Source is this Dayton Daily News article: Income drops poverty rises… (which has some indicators based on demand on local food pantrys).

 

The graphs show the decline in median incomes, but even more interesting the uptick in the poverty rate (except for Warren County).  This is over the course of the decade, which is quite interesting.

 

 

Its interesting when considering this in the context of a long term trend in the Dayton region.  The following map is derived from the Windows on Urban Poverty website.  It shows the % increase or decrease in poverty by tract, from 1970 to 2000, a thirty year horizon, for Dayton and it’s suburbs. 

 

What’s remarkable is both the concentrations and how widespread the uptick has been, even if the actual annual percentages are so low (over the course of 30 years) to not be visible in day-to-day life. Yet some suburbs, like Trotwood, Fairborn and Northridge and even Huber Heights and Vandalia, have seen noticeable increases in poverty since the postwar heyday of 1970;  2.0% to 9.9% increase over 30 years.  In some tracts it's even higher.

 

 

Backing off a bit to bring in Xenia, Springfield, and southern Miami County.  You can draw your own conclusions as to what’s happened to Springfield.

 

And then dipping down to see maybe the start of a “poverty valley”  along the Great Miami between Dayton to south of Middletown; the string of blue collar river towns and the river rat areas between.  They all had a uptick in poverty as working class incomes and employment declined since 1970. 

 

 

The repositioning of Springboro as an affluent suburb also becomes quite visible.  I know of some anecdotes of the social tensions as this was happening

 

Then picking up Hamilton and the Route 4 corridor heading south toward Cincy.

 

(yet hard to figure whats going on in what looks like the Union Centre area)

 

What does this have to do with the recession?  Perhaps the series of recessions since 1970 has eroded incomes and increased poverty, and this one will contribute to that trend, a trend that’s not really visible unless one takes the long view.

 

But it’s interesting to think on this, how this long term increase in poverty (and perhaps declining wages that are above poverty) manifests itself on the landscape.  I’m thinking of the dead and marginally occupied shopping centers and retail stuff in Fairborn and Salem Avenue in Trotwood and Dayton, or the hardscrabble vibe of Springfield. 

 

This place is turning into one of those sad Springsteen songs. 

 

I come from down in the valley

where mister when you're young

They bring you up to do like your daddy done

Me and Mary we met in high school

when she was just seventeen

We'd ride out of that valley down to where the fields were green

 

We'd go down to the river

And into the river we'd dive

Oh down to the river we'd ride....

 

I got a job working construction for the Johnstown Company

But lately there ain't been much work on account of the economy

Now all them things that seemed so important

Well mister they vanished right into the air

Now I just act like I don't remember

Mary acts like she don't care…

 

(maybe sort of hokey to have a soundtrack to economics & demographics threads?)

 

 

 

 

 

 

    Some of the stuff that I have read seems to indicate that Americans have been getting poorer since 1970. Sure, we have more electronic gadgets, but there's more to life than those.

from the times today, nothing surprising, but here's how ny came out in this:

 

The Bronx remained the country’s poorest urban county; the income gap in Manhattan was still higher than in any other county (The top 20 percent made about 42 times as much as the bottom 20 percent. Income disparities were higher in New York State than in any other state); and the poverty rate in Connecticut rose faster than in any other state.

 

http://www.nytimes.com/2009/09/29/nyregion/29poverty.html?hpw

 

^

...and here we think we have problems.

 

 

Some of the stuff that I have read seems to indicate that Americans have been getting poorer...

.  I've read about wage stagnation but dont recall much about poverty.

 

 

Essentially we are in a lost decade. Most data for the last ten years is stable to down, which means the rising tide that was going to lift all boats wasn't actually rising. The mid-decade bubble was a gamble that failed. The Bush Admin. knew that they needed to devalue the dollar but could never really commit to a weak dollar because of the fears of inflation and the predominance of finance capitalists in the halls of power. The killer currency cycle is that if the U.S. devalues enough to be a competitive manufacturing nation again then we'll have either driven the yuan to completely unsustainable levels or lost the ability to finance our debt on a going forward basis.

 

I'm increasingly sure that last November was actually the true transformative calamity that is due. That doesn't mean we are headed for a Depression or anything just that we are due for a more disjunctive moment in history when the ability to exercise power in the world system becomes unstable and the rules of the games and the players start to experience serious change.

This place is turning into one of those sad Springsteen songs.

 

let's continue the song for more inspiration and mood setting...

 

And then I got Mary pregnant, and man, that was all she wrote.

For my 19th birthday, I got a union card and a wedding coat.

We went down to the courthouse, and the judge put it all to rest...

No Wedding day smiles, no walk down the isle, no flowers, no wedding cake.

 

We went down to the river, and into the river we dived

O....oh down to the river, we did dive.

 

... (I can't recall the next lines off the top of my head, and I'm too lazy to look them up).

 

Probably some of the most haunting lyrics ever written by the Boss, and he's written a lot of them.

