as an optimist as I look over that landscape and contemplate the future. While I don't foresee disaster and society unravelling, I do think that for the rest of my life, we'll have to get used to less.

    But that isn't necessarily a bad thing. We had too much to begin with. So long as we can still find a way to eke out a living, find personal satisfaction, fall in love, keep a roof over our head and food on the table, then we have all the ingredients necessary to live happy and fulfilling lives.
     
  16. samiwas Suspended

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    #16
    Ha! If you include my house, my wealth drops a pretty good amount. Yay for negative equity!!
     
  17. localoid macrumors 68020

    localoid

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    #17
    While a more realistic and sustainable future is in the best interest of everyone living on the planet (with finite resources), your "lions' share" theory seem based on the zero-sum fallacy, e.g., wealth is fixed; in order for one country to win (the game) some other country has to lose.

    The natural world is a zero-sum game, but the by-products of human creativity (i.e., improved efficiency and innovation) has facilitated the synthesis of new/added wealth (value) on an increasing scale since the dawn of the Industrial Revolution.

    Personally, I believe embracing Transhumanism (e.g., "Human Capital") is more logical than embracing Ludditism.

    For further reading: Capitalism is Dead. Long Live Transhumanism

     
  18. citizenzen macrumors 65816

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    #18
    And on that point I agree. By lions share I was referring to resources and the share of the world's wealth, which through globalization is becoming less concentrated in the U.S.

    But I agree that ingenuity and creativity is not zero-sum.
     
  19. PracticalMac macrumors 68030

    PracticalMac

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    #19
    Our unemployment is over 7% average, some places close to 10%
    Median income is falling, while the top 1% is gaining.
    Americans are considered the most productive people in the world, even beating out the Chinese according to some metrics (but that is really debatable).
    Report after report suggests that less then 10% of Americans will have enough to retire on.

    In all, for the average American, it is not good at all. The "Happiness Index" is really dismal for the USA.
    (Of course the USA has some incredible opportunities and freedoms).


    IMHO, the American tradition of business puts the almighty dollar the most important metric.
    Money cant buy your happiness (just security).
     
  20. ElectronGuru macrumors 65816

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    #20
    I was recently thinking about the 1946+ years. What we (the US) had more than anything, was customers. Within the US, folks had lived with less during an entire war that denied all manner of resource - things were not available. And this was sandwiched on top of a depression where things were available but most simply could not afford them.

    Meanwhile, overseas, whole cities were wiped out. A factory to make things, itself takes years to build and Europe didn't have even the resources to start making factories to make things. The US had a temporary (extended) monopoly on the production and sale of a huge array of desperately needed goods, both raw materials (food stuffs and steel) and finished.

    Fast forward 20 years and former choiceless customers had 1) houses full of goods, 2) a world of other choices to replace them, and 3) started becoming competitors in their own right. The tone was set and when the song changed, the world 'stopped making sense'.
     
  21. localoid macrumors 68020

    localoid

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    #21
    Also during the post-war era, America had huge numbers of middle class families that made a much more than just a "living wage", which meant they had disposable incomes that they gladly spent on shiny new toasters, TVs, appliances, and other durable goods and shiny new automobiles.

    Couples got married, bought a "starter" house in the suburbs, and started making babies without fear about being able to afford it, and then started saving for a bigger house.

    Business entrepreneurs and investors created new jobs but so did the hordes of middle class consumers who's purchases kept the American Dream Machine humming along.

    The middle class fared pretty well until about the time the Ronald Reagan took office, when things began to change...

    [​IMG]
     
  22. lannister80 macrumors 6502

    lannister80

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    #22
    And have a 95% chance of failing, and then go bankrupt. No thanks.
     
  23. samiwas Suspended

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    #23
    Who's vilifying who?

    Let's get one thing straight...the rich are being vilified by everyone else with fraction of the energy being put towards vilifying everyone else by the rich. People like you are the reason people like me "vilify" you. It has nothing to do with vilifying success, hard work, etc. It has to do with the extremist entitlement attitudes that many rich have. It has to do with the exorbitant money paid to people in upper positions who still whine incessantly about how little they are respected and how hard it is for them. Prove me wrong.

    It still amazes me that so many rich cry about how much taxes are crushing them when they have some of the lowest taxes in history. Somehow, the rich managed to hum on by in the 40s, 50s, 60s, and somewhat in the 70s even while the lower classes were still doing well. And now that they are up by multitudes and the lower classes are at fractions, they have the gall to say that it's stacked against them. Whine. Whine. Whine.
     
  24. VulchR macrumors 68020

    VulchR

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    #24
    The simple truth is that too much money has become concentrated in too few hands. The spending of the middle and working classes fuel the economy, and there is very little left for them to spend. This has been obscured by statistics that have focused on income rather than wealth. Somebody earning such-and-such % more than you might not seem like much, until this compounds over the years.

    At some point the rich earn their living from their savings, and that is the point at which I believe we should start taxing them highly. In the UK people talk about degrees of wealth: 1st degree is living off the interest of wealth, 2nd degree is living off the interest of the interest, etc. I don't think anybody should allowed to be rich enough to have money work for them rather than them working for money. Not when there are people who are homeless, uneducated, and starving....
     
  25. senseless macrumors 68000

    senseless

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    #25
    There are countless jobs permanently destroyed or devalued by the internet. The only growth is in package delivery and warehouse work.
     

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