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If the U.S. Is In A Recession, Why Don't Economists Know It??? Workers Do!!

Officials in Denial About Weakening Economy As Value-Added Jobs Vanish

March 8, 2008       Leave a Comment
By: Dave Rogers

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Recession in 2008? As an Economist.
 

  • "We may be in a recession."

  • "We won't know for several more months whether the nation is in a recession."

  • The nation may be in a recession because we see a softening of the jobs picture."

    These are typical statements by economists reported recently by the news media.

    And they wonder why economics is the most misunderstood discipline?

    Nothing seems to make sense since they never know when we are in a recession, and, supposedly, never know when we come out of one.

    It's usually pretty clear when times are good because things happen that eventually will make it all worse again, like lending money on homes to people who don't have jobs and haven't a prayer of repaying.


    "I'm still not saying that there is a recession," said Edward P. Lazear, chairman of the President's Council of Economic Advisers.

    One thing you learn in years in the news business is that officials will seldom (usually never) admit that things are bad. Mr. Lazear seems to be no exception.

    Median household is down to $48,201 in 2006 from $49,244 in 1999, a drop of more than $1,000 according to the Census Bureau.

    It has been about 10 years since the income of average American working folks increased. And everyone knows who can read that gas and food prices are rising.

    Workers know definitely that we are in a recession when their paychecks shrink, hours are cut, they are laid off or "downsized." It doesn't take an economist in the family to figure that out.

    The national news media reported Labor Department estimated that the nation lost 63,000 jobs in February. It was the second straight monthly decline, with private-sector jobs taking a bath for three consecutive months.

    The National Bureau of Economic Research, comprised of seven eminent economists, was meeting last week to try to find a crystal ball so they could wizard their way to the future.

    The committee did not announce the end of the last recession in November 2001 until it had been over for more than a year-and a half, The New York Times blithely reported, with no further explication.

    Wouldn't it seem to make sense that if a company was losing money its executives would know it immediately?

    "Robert J. Gordon, a Northwestern University economist on the committee, said any announcement about the start of a new recession was unlikely before the last few months of 2008 at the earliest.

    "Recent recessions have inevitably brought inflation-adjusted income declines for most families, which would be particularly painful given what has happened over the last decade. For a variety of reasons that economists only partly understand -- including technological change and global trade -- many workers have received only modest raises in recent years, despite healthy economic growth."

    Well, if the reasons are technological change and global trade, that would indicate that the economists know the source of the negative trends in the U.S. economy, wouldn't it?

    It doesn't take a crystal ball or a wizard to walk into your average retail store and check the tags. Made in China, Made in China, Made in Bangladesh, Made in Korea, etc., etc.

    The Federal Reserve for its part reports confidently that the falling economy is reducing household wealth. Net household wealth dropped by $900 billion in the fourth quarter of last year. The main reason is that home values are not what they used to be.

    The ratio of homeowners' equity to the value of their homes fell below 50 percent for the first time in history last year, according to the Fed. About 30 percent of all homes purchased in 2005 and 2006 are "upside down," meaning the owners owe more on their mortgages than the home's sale value.

    A business executive writes to MyBayCity.com: "The real question is, do we have a candidate left in the race that will discuss this issue and has a plan or are we just going to continue to dismantle value added jobs and expect low wage earners to finance the bulk of the American economy? Where does Congress stand on these issues? Where do the Presidential candidates stand? When will America stand up again?"

    Another says: "I think we are all missing one important issue. The US has outsourced a lot of value-added jobs and we have lost our taxable base. Without value added jobs we are "eating our seed corn."

    "If you want to know why we are doing poorly and the middle class has disappeared it is because of the loss of value added jobs. How can you hope to balance a budget if there really isn't any growth in the economy?

    "The only growth has come from the fed dumping $$ into the system. Forget about tax policy - it's an inane argument. What we need to do is demand that companies grow value added jobs here first before outsourcing them. Just because Toyota, Honda and other foreign companies have factory jobs here doesn't mean they are adding value.

    "The profits that make an economy grow are leaving the US. Create value added jobs in the US, give tax breaks to the companies who create these jobs and then you will have a basis for discussion on how to tax.

    "The middle class is gone - finished - kaput. The sooner everyone realizes this the sooner we will hopefully get our heads out of our collective butts and demand that Congress take action. This will only get worse over time unless value added jobs come back to the U.S."###

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    Dave Rogers

    Dave Rogers is a former editorial writer for the Bay City Times and a widely read,
    respected journalist/writer in and around Bay City.
    (Contact Dave Via Email at carraroe@aol.com)

    More from Dave Rogers

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