 

(WOW - that song is nearly 30 years old now [1980 album, 'the river'] and yet those lyrics never leave the mind of someone coming of age in that timeperiod, expecially if you were a huge Springsteen fan.)

Some intersting economic news out today....

 

+ 2009Q2 GDP growth (contraction) was revised to a lightly better -0.7 from the initial -1.0 reading

 

(interesting that exports were down 4% vs previous year - I thought manufacturing was improving with the weakening dollar)

 

+ Speaking of manufacturing...

 

Institute for Supply Management-Chicago's business barometer fell to 46.1 in September, a reading that indicates a contraction in the regional economy. It was lower than a reading of 50.0 in August and the analyst consensus forecast of 52.0.

 

(http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20090930&id=10373441)

 

+  And the gov't is supposed to give us September employment numbers this Friday, but ADP came out with their numbers today...

 

Disappointing numbers also came from the ADP National Employment Report, a precursor to the government's own jobs report due on Friday, which showed job cuts in September in the private sector were greater than analysts expected.

 

(from the same article)

 

+ also, commercial lender extraoirdinar CIT group looks like it will not avoid financial troubles afterall...

 

The market was also weighed by CIT Group Inc , down 39.1 percent at $1.34 after a news report late on Tuesday that the troubled commercial lender is likely to be handed over its bondholders.

 

(from the same article)

 

+ and finally, mortgage applications were down last week dispite lower interest rates.  I guess the "urgancy" to buy before the existing home purchase tax credit expires is entering the 'too late to complete the deal' phase.  The tax credit will almost certainly be extended, but I suspect there are going to be fewer and fewer people wanting to buy first-time homes over the next couple of years.

 

 

I think Cit is going into the crapper. The FEDs will pull a positive GDP number out of their butts for the third quarter (which will probably be revised lower over the next few years). The general public will say, I don't see any major positive moves in the economy and wall street and economist will say happy days are here again. Then in the first half of 2010 some reality will start setting in that things really are not rebounding like everyone thought and the ARMs, Alt-A reset will begin in earnest.

 

Does that help light the mood or should we go back to Springsteen?

The necessity to keep ARMs from crushing the economy means the fed have to keep the fed funds rate and LIBOR low for as long as possible, so that resetting ARMS reset lower rather than higher. Remember some of the ARM pain came from the much higher rates they reset at in 07 and early 08 as the feds had tried to slow the economy and inflation (that worked well).

"The necessity to keep ARMs from crushing the economy means the fed have to keep the fed funds rate and LIBOR low for as long as possible"

 

While I agree that will be a factor, I think Bernanke will look to 1937 for his queue in raising rates.  In the meantime, I expect a very slow withdrawl of alternative Fed measures (buying up mortgages, treasury bonds, etc).  This will probably continue, but at an ever-slightly decreasing rate, for the next year.  Then, maybe a year from now (more like 18 months), the Fed might return to its traditional toolset.

 

I think the economy  is on life support right now, and will likely remain that way for another year.  I just don't see the private economy taking up any slack that arises from withdrawing the emergency measures.  If the gov't tried to end the emergency financial measures, and still leave the interest rates at near zero, the economy will take a big turn down.

 

So I think we need to get to the point where the economy can survive on zero interest rates and NO emergency stimuli before the FED can begin to think about raising interest rates.  And I don't see that happening for another 12-18 months, imo.

 

Once rates start to rise, then the interest on all the national debt will sink the country.

 

So what's Bernanke to do?  I say, keep rates at zero % for another 2 years, then find a nice private sector job and bail on the FED.

http://www.theglobeandmail.com/report-on-business/crash-and-recovery/deflation-taking-root-in-global-economies/article1306056/

 

Read it. Back away slowly from your computer. Get a stiff drink and go do something that makes you happy.

(WOW - that song is nearly 30 years old now [1980 album, 'the river'] and yet those lyrics never leave the mind of someone coming of age in that timeperiod, expecially if you were a huge Springsteen fan.)

 

yeah, and 30 years ago was pretty bleak times.

 

When I was putting that post together I was thinking that those lyrics sort of fit the place.  The industrial Miami Valley. Substitute Armco Company for Johnstown Company, etc.

 

A Brookings policy wonk writing in TNR opines on long term unemployment :

 

http://www.tnr.com/blog/the-avenue/where-are-the-long-term-unemployed]Where are the Long Term Unemployed[/url]

 

Apparently in the Big Valley, on the Great Lakes shores, and way down south in Dixie.

 

 

The article closes with this:

 

Some experts are beginning to talk about the need for subsidized employment to get disconnected workers reattached to the labor market in what may be a long economic recovery. Reasonable people disagree about the potential effectiveness of such programs, but the debate on how to help these workers is certainly a worthwhile one. A diverse group--regionally, demographically, and politically--of U.S. metro areas looks to have a stake in that evolving discussion.

 

Get a stiff drink and go do something that makes you happy

 

My preference is Scotch - 15 yr-old aged in French oak barrels.

 

(I initially wrote a long reply to this, but my internet connection died just before I sent it - here is the short version....)

 

The deflation/inflation debate has been raging on various blogs for some time now.  Personally, I look for inflation in the future.  Not immediate future, though.

 

With all the deleveraging, asset price deflating, etc going on, deflation would be the normal expection.  But Bernanke was a student of the GD, so I look for him to do everything possible to not have a repeat. I expect his stimulous printing of money to counter much of the natural deflation forces in the economy. Throw in the gov'ts efforts to boose consumption (houses, cars, appliances) and we have a totally artificial economy right now.

 

Therefore, I expect to see a stand-off between the forces of deflation and inflation, resulting in stagnation.  Another lost decade, if you will, on top of the one we just had.

 

In the end, I expect the printing presses to keep running after the deflationary forces subside, yielding inflation.  Not sure when this will happen, perhaps 2-3 years from now.

 

That's just my take on things.  Bill Gross was predicting inflation up until very recently, so his crystal ball is not consistent either.

 

 

concerning the map above on long-term unemployment, the article says the study looked at the 100 largest markets in the country and ...

 

It restricts these measures to working-age adults (age 25 to 64) who have a high school diploma or less, the educational group most severely impacted by the downturn.

 

I'm not so sure that age group is the one mostly impacted by this downturn.  Furthermore, those without a college education are more likely to work in manufacturing (the Michigan-Ga region) and the agricultural areas of California.  So no surprise that the unemployed garmet and furniture makers of western North Carolina would show up on the list.

 

Still, the issue of long-term employment is an important one, and it's study is a hard one.  I suspect one would have to look at it indirectly from a number of different angels to get a clear picture of it, and that will take a number of teams and a number of years to really do.  Until then, we gleam what we can from each study, however minutely defined.

 

good study to post.  Thanks.

 

 

New jobless claims rise; Americans' spending jumps

 

"WASHINGTON – First-time claims for jobless benefits increased more than expected last week, a sign employers are reluctant to hire and the job market remains weak.

 

And even though consumer spending jumped by the most in nearly eight years in August, due partly to the government's Cash for Clunkers program, economists question whether the improvement can be sustained. They note that households face rising unemployment, tight credit conditions and other obstacles."

 

I think the economist, main street and wall street are starting to realize all the hype about the recession truly being over was nothing more than a wish upon a star. I think the increase in consumer spending will see a drop in the next few months.

 

I think the increase in consumer spending will see a drop in the next few months.

 

Depends on how you measure it:  M-o-M or Y-o-Y.

 

The next 3 months are holiday months... the now-heavily commerciallized Halloween, then people pause for the non-commercial Thanksgiving, then it's right into the Christmas buying season.

 

So yea, the August consumer spending number should prove to be an annomily. But I would expect consumer spending to pick up over the next few months with Christmas approaching.  Won't be the Christmas that it was 2 years ago, or even last year.  But it will provide some boost to spending.

 

 

Here's an interesting article on job losses this decade....

 

http://www.heraldtribune.com/article/20091001/ARTICLE/910011050/2107/BUSINESS?Title=Job-recovery-may-be-long-way-away

 

from the article...

 

A Rutgers University study suggests it will take until 2017 for the United States to replace the jobs lost in the Great Recession.

 

From 1980 to 2000, the U.S. created 35.5 million jobs while from 2000 to 2009, it lost 1.7 million.

 

"This is the first time since the Great Depression of the 1930s that America will have an absolute loss of jobs over the course of a decade," according to the report produced by Dean James W. Hughes of the Edward J. Bloustein School of Planning and Public Policy and university Professor Joseph J. Seneca.

I think the increase in consumer spending will see a drop in the next few months.

 

Depends on how you measure it: M-o-M or Y-o-Y.

 

The next 3 months are holiday months... the now-heavily commerciallized Halloween, then people pause for the non-commercial Thanksgiving, then it's right into the Christmas buying season.

 

So yea, the August consumer spending number should prove to be an annomily. But I would expect consumer spending to pick up over the next few months with Christmas approaching. Won't be the Christmas that it was 2 years ago, or even last year. But it will provide some boost to spending.

 

 

 

Look at Y o Y but, September numbers may be lower than August.

I haven't seen much data on this until now. We new it was coming, and we know the number is only going to grow.

 

Equifax: Commercial bankruptcies up in Q2

 

"Commercial bankruptcies are on the rise and have surpassed consumer bankruptcies, according to data from Equifax Inc.

 

The Atlanta-based credit reporting firm (NYSE: EFX) said commercial bankruptcies increased by 208 percentage points from the first quarter of 2008 to the second quarter of 2009, while consumer bankruptcies rose by 122 percentage points for the same period."

http://atlanta.bizjournals.com/atlanta/stories/2009/09/28/daily60.html

Jobless Rate Climbs to 9.8 Percent in September

 

"If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the unemployment rate rose to 17 percent, the highest on records dating from 1994."

 

"The Labor Department said Friday that the economy lost a net total of 263,000 jobs last month, up from a downwardly revised 201,000 in August. That's above Wall Street economists' expectations of 180,000 job losses, according to a survey by Thomson Reuters."

 

The economists miss their forcast more than the weatherman.

 

I also noticed that the main stream media is starting to print and understand the concept of total unemployment and underemployment and not just the FED data. That is nice to see. It took them long enough.

 

^ why would you think that it doesnt matter?

with less 'recession,' the average working person is less likely to get the boot.

 

***

 

an editorial in the times:

 

Editorial

Wanted: Leadership on Jobs

 

Published: October 3, 2009

 

By every meaningful measure, the weak job market deteriorated further in September. Federal stimulus spending has prevented an even worse decline. But that is cold comfort for the tens of millions of working men and women for whom conditions are bleak and getting bleaker, and for the millions more who are destined to lose their jobs — or to have their hours and compensation cut — in the months and years to come.

 

http://www.nytimes.com/2009/10/04/opinion/04sun1.html?_r=1

 

 

^ That NY Times Opinion article had a lot of interesting statements in it - good find.

 

What's missing from the article is any mention of cut in salaries from commissioned-based jobs (and small business owners), which probably make up a higher percent of jobs today than any time since 1945. A lot of those people today are the working ghosts - holding jobs with little or no income. Yet they get counted as 'employed'.

 

Here's a suggestion... if you earn less than the minimum wage for a month, you get counted as unemployed, regardless of your job status. (think real estate agent, small photography studio owner).

 

September was the 21st straight month of job loss — the longest unbroken stretch of losses since record-keeping began in 1939.....

 

The unemployment rate for September — 9.8 percent — also understates the damage. It would have been higher but for the fact that 571,000 people dropped out of the work force last month .....

 

For adult men, who have been particularly hard hit by job loss in this recession, the employment rate fell to 67 percent, its lowest level since the government began keeping track in 1948. Before this recession, that rate had never dropped below 70.5 percent. ......

 

Of the 15.1 million people who are now officially counted as unemployed, over a third have been out of work for 27 weeks or longer, the highest percentage of long-term unemployment on record....

 

(updated to qualify the 67% employment, refers to Adult Males)

^ That NY Times Opinion article had a lot of interesting statements in it - good find.

 

What's missing from the article is any mention of cut in salaries from commissioned-based jobs (and small business owners), which probably make up a higher percent of jobs today than any time since 1945. A lot of those people today are the working ghosts - holding jobs with little or no income. Yet they get counted as 'employed'.

 

Here's a suggestion... if you earn less than the minimum wage for a month, you get counted as unemployed, regardless of your job status. (think real estate agent, small photography studio owner).

 

September was the 21st straight month of job loss — the longest unbroken stretch of losses since record-keeping began in 1939.....

 

The unemployment rate for September — 9.8 percent — also understates the damage. It would have been higher but for the fact that 571,000 people dropped out of the work force last month .....

 

the employment rate fell to 67 percent, its lowest level since the government began keeping track in 1948. Before this recession, that rate had never dropped below 70.5 percent. ......

 

Of the 15.1 million people who are now officially counted as unemployed, over a third have been out of work for 27 weeks or longer, the highest percentage of long-term unemployment on record....

 

The unemployment situation is on the edge of being depressionary. While other economic stats are still in the recession catagory. I think a very important stat is the employment number not the unemployment number.

 

Can the majority of our other economic data stay level or even grow while unemployment/employment numbers continue to drop deeper into 'depressionary' data? We hear the economist and main stream media talk about a jobless recovery, but what about a continuing job lose recovery?

^

 

But Rage, it's not a jobless recovery anymore....(from today's headlines)

 

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20091005&id=10449350

 

NEW YORK (Reuters) - The U.S. service sector in September expanded for the first time since August 2008, growing at a faster pace than expected to take the benchmark index to its highest since May 2008, according to a report released on Monday.

 

 

and this....

 

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20091005&id=10449349

 

NEW YORK (Reuters) - The U.S. job market strengthened in September for the first time since January of last year,...

 

The Conference Board, a private research group, said its Employment Trends Index edged up to 88.5 in September from an upwardly revised 88.2 in August, originally reported at 88.1.

I agree looking at employment numbers, relative to pre-recession levels, may be a better gauge of employment.  I suspect over time, the % has been dropping due to early retirement of baby boomers.  However, I'm sure some of that retirement was not exactly voluntary, which would skew any results.

 

also from the NY Times opinion article....

 

In September, the employment rate for all workers — defined as the share of the population with a job — fell to 58.8 percent, its lowest level in more than 25 years.

 

If I read this right, it basically means that at the moment, 58.8% of adults in this country are supporting (directly and indirectly) both government spending (including employment), and the other 41.2% of adults in this country.

 

I must not be reading that correctly.

 

 

^  those 58.5% of working adults in this country are also supporting all the children in the US. 

 

But they are getting some help this year from the $1.7T budget deficit, the $1T expansion of the Fed Reserve Balance sheet, some retirement savings being drawn down, and probably the current accounts deficit as well.

 

So I guess us workers do some help.

Blue Ash firm pays $44M for Fairfield center

By Laura Baverman • [email protected] • October 5, 2009

 

http://news.cincinnati.com/apps/pbcs.dll/article?AID=/AB/20091005/BIZ01/910060335/

 

A Fairfield Township shopping center, built for $100 million in 2004, was sold Monday for $44 million to Blue Ash-based Phillips Edison & Co., one of the largest privately-owned investors and operators of retail centers in the nation.

 

You don’t hear many news stories about what happens after the unemployment runs out.  The stories usually end with a happy ending; the unemployed worker finds a job.  Or the story cuts off while worker is on his or her last legs and is selling stuff to pay the bills.  The readers or viewers are spared the grim bitter end.

 

I’d wish there was some long term reporting on this, tracking a group of workers who lose their jobs, fall off the economic cliff, and then see how they land or where they end up.

 

That would be the real story behind the so-called “declining” unemployment rates.

 

(Oh, by the way, for C-Dawg, I just saw Michael Moore’s “Capitalism a Love Story”, and your Marcy Kaptur is prominently featured in the movie).

 

I don't know if this 'speculation' is true or not. But, a lot of talk has been happening about removing the dollar as the main trading base for several months now. Look at IMF's approval to print their own money, the move of power from the G-8 to the G-20. Things are definitely changing, just how fast remains to be unseen. If the dollar is removed as the main trading currency, I think we are in for some serious inflation in the US, much quicker than expected. Of course, this might allow the government and debt holders to inflate their way out of all this nasty debt.

 

Potential end of dollar-based oil deals helps gold shine

 

"Gulf Arab states, along with China, Russia, Japan and France, are planning to put an end to dollar-based trading in the oil market, according to an exclusive report published Tuesday in the U.K. by The Independent."

 

"In place of the greenback, the nations plan to use a basket of currencies, including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar, the report said."

http://www.marketwatch.com/story/potential-end-of-dollar-based-oil-deals-lifts-gold-2009-10-06

A Fairfield Township shopping center, built for $100 million in 2004, was sold Monday for $44 million

 

Now that's a nice new comp!

 

Normally, this article would probably be posted on another thread, but with all the cleansing going on, I think it belongs here for the time being.

 

I always thought Bridgewater falls was in Liberty Township.  I guess I have to look at the maps closely.  It can't be too far from Liberty township.

 

a nice local example of how the commercial sector is being affected by the economy, and while it does not say how big a loss the lenders took, I have to guess it's pretty big since the lender had to pay $30M in property taxes while holding it.  That kind of property tax payment is real incentive to dump the property at any cost.  Not sure the residential loan-holders have the same incentive.

 

(Oh, by the way, for C-Dawg, I just saw Michael Moore’s “Capitalism a Love Story”, and your Marcy Kaptur is prominently featured in the movie).

 

Yeah, I know. They've been hyping it huge in Toledo. Marcy Kaptur is the best woman in America.

 

You don’t hear many news stories about what happens after the unemployment runs out.  The stories usually end with a happy ending; the unemployed worker finds a job.  Or the story cuts off while worker is on his or her last legs and is selling stuff to pay the bills.  The readers or viewers are spared the grim bitter end.

 

I’d wish there was some long term reporting on this, tracking a group of workers who lose their jobs, fall off the economic cliff, and then see how they land or where they end up.

 

That would be the real story behind the so-called “declining” unemployment rates.

 

The structure of news is this:

 

1. Open with shocking or psuedo-shocking news.

2. Inundate audience with negative stories about rape, murder, assault, arson, sex scandal, terrorism, soldier deaths, and sh!tty economy.

3. Scare the sh!t out of the audience with the newest health scare (air drug company ad afterwards).

4. Tease what's coming later.

5. End with a cutesy story about dolphins getting married or a teenage girl who plays clarinet with her toes.

 

Basically, you beat the sh!t out of the audience for 7/8th's of the show, and then make it seem alright by leaving them with a positive feeling in their stomachs for the last 1/8th. That way they aren't too scared to go out and buy all the things that were just advertised.

 

It's true no one wants to hear the story about the happy family where everything is fine. That's boring as sh!t. We want blood and conflict. But at the same time, everyone wants a happy ending after all the blood and conflict. That's why many stories never even have an ending. Rest assured, the real world ending was too depressing and the audience might kill themselves if it was aired. That's just not a good business model. :wink: So people want to know how sh!tty the economy is, but they don't want to hear about the family ending up homeless or the daughter prostituting herself out for a loaf of bread. That's too deep. People want to think "everything works out in the end." And it will work out better if you buy Proctor & Gamble's new super-f$&king-heavy-duty-as-sh!t detergent.

 

 

True, Funny, Sad, Exciting, but ended on a sad note. Well maybe not, we all need good mega detergent.

C-Dawg prefers beating his clothes with a rock along the Maumee!!

Consumer credit continues to shrink...

 

http://finance.yahoo.com/news/US-consumers-cut-borrowing-by-apf-3466825138.html?x=0&sec=topStories&pos=1&asset=&ccode=

 

from the article...

 

U.S. consumers reduced their borrowing for the seventh straight month in August...

 

The Federal Reserve said Wednesday that total consumer debt outstanding fell in August by $12 billion, a 5.8 percent annual rate.

 

Credit card debt, meanwhile, fell 13.1 percent, its steepest drop since February.

 

and this last bit of the article is telling....

 

Retailers already are bracing for another meager holiday season. The National Retail Federation said Tuesday that it expects sales during November and December to fall 1 percent from last year. While that's not as steep a drop as in 2008, last year's holiday sales saw the worst annual drop on records dating to 1967.

 

The NRF also expects retail sales for all of 2009 to fall 3 percent.

I'm a little confused.  Shouldn't reducing household debt load be considered a good thing in the long run?

In the long run, yes. The fear is that the consumer squeezes so tight that whole sectors of the economy go poof! and then savings rate don't matter because not enough folks are productively employed and that cycle keeps spiraling downward until you have to fight a massive war and just barely manage to transition the economy out of a war footing without kicking that cycle back into effect.

You know, I keep hearing that consumer spending comprises 70% of GDP for the US.  Everyone acts so concerned that consumers are cutting back because we comprise 70% of the economy.  I was taught 30 years ago that consumers made up 70% of the GNP, so that number has not changed much over time.

 

But how does that 70% compare to other countries. What % of Canadian GDP is consumer spending?  What percent of GDP is consumer spending in Britain, Germany, Italy, or Japan?  Anyone have any idea?

 

If I recall correctly, the basic formula for GDP is: GDP = C + G+ I + X, or

GDP = Consumer spending + Government Spending + (corporate capital)Investments + net Exports.

 

Now, in a socialist society, government spending makes up a big section, but it just replaces part of what the US citizen spends.  So in essence, isn't there a comingling of C+G that varies from country to country.  In the US, C = 70% and G= 25% (roughly).  So that means 95% of GDP is consumer and government spending. If we assume that C+G represents the same items, with varying rations between countries, then that just leaves I + X.  (in the US, I think I = +10%, X = -5%

 

Agreed, X is negtive in the US due to our trade deficit and current account deficit, where as it is positive in a lot of other countries.

 

But if C+G is 95% of GDP in the US, what percent is it in other countries? 

 

In other words, I bet that consumer spending is just as important in other countries as it is in the US.  (in other countries, a lot of taxes to support 'G' comes from value-added tax based on consumer perchases).

You know, I keep hearing that consumer spending comprises 70% of GDP for the US.  Everyone acts so concerned that consumers are cutting back because we comprise 70% of the economy.  I was taught 30 years ago that consumers made up 70% of the GNP, so that number has not changed much over time.

 

But how does that 70% compare to other countries. What % of Canadian GDP is consumer spending?  What percent of GDP is consumer spending in Britain, Germany, Italy, or Japan?  Anyone have any idea?

 

If I recall correctly, the basic formula for GDP is: GDP = C + G+ I + X, or

GDP = Consumer spending + Government Spending + (corporate capital)Investments + net Exports.

 

Now, in a socialist society, government spending makes up a big section, but it just replaces part of what the US citizen spends.  So in essence, isn't there a comingling of C+G that varies from country to country.  In the US, C = 70% and G= 25% (roughly).  So that means 95% of GDP is consumer and government spending. If we assume that C+G represents the same items, with varying rations between countries, then that just leaves I + X.  (in the US, I think I = +10%, X = -5%

 

Agreed, X is negtive in the US due to our trade deficit and current account deficit, where as it is positive in a lot of other countries.

 

But if C+G is 95% of GDP in the US, what percent is it in other countries? 

 

In other words, I bet that consumer spending is just as important in other countries as it is in the US.  (in other countries, a lot of taxes to support 'G' comes from value-added tax based on consumer perchases).

 

Did some quick research.

 

Britian - 65% of GDP

http://uk.reuters.com/article/idUKTRE58S17820090929

 

Japan - 55% of GDP

http://www.thaindian.com/newsportal/uncategorized/japans-gdp-plummets-127-percent-amid-record-export-drop-lead_100155757.html

 

China - 30% of GDP

http://www.brainmass.com/homework-help/business/marketing/142032

 

Germany - 55% of GDP

http://www.brainmass.com/homework-help/business/marketing/142032

 

What would be interesting is to see if the variables in the formula's are the same. Example: In the US consumer spending includes healthcare, but in Germany is that included in Government spending or consumer spending. If so than both the US and Germany have a 90% of GDP for consumer spending and government spending with 10% left over.

