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Lying to yourself

Justin Wolfers at the NYTimes The Upshot is trying not to take the new GDP numbers too seriously:

An economic report issued this morning provides a good example of the hazards facing election forecasters. The Bureau of Economic Analysisreported that in the first quarter of this year, Gross Domestic Product, a broad indicator of the health of the economy, shrank at an annual rate of 1 percent. Even worse, an alternative and more accurate measure, called Gross Domestic Income, shrank at an annual rate of 2.3 percent. If that persisted, we’d call it a sharp recession.

But no one is using the R-word. Nor should they. Markets have taken the news in their stride, and few economists have changed their view that the economy is growing and will continue to through 2014. Likewise, consumers remain confident about their economic prospects. Their confidence rests partly on other indicators that suggested far better growth throughout the quarter, such as nonfarm payrolls, which grew by 569,000 over the same period.

And the economy motored along after that bad quarter ended, with employment growing strongly and unemployment falling in April, and new claims for unemployment insurance falling through May. Importantly, we know that the weakness in G.D.P. is partly due to one-off factors — it snowed heavily, keeping many of us indoors, rather than out making and buying stuff — and it partly reflects influences, like the inventory cycle, that don’t have an enduring effect.

In any case, G.D.P. data are known to be noisy, and subject to a lot of later revision — so much so that the difference between the first and the final reading of G.D.P. growth is typically 1.3 percentage points. For all we know, the recent measured decline in output may be revised away.

But many election forecasters rely on quite mechanical models, linking their forecasts to a single economic indicator. The worst of these models assert that a single quarter’s G.D.P. growth is sufficient; others average G.D.P. growth over several quarters, but they still put a lot of weight on very recent data. Because these computer models read the data so literally, they overreact to statistical noise. If the election were to be held next month, they would have no choice but to interpret this morning’s data as evidence of a recession, leading them to forecast a huge swing against the president’s party.

Oh, Lord, we can’t have that.  “We must protect Obama at all costs” has been the operative slogan since 2008.  Let’s all pretend that he’s a genius, playing 11 dimensional chess and his speeches are the bomb-diggity. (I just learned that phrase from number 1 child and I intend to use it all the time now).

Wolfers needs to get out more.  I meet very few people who are prospering and I meet a LOT of people these days in my part time job.  From what I can see, we are all pinching pennies.  The reason the economy is sucking is not all weather related, unless you see working people as crops that need to be periodically harvested for the last teensy bits of disposable income they have.  I swear that every industry has a meeting with some Wharton graduate giving a presentation where the numbers have been run to predict the threshold of the pain point where the consumer will be forced to fork over their hard earned dollars for gas, salad, auto insurance, health insurance, tuition, rent/mortgage.  It’s all been carefully modeled.  And each industry thinks it’s the most important one that the consumer can not live without.  We all have to have food and insurance and a place to live, amirite?  Where else are they going to go?

But income is part of a closed system these days.  It can’t be created out of nothing.  Every penny is accountable to the shareholder.  And if there is no money going into the system, it’s difficult to see how the economy continues to expand.  The contraction is real and it’s coming from the top.  The money is being hoarded or spent on the biggest yachts in the world.

The Great Recession or the Little Depression has dragged on too long but a person like Wolfers or Paul Krugman or some smart ass Democratic operative might not know it.  It’s dragged on and people are diving into the corners of their nests for a few eggs that are left, if there are any.  But this hasn’t stopped the MBAs and marketing dudes from creating new and improved ways of getting those last remaining dollars first.

So, color me unsurprised if the numbers that Wolfers finds so easily dismissible right now turn out to have real impact in November.  The economic contraction is real.  Whatever expansion was in the works may be getting strangled by the effects of the endless winter and the impact of the Obamacare individual mandate.  If you see your part time hours getting cut, you might not be quite so confident as a consumer.  Every item in a store starts to look like a moment of pain requiring a careful calculation of how many hours of work are required to buy it.

Wolfers can’t even use the R-word but I can.  It’s called a recession.  If I were a Democrat running a campaign, I’d be worried.

***********************************************************************

In addition…

Apartmenttherapy has been doing a series of posts lately on the realities of living on a strict budget.  The posts on food shopping have generated quite a bit of controversy with some readers in what sounds like the Obama contingent scolding poorer readers for not buying the best organic foodstuffs from Whole Foods.  It’s gotten ugly at times.  Even the “calming the waters” post from Cheryl Sternman Rule at The Kitchn affiliate makes a lot of assumptions that would only occur to someone at the top of Maslow’s pyramid of needs.  It’s a tragedy that we’re even having food fights like this.  Maybe Justin Wolfers should hang out in some of the blogs I visit regularly.

As for me, I have discovered Aldi, I buy bags of frozen chicken breasts at Trader Joe’s (because they are that good for that price), I am learning to avoid the “fuel perks! for food” scam at my local Giant Eagle and I am gardening this year.  Yes, yes, the weather sucked last year and all I got was squash, which I hate.  (So, I’m not planting any squash this year).  Call it the triumph of hope over experience.  I have a lot of yard and there’s no excuse for not turning it into a food manufacturing facility.  There’s a farmer’s market in East Liberty on Saturday mornings that I will visit when I can and when I’m in Target, I will look at whatever is on sale.  So there.  :-pppp

Republican Coup, Already in Progress

Just got home from a grueling day of window shopping at the Palisades Mall near Nyack. I hate to shop but the kid took my best pair of gladiators with her on vacation and I needed a replacement pair.

What I really wanted was to get away from this interminable debt ceiling screwup for awhile. But when I got home, I found that there are a bunch of idiots still talking about it on the House floor. And I’m reading that we can’tt pivot to addressing unemployment until we bring down the deficit in a harsh, draconian way. Like, I’m supposed to believe that. What do they take us for? Idiots? We know there’s no way in hell the passage of this bill is going to help the economy or the unemployed. It’s going to make matters worse. There will be more federal and state workers laid off and probably higher state and property taxes to offset what is lost.

More people window shopping and fewer people spending means another slam at the economy and more lost jobs. And I am firmly of the opinion that the Republicans actually *want* this outcome. They want the economy to be so bad next year that Obama is a one-termer. Hey, fine with me. I have no problem with Obama leaving the White House to spend more time with his family, write a book and go on a lucrative speaking tour. He is over his head. We knew this would happen with Obama in the White House. No, seriously, go back to the beginning of this blog and read all about why we objected to obama’s nomination.

So, the likely scenario is that this stupid bill gets passed by Republicans and signed into law by Obama and the Democrats wash their hands of it. Yep, get as far away from this radioactive fart as you possibly can get, Dems. Let Obama take the fall for this and when you see once and for all that he’s killing your party, think long and hard about whether you want him as your fearful leader for four more years.

Blog the vote in the comment thread and make your predictions.

Update: Radioactive fart bill has passed the House.

Found on twitter: “Left calls for original birth certificate; believes Obama was really born a Republican”

Also, Jeff Jarvis has started a new hashtag- #Hillaryforpresident. It’s time.

WTF?? Another example of how sexism costs all of us

So, I was reading Elizabeth Drew’s article in the New York Review of Books titled “What Were They Thinking?” that recounts how we got to this messy stage of impasse, political grandstanding and Obama’s inflated self-image when I came to what I think might be a hidden gem on two points:

Finding a solution to reducing the deficit that was agreeable to Boehner, to Cantor, to former Speaker Nancy Pelosi, to Senate Minority Leader Mitch McConnell, and to the President was no small task. The men, who had rudely and unwisely excluded Pelosi, now the minority leader, from their deliberations, could no longer avoid dealing with her. They’d considered Pelosi a bit of a pain, insistent as she was on standing up for liberal principles.

Are you f^&*ing kidding me?  These GUYS excluded the former speaker of the house and now minority leader from the negotiations because she sticks up for liberal principles?  I’ll be the first one to say that Nancy shouldn’t be surprised and is paying royally for the mess she made in Denver in 2008.  But Jeez, it is completely unacceptable that there wasn’t even one woman in the room when these assholes met, not even the House Democrats’ minority leader.  It happens in the business world all of the time.  Women don’t get the email, are conveeeeeniently left off the meeting list, their phone calls are ignored.  And THIS is womens’ issues are never considered in the final bills.  If you’re a liberal woman, you’re doubly screwed.

And Barack Obama was OK with this?

You betcha.

#fuckyouwashingtonguys

Update: Craig Crawford says that Congressional leaders have decided to cut Obama out of future negotiations.  Here’s what he’s been hearing:

It’s no surprise that Republicans, led by House Speaker John Boehner, went out of their way to insult the president but remarkably Democrats also went forward over the weekend with Capitol Hill debt talks that did not even include a symbolic emissary from the White House.

[...]

While the GOP obviously would savor a solution to the debt-ceiling crisis that gives Obama no credit, why are Democratic leaders so willing to cut him out?

The answer might be found in growing concerns among veteran Capitol Hill Democrats that their president is a lousy negotiator.

Although they see him as a talented public communicator, his short time as a senator and painfully slow learning curve as president leads congressional Democrats to think it best to take over and provide cover for him once the deal is done.

Wow, just wow.  Um, would giving him cover really be the best idea?  Maybe they’ve been too permissive.  They provided him with a lot of cover in 2008 and carried him gently over the threshhold of the nomination.  In retrospect, that was a bad idea.  It could explain why he’s painfully slow to learn his job and why he’s so fricking clueless about legislating with Congress. He’s never had to do it before.

After this is all over, the Democrats need to have a heart to heart with President Mashieniblick.  The idea that they can foist him on the rest of us and give us no Democratic alternative is unacceptable when they don’t think he is capable of doing his job.

It’s Not about Taxes

I live in California, and you may have heard that we’re having a bit of an argle-bargle about a budget in this state.

The history, for those who’d like it: Back in the 1970s, enough Californians felt their taxes were too high to limit property taxes by law. The limit is low, (1.5%, I thought, but wikipedia says 1%) and — this is the biggest deal — the assessed value of the property can’t increase more than 2% a year until it’s sold. The new assessed value is then based on that sale price. You’ve probably heard about property values in California. A house worth $60,000 in 1978 is worth $600,000 now, but it’s taxed at around $100,000. There’s something to be said for this in the case of retirees on fixed incomes, for instance. However, they forgot to limit it to people of limited means. It applies equally to movie stars. And to commercial real estate which can stay in the same hands forever, even when it’s sold, through the magic of shell corporations. That turns out to be a loophole big enough for the whole state to fall through. . . . Proposition 13, as it’s known, also said that any tax increase had to pass with a two-thirds supermajority. We have two, count ‘em, two, Republicans more than a one third minority. So that voting bloc, in its infinite intransigence, can stop any budget from passing. The situation is not helped by a Gropinator who vetoes legislation just to show off, as far as I can tell.

(Update: I should mention that the up-to-the-minute blog for all things to do with politics in California is calitics.com.)

On to the gnarly present. As Krugman wrote, California may once again be ahead of the curve in showing what happens when a bunch of Republicans decide to play politics with the future. This is not, at this point a faults-on-both-sides situation. This is a bunch of Republicans playing politics with the future. They have made the (apparently accurate) judgment that repeating NO NEW TAXES on an infinite loop will keep getting them re-elected till hell takes over.
Continue reading

Friday: Budget under control? Great. What about mass transit?

The CRRNJ terminal and ferry docks in Jersey City, sitting idle.

The CRRNJ terminal and ferry docks in Jersey City, sitting idle.

Paul Krugman reviews Obama’s budget plans and gives a thumbs up.  Obama’s got his priorities straight, but that doesn’t mean there aren’t some problems coming up:

So we have good priorities and plausible projections. What’s not to like about this budget? Basically, the long run outlook remains worrying.

According to the Obama administration’s budget projections, the ratio of federal debt to G.D.P., a widely used measure of the government’s financial position, will soar over the next few years, then more or less stabilize. But this stability will be achieved at a debt-to-G.D.P. ratio of around 60 percent. That wouldn’t be an extremely high debt level by international standards, but it would be the deepest in debt America has been since the years immediately following World War II. And it would leave us with considerably reduced room for maneuver if another crisis comes along.

Furthermore, the Obama budget only tells us about the next 10 years. That’s an improvement on Bush-era budgets, which looked only 5 years ahead. But America’s really big fiscal problems lurk over that budget horizon: sooner or later we’re going to have to come to grips with the forces driving up long-run spending — above all, the ever-rising cost of health care.

And even if fundamental health care reform brings costs under control, I at least find it hard to see how the federal government can meet its long-term obligations without some tax increases on the middle class. Whatever politicians may say now, there’s probably a value-added tax in our future.

The health care funding is the key.  It stops well short of universal however.  Let’s not forget that there’s a hidden tax applied to every working taxpayer to pay for the uninsured. In NJ, that hidden tax is estimated to total  $700,000,000 per year and with more people out of work these days, it’s bound to go up.  That’s why universal healthcare is so important.  Ideally, we want to keep people healthy before they become so sick they end up in the emergency room and the hospital.  It saves us all money in the end.

Krugman expects tax increases on the middle class.  I suppose that is inevitable but I hope that someone is thinking about the millions of us single parents out here who pay taxes at a single rate and even with Head of Household and dependent deductions end up paying more every year in taxes than married people.  I’m sorry, married people, but I think this is unfair.  No one is reducing the cost of living for single people and single parents aren’t spending like there’s no tomorrow, except on the locusts who reside with us and regularly clean out our refrigerators.  Reports of our disposable incomes are greatly exaggerated.

One thing I haven’t heard mentioned is mass transit.

The abandoned CRRNJ station at Belle Mead, NJ

The abandoned CRRNJ station at Belle Mead, NJ

My impression is that it was underfunded but if anyone has a handle on the exact numbers, raise your hand.  Here on the east coast, especially dense NJ, there were a number of commuter rail lines that were abandoned in the 60’s as workers took to their cars.  Now, 40 years later, suburban sprawl has made getting from point A to point B a nightmare.  But the old rail lines are still there.  You can see them on google satlellite maps.In at least one case, the CRRNJ, the terminal station in Jersey city is still there.  It looks like it’s waiting for someone to just flip a switch.  I’m sure there’s a lot more to it than that but with most of the infrastructure already in place, what are the barriers to getting it up and running again?  We could really use it.

What’s your budget priorty?  Let us know in the comments.

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