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Schrödinger’s American economy – alive and dead at the same time. How can this be? [1]
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Date: 2022-09-29
Yes, the American economy is booming. Simultaneously, it is declining badly relative to earlier periods, and compared with other advanced nations.
How can this be? Simple. It depends which variables we examine, what weight we give to them and which countries we choose for comparisons.
Analysis of all available data shows the US economy has deteriorated disastrously over the period 2017 to 2021, but is now recovering. The critical lessons are that the decisions Donald Trump and his Republican enablers made on tariffs, trade relations, spending, corporate tax rates, individual tax rates and management of the Covid pandemic were wrong and Americans should never vote Republican again.
It is critical to understand the damage done if history is not to repeat and more Americans are not to suffer the farmer suicides, bankruptcies, homelessness and poverty Trump caused. That was the point of the diary published on Monday titled Detecting the cause of America’s steadily deteriorating economy, which a small number of readers have misinterpreted.
The messages of that diary were these:
(a) many areas of the US economy have declined seriously since 2017,
(b) several are yet to recover to where they should be given global conditions,
(c) some are still deteriorating,
(d) these are principally the doing of the Trumpian Republicans, and
(e) reversals of Trump’s policies are essential to restore the economy fully.
Progress by Mr Biden
Of course most Daily Kos community members are barracking for the President and are confident he will rescue the economy. But it is too early yet to celebrate.
Positive indicators include:
* Decline in homelessness in 2021,
* GDP per person at an all-time high,
* Strong increase in mean wealth and median wealth in 2021,
* The budget deficit this year is on track to be $1,031.5 billion, which is just 38 per cent of last year’s horrific deficit of $2,723.8 billion, and
* Industrial production, mining production and manufacturing are humming along nicely.
Negative indicators include:
* GDP growth was negative in both the first and second quarters of 2022. This, by definition, means the nation overall is producing less this quarter than the quarter before. The USA is the only economy among the 38 OECD members in this parlous situation.
* Inflation has averaged 8.55 per cent over the last six months. That is the highest six-month average since 1982. The USA ranks 13th in the OECD on inflation, outside the top ten.
* America’s budget deficit last year was a staggering US$2,723.8 billion. That was by far the worst deficit of all OECD members. This year’s deficit will be less, but will still be the worst in history outside a global recession.
* Gross federal debt hit an all-time high of $30,569 billion at the end of last month.
* America’s debt expansion since 2016 has been the OECD’s worst. See graph, above.
* An extra $1,293 billion has been added to the debt this year; an extra $312 billion has added just in the last two months.
* Unemployed Americans snuck up above six million in August for the first time in six months. The jobless rate jumped from 3.46 per cent in July to 3.65 per cent in August. That’s the highest August rise since 2008. The USA now ranks 14th in the OECD on jobless rates, outside the top ten.
* Personal savings dropped to 5.0 per cent in July, the lowest level since August 2009 at the depths of the Great Recession.
* The trade balance remains at disaster lows, deeper than $60 billion.
Correcting misunderstandings
Yesterday another diarist critiqued mine from Monday with this: No. The US Economy is not Deteriorating. A Response to a Troubling Rec'd Story from Yesterday.
Most observations in that diary were fair and correct. We differ principally on the breadth of data accessed and interpretation of some outcomes.
For example, an improvement in an economic outcome over a previous estimate is not evidence in itself of good management. It could be that the original estimate was wrong. They are sometimes deliberately falsified.
We differ also on country comparisons. G7 nations, which are mostly the large, inflexible, sclerotic economies, are less helpful for comparisons than the 38 developed members of the OECD or the 66 UNDP very high development nations.
The bottom line
Paying interest on last financial year’s federal debt came to $3,515 per taxpayer, on average over all taxpayers.
This year’s impost will be $4,504 from each, on average. That is $4,504 which citizens cannot spend on their families, and revenue which the government cannot to apply to other priorities.
This will increase every year until the debt is reduced by budget surpluses, or interest rates are miraculously reduced. We should show forcefully and stridently that this is an appalling state of affairs and that Trump is primarily to blame.
Yes, the US economy is showing positive signs. We should have every confidence Mr Biden and the Democrats will reverse the disastrous 2017 tax cuts which have so blighted the economy. When they do so, they should be heartily congratulated.
Meanwhile, now is the time to hammer home the message that Trump and the Republicans were disastrous for the economy and must never be allowed near the Treasury again.
[END]
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https://www.dailykos.com/stories/2022/9/29/2125998/-Schr-dinger-s-American-economy-alive-and-dead-at-the-same-time-How-can-this-be
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