 

Whatever it is most of Europe, Japan and the US are being 'hurt' currently by the reduction in consumer spending. I know this topic has mostly focus on the US in general, but Europe and Japan (as well as others) are taking this great recession as hard as the US. Their governments are trying to doctor the system just like we are. Germany is even doing a cash for clunkers type program right now. Their governments also are telling the people recovery is right around the corner. I think we know the drill.

Thanks Rage!  I didn't expect anyone to actually research the topic, just maybe there was a general number floating around somewhere.

 

As you said, and as I tried to allude to in my post, the issue is what is included in consumer spending and what is included in government spending, as some items are counted differently in each country.

 

But you answered my question with your talk of recession in the other countries and their government's consumer stimulous programs.

 

As to China and other countries, even though they are highly socialistic, I'm not sure the 'account' for certain activities the same way we do.  For instance, China has a HUGE agriculture population.  A great many people eat the food they grow, and barter with some of the remaining.  I'm not sure that 'activity' is captured in the GDP calculations, since it does not flow thru monetary, recorded transaction system we rely on for information.  The same is probably true for the US as well, but the percent those non-money transaction/procutions is probably a lot less in developed worlds.  I think the farmer down the street from me eats very little of what he grows (corn/soybeans). Instead, he grows food, sells all of it, then buys back the food he eats - all recorded monetary transactions. [i think a very small patch of sweat corn is grown for personal human consumption on the horse farm across the street from me, but hardly enough to use farm equipment on.]

So where are we heading over the next 12 months? If they can't get the banks to lend and get the financial multipler moving again then the system will have a second leg down.

 

"The Fed's purchases of assets to increase this base automatically created deposits that positively charged the money supply growth to a 15.2% six-month growth rate (Chart 2). If the economy were operating near full capacity, a healthy banking system would take these deposits and multiply them roughly nine times; that circumstance could be inflationary. Unfortunately the banking system is not healthy, as evidenced by the fact that we have closed 95 banks this year, more than the cumulative total of the past 15 years, and another 416 banks are on a list destined to become extinct. With consumers' asset prices falling so rapidly and banks increasingly afraid of failure, banks are more interested in collecting loans than in lending. So with fewer consumers now credit worthy, loan volumes are collapsing. As loans are paid off, deposits are destroyed, and the money multiplier that should stand at nine has gone to zero. This is evidenced by the fact that the six-month change in M2 has fallen to a 1% growth rate, meaning that monetary stimulus is on hold. Get set for negative GDP in 2010."

http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2009/10/12/quarterly-review-and-outlook-third-quarter-2009.aspx

Over the pat 2 years, governments at all levels have been net hirers of employees.  We've often commented about how their hiring is partially masking what is really happening in the private sector job market.  We've often wondered how long governments could continue hiring people given the fall in tax revenue.

 

How often is the following being repeated across the country?

 

Butler County’s budget horrors not over

 

http://www.middletownjournal.com/news/middletown-news/butler-countys-budget-horrors-not-over-346406.html

 

HAMILTON — Butler County government’s financial blood-letting this year will likely pale in comparison to 2010’s budget woes, according to the most recent projections.

 

In a letter sent Tuesday, Oct. 13, commissioners are asking their departments and other elected officeholders for 11 percent cuts in non-mandated services to patch a projected $6.6 million hole next year.

 

and this from the article...

 

If it becomes a $2.5 million reduction for the sheriff’s office, it will dramatically and severely impact public safety for the citizens we provide services for,” said Chief Deputy Anthony Dwyer.

 

The sheriff’s office already laid off more than a dozen deputies and corrections workers to deal with a $900,000 budget cut this year.

 

Over the pat 2 years, governments at all levels have been net hirers of employees.  We've often commented about how their hiring is partially masking what is really happening in the private sector job market.  We've often wondered how long governments could continue hiring people given the fall in tax revenue.

 

How often is the following being repeated across the country?

 

Butler County’s budget horrors not over

 

http://www.middletownjournal.com/news/middletown-news/butler-countys-budget-horrors-not-over-346406.html

 

HAMILTON — Butler County government’s financial blood-letting this year will likely pale in comparison to 2010’s budget woes, according to the most recent projections.

 

In a letter sent Tuesday, Oct. 13, commissioners are asking their departments and other elected officeholders for 11 percent cuts in non-mandated services to patch a projected $6.6 million hole next year.

 

and this from the article...

 

If it becomes a $2.5 million reduction for the sheriff’s office, it will dramatically and severely impact public safety for the citizens we provide services for,” said Chief Deputy Anthony Dwyer.

 

The sheriff’s office already laid off more than a dozen deputies and corrections workers to deal with a $900,000 budget cut this year.

