The US economy may not grow at all in the 4th quarter

Never say never......15 years ago, a great majority also believed that our economy was INVINCIBLE.

 

The Federal Government's ability to repay financial obligations has little to do with the economy. There is a reason why Treasuries are considered "the risk-free rate."

 

If the GDP is not growing, why is the stock market still rising?

 

Not all of our sales and manufacturing are in the US. Also, as a companies are run more efficiently, their stock price goes up.

The GDP has somewhat of a flexible upper limit. For example, we have enough money we could go out and buy more furniture or appliances or autos, but we don't need any and don't spend. It is somewhat flexible in that no every one is as well off as we are. However, as more and more people become affluent, the need to spend becomes less necessary. Some will spend and some won't, but the somewhat flexible upper limit is still there.

 

September farm bankruptcy filings highest since 2011.

 

This is getting painfully idiotic - 1) your claim that it was only the Fed is nonsense on steroids.

What economic factors lets see 2011 - less than two years after the bursting of the housing bubble which culminated in the Dow dropping from 14,000 down to 6500, the value of people's homes being reduced by half, a financial crisis that, at one point, got so bad that the commercial paper markets were frozen.

This above confirms your lack of understanding of the subject matter. The interest rate I pay on my debt is a function of where the Fed sets rates. What we are talking about is the interest rate of Federal debt - which - is a function of market forces - but, at the same time the Fed can intervene in the supply demand equation to try and alter those forces.

 

QUESTION: What were the tax cuts if not fiscal accommodation?

RESPONSE; No "significant fiscal accommodation." We've lowered marginal tax rates, but the Government hasn't conducted at large government expenditures

--------------

A matter of opinion, here are the facts;

1. The four components of GDP are;

1. The four components of gross domestic product are personal consumption, business investment, government spending, and net exports.

https://www.thebalance.com/components-of-gdp-explanation-formula-and-chart-3306015

2. Government | U.S. Bureau of Economic Analysis (BEA)
https://www.bea.gov/resources/learning-center/what-to-know-government
Consumption expenditures and gross investment are the measures of government spending included in calculations of gross domestic product, or GDP.

3. Federal Government Consumption expenditures and gross investment

Q3 2016; $1.23 trillion

Q3 2019; $1.43 trillion

Up $200 billion

https://ycharts.com/indicators/us_federal_government_consumption_expenditures_and_gross_investment

QUESTION; Is an extra $200 billion in GCE, a significant or an insignificant amount?

 

My claim? I don't know what you're talking about...

You're talking about events that transpired years prior to 2011/12, when I'm asking you about events specifically related IN 2011/12.

That's just wrong. The Fed influences ALL short-term interest rates through Open Market Operations (OMO). They influence the Fed Funds Rate (these days, it's the IOER) through the purchases/sales of Treasuries, which affects the supply of Treasuries in the market and supply of funds in the banking system. The supply of Treasuries in the open market influences the interest rate on Federal Debt; the supply of funds in the banking system influences the interest rates on all other debt.

There is a reason why the 10-Year Treasury bond is considered the benchmark for all interest rates in the economy. The Fed influences all interest rates through its monetary policy.

 

That is average of $66 billion a year, or less than 1% of overall GDP. Placed in the context of the amount spent to combat previous recessions and economic crisis, it is barely a drop in the bucket.

 

Stock buy backs and tax cuts.
In other words profit for doing nothing.

 

Global debt grew b y $7.5 TRILLION this year and now exceeds $250 TRILLION.

 

So this IS a democrat economy!

 

Current stock market values certainly do not reflect PROFITS as they used to in the past.

 

Funny that you don't remember .. because you double down on that claim below "That's just wrong - with respect to other economic factors - and then talk about the Fed influence" Your claim that the Fed is the only thing that influences rates is wrong.

You say "your wrong" and then repeat what I have told you. ding ding ding ?

Yes Padwan - the economic impact of events often happens after those events transpire - sometimes - such as in the case of a Financial System Collapse, Stock Market Crash, Housing crash - the economy is affected for years after.

 

Is that really my claim or did you just interpret words incorrectly?

You didn't say anything remotely similar to what I have stated. Don't even try to flatter yourself...

After 2009, financial system stabilized, the stock market rebounded, and the housing market was proped up through MBS purchases from the Fed. How would any of this cause an economