That is good news. Around here I watch for contractors and construction vehicles. The roads are swarming with both, and it seems like half the people in the neighborhood are having something done this summer. I've talked with some local contractors about home renovations and they're very busy. Many have had long waiting lists all season. (Unfortunately for me that also means that they aren't as anxious to compromise on prices to bring in more business. Such is life.)
All that disposable income must be coming from somewhere, and most of my neighbors are well-established families who are unlikely to be racking up irresponsible debt.
The obsession with oil prices as a major economic indicator tends to leave me very slightly amused. Not only are we nowhere near historical peak gas prices once you adjust for inflation, and there are all sorts of ways people can adjust to higher gas prices without hurting their lifestyles much. And for food and other consumption goods, the price of gas is far from the most influential factor on prices.
The economy would hardly collapse if average pump prices rose to $3.00/gallon or more. Mind you, I wouldn't *like* it much, but the idea that it's a primary economic indicator? Please....
Gas prices are squeezing pocket books, to be sure. But I'm more concerned about the mandated rise in minimum credit card payments along with the fed's constant jacking up of interest rates.
The variety of indicators all together could spell bad things.
As well, the obsession with a quarterly growth rate as a major economic indicator seems like watching the boiling water a little too closely.
I hope the economy keeps growing at a good pace, but I'm also getting uneasy about all the negative signs.
Dean
I see a lot of negativism as the founder and benign dictator of the ITPAA. It seems that many people want the economy to tank just so that they can say "See, I told you so."
From my perspective I'd rather be wrong and rich than right and poor. I'm glad that people are working. I'm happy to see entrepreneurs making it. That, after all, is what life in America is all about. It's the Dream - the American Dream. It's still alive and kicking, and I want to see it remain that way.
However consider the following:
1. Consumer and corporate debt are running at unsustainable levels. Eventually the bills will have to be paid.
One of the best ways, from a debtor's perspective, to get out of this would be for some serious inflation to eat away at the value of the debt. Given the inflation-phobia of the Fed, I don't forsee this happening anytime soon.
2. People are feeling rich because their houses are worth more. My home has nearly doubled in value since I bought it in 1998. Like many, I am using the equity in it to improve it.
All fine - except bubbles always burst. I lived through the precious metals bust in 1981 - having used some of my father's life insurance money to buy silver at $45/ounce and gold at $710. I also lived through the IT collapse from 2000-03 (also referred to as the Internet Bubble - however IT collapse reflects a broader tightening of IT spending that began when firms stopped purchasing hardware because of Y2K).
What will happen when the housing market cools?
3. The Trade Deficit - Eventually foreigners will tire of servicing our debt, which will lead to the Fed raising interest rates. When that happens, many people with balloon or ARM financing of their homes will be in very big trouble.
4. Globalization. I realize this comment is a minority opinion around here, but NAFTA specifically and globalization in general have yet to produce the benefits promised by globalization proponents.
All high growth jobs are in low paid professions like teaching, hospital/homecare aide, and retail.
We must be aware of the danger that the American economy could become like Brazil's - a thin layer of well-heeled working in highly paid professions while the vast majority of people toil in low paid jobs without security. There's an ugly word for it: Brazilification.
Now I don't mean to pee on anyone's parade, but we should think about the long-term prosperity of our country. I want America to be strong, prosperous and secure in its borders.
Does our current economic situation meet those requirements?
All high growth jobs are in low paid professions like teaching, hospital/homecare aide, and retail.
Many of those high growth jobs are in the health professions. These are not all low-skill or low-paid jobs, and the increase in demand is probably due to the aging baby-boomers.
This generation has had a tremendous effect on the nation's economy. It's not a coincidence that the housing market, the stock market and the fatness of Americans ballooned as the baby boomers went through middle age. Now, the healthcare industry is big. General investment in high-risk stocks may go down, while "secure" investments, like bonds and property (or even saving?) could become more popular. Demand for low-impact yoga instructors will go up, while demand for tae bo instructors may go down. After a few decades, funeral parlors will be very big.
Things change. Oil prices don't have the effect on the market that we feared. The rise of China's economy is a good and a bad thing. A non-democratic economy is has more power than it used to, but Japanese and the Chinese are currently keeping our economy afloat by buying dollars. We don't have to eat our peas because of the poor starving children in China. One good thing.
The airlines are going to take it in the teeth because of ongoing high fuel prices. I don't think there's another industry which is so seriously impacted by high petroleum prices.
...as if the airlines didn't already have enough troubles, many self-inflicted...
The airlines' troubles are mostly self-inflicted. They offered their customers bad service &high prices before 9/11. Afterwards, things could only get worse.
The airline industry is too centralized. We should open up more small-to midsized airports and allow them to compete with hellish hubs like O'Hare. We should stop propping up the large, incompetent corporations like United and give innovative airlines like Jet Blue, Southwest and Virgin air a better chance to destroy the slow, weak competition.
Despite the outrageously poor service and high prices that the major airlines offer, demand remains high. Even high fuel prices might not have a big effect on that demand.
The government and the big airlines' fear of high oil prices might provoke another bailout, though. The only things that could really hurt the industry are more centralization and more government bailouts - and that's probably what we'll get.
All that disposable income must be coming from somewhere, and most of my neighbors are well-established families who are unlikely to be racking up irresponsible debt.
The economy would hardly collapse if average pump prices rose to $3.00/gallon or more. Mind you, I wouldn't *like* it much, but the idea that it's a primary economic indicator? Please....
The variety of indicators all together could spell bad things.
As well, the obsession with a quarterly growth rate as a major economic indicator seems like watching the boiling water a little too closely.
I hope the economy keeps growing at a good pace, but I'm also getting uneasy about all the negative signs.
I see a lot of negativism as the founder and benign dictator of the ITPAA. It seems that many people want the economy to tank just so that they can say "See, I told you so."
From my perspective I'd rather be wrong and rich than right and poor. I'm glad that people are working. I'm happy to see entrepreneurs making it. That, after all, is what life in America is all about. It's the Dream - the American Dream. It's still alive and kicking, and I want to see it remain that way.
However consider the following:
1. Consumer and corporate debt are running at unsustainable levels. Eventually the bills will have to be paid.
One of the best ways, from a debtor's perspective, to get out of this would be for some serious inflation to eat away at the value of the debt. Given the inflation-phobia of the Fed, I don't forsee this happening anytime soon.
2. People are feeling rich because their houses are worth more. My home has nearly doubled in value since I bought it in 1998. Like many, I am using the equity in it to improve it.
All fine - except bubbles always burst. I lived through the precious metals bust in 1981 - having used some of my father's life insurance money to buy silver at $45/ounce and gold at $710. I also lived through the IT collapse from 2000-03 (also referred to as the Internet Bubble - however IT collapse reflects a broader tightening of IT spending that began when firms stopped purchasing hardware because of Y2K).
What will happen when the housing market cools?
3. The Trade Deficit - Eventually foreigners will tire of servicing our debt, which will lead to the Fed raising interest rates. When that happens, many people with balloon or ARM financing of their homes will be in very big trouble.
4. Globalization. I realize this comment is a minority opinion around here, but NAFTA specifically and globalization in general have yet to produce the benefits promised by globalization proponents.
All high growth jobs are in low paid professions like teaching, hospital/homecare aide, and retail.
We must be aware of the danger that the American economy could become like Brazil's - a thin layer of well-heeled working in highly paid professions while the vast majority of people toil in low paid jobs without security. There's an ugly word for it: Brazilification.
Now I don't mean to pee on anyone's parade, but we should think about the long-term prosperity of our country. I want America to be strong, prosperous and secure in its borders.
Does our current economic situation meet those requirements?
Only time will tell.
Many of those high growth jobs are in the health professions. These are not all low-skill or low-paid jobs, and the increase in demand is probably due to the aging baby-boomers.
This generation has had a tremendous effect on the nation's economy. It's not a coincidence that the housing market, the stock market and the fatness of Americans ballooned as the baby boomers went through middle age. Now, the healthcare industry is big. General investment in high-risk stocks may go down, while "secure" investments, like bonds and property (or even saving?) could become more popular. Demand for low-impact yoga instructors will go up, while demand for tae bo instructors may go down. After a few decades, funeral parlors will be very big.
Things change. Oil prices don't have the effect on the market that we feared. The rise of China's economy is a good and a bad thing. A non-democratic economy is has more power than it used to, but Japanese and the Chinese are currently keeping our economy afloat by buying dollars. We don't have to eat our peas because of the poor starving children in China. One good thing.
...as if the airlines didn't already have enough troubles, many self-inflicted...
Giggling fan-thing aside...
So when do we renationalize them, making an Amtrak in the sky?
In fact, what is the difference between United and Delta of today and the New York Central and beloved Pennsy of yesteryear?
The airlines' troubles are mostly self-inflicted. They offered their customers bad service &high prices before 9/11. Afterwards, things could only get worse.
The airline industry is too centralized. We should open up more small-to midsized airports and allow them to compete with hellish hubs like O'Hare. We should stop propping up the large, incompetent corporations like United and give innovative airlines like Jet Blue, Southwest and Virgin air a better chance to destroy the slow, weak competition.
Despite the outrageously poor service and high prices that the major airlines offer, demand remains high. Even high fuel prices might not have a big effect on that demand.
The government and the big airlines' fear of high oil prices might provoke another bailout, though. The only things that could really hurt the industry are more centralization and more government bailouts - and that's probably what we'll get.