 

 

I work in city government and I can tell you its happening at a rapid rate all across the country. At best, some city, county and state governments are holding the line (not adding to their overall employment base) but most are reducing at a significant rate. The only one that is currently on a hiring mode is the Feds. It helps when you can print money.

 

Here are some quick examples of some of the layoff annoucements by government agencies within the last week or so. Compare this to the very few job creation annoucements that are happening and most of them are for X amount of jobs to be created by 2011, 2012, etc.

 

Department of Health and Human Services North Carolina - Expects Thousands Of Job Losses, Cut Services

http://wake.mync.com/site/wake/news|Sports|Lifestyles/story/43126/dhhs-expects-thousands-of-job-loses-cut-services

 

New Hampshire - 250 state workers to lose jobs

http://www.concordmonitor.com/apps/pbcs.dll/article?AID=/20091013/BREAK/910139996/1030

 

Aurora, CO - "Fifty people will lose their jobs and 85 open job positions will not be filled."

http://cbs4denver.com/local/aurora.budget.cuts.2.1246016.html

 

Iowa's Chief Justice warns staff of layoffs

http://www.wcfcourier.com/news/local/govt-and-politics/article_c0dbb9ea-b73b-11de-95d0-001cc4c002e0.html

 

Layoffs imminent - Massachusetts

http://www.boston.com/yourtown/budgetblues/2009/10/layoffs_imminent_lt_gov_says.html

 

Nixon to announce more job cuts - Missouri

http://stlouis.bizjournals.com/stlouis/stories/2009/10/05/daily68.html

 

Grand Rapids City Mgr.: 'Significant' layoffs coming

http://www.wzzm13.com/news/news_story.aspx?storyid=114516&catid=14#

 

"The Dayton suburb of Moraine also is laying off 187 full-time, part-time and seasonal workers, about 43 percent of the total."

http://www.fox59.com/news/sns-ap-oh--waterpark-economy,0,4754409.story

 

City to eliminate 89 employee positions - Coral Gables, FL

http://www.miamiherald.com/news/miami_dade/east/story/1270780.html

I know crime is a serious deal, but I think you could make a pretty compelling argument that many municipalities overhired police during the last decade - maybe not so much in the growth areas of Butler Cty, but certainly in Hamilton Cty.

I know crime is a serious deal, but I think you could make a pretty compelling argument that many municipalities overhired police during the last decade - maybe not so much in the growth areas of Butler Cty, but certainly in Hamilton Cty.

 

Crime is always a top priority for most communities, which is understandable. But, I think one of the big issues with employment related to police/fire is to much cooked in title raises, and HUGE retirement funds. It nothing for 70% of a city or county budget to be going to these two agencies. A lot of this has come from the police and fire union system.

 

That only leaves 30% of the budget for parks, public works, economic development, planning, utilities, health departments, libraries, etc.

Compare the job lose post above with this. Main Street is simply being fleeced and that would be a nice way of putting it. I thought by now their would be some real discontent on the part of Main Street. You do hear a lot about high gun sales!?!

 

I wonder if they will at least send a thank you card to main street (taxpayer) for their bounty this year.

 

Wall Street On Track To Award Record Pay

 

"Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street's pay culture."

http://online.wsj.com/article/SB125547830510183749.html

 

And on the dollar front and the please buy our debt front.

 

Dollar loses reserve status to yen & euro

 

"Ben Bernanke's dollar crisis went into a wider mode yesterday as the greenback was shockingly upstaged by the euro and yen, both of which can lay claim to the world title as the currency favored by central banks as their reserve currency.

 

Over the last three months, banks put 63 percent of their new cash into euros and yen -- not the greenbacks -- a nearly complete reversal of the dollar's onetime dominance for reserves, according to Barclays Capital."

http://www.nypost.com/p/news/business/dollar_loses_reserve_status_to_yen_hFyfwvpBW1YYLykSJwTTEL

Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high

 

But aren't there fewer employees in those companies these days?  So the 'per employee' rate is MUCH higher than the previous record 2 years ago, no?

Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high

 

But aren't there fewer employees in those companies these days? So the 'per employee' rate is MUCH higher than the previous record 2 years ago, no?

 

Correct. Let the New Year's Eve partying begin.

Apparently I work in the wrong field.

 

I need to work in the Oil or Banking Industry!

 

A Brotha needs to get paid!

Here on one piece of the economy that is clearly not getting better.

 

Foreclosures rise 5 percent from summer to fall

 

"The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to a report released Thursday by RealtyTrac Inc. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year."

http://news.yahoo.com/s/ap/20091015/ap_on_bi_ge/us_foreclosure_rates

Here on one piece of the economy that is clearly not getting better.

 

Foreclosures rise 5 percent from summer to fall

 

"The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to a report released Thursday by RealtyTrac Inc. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year."

http://news.yahoo.com/s/ap/20091015/ap_on_bi_ge/us_foreclosure_rates

 

hold out for another year, new home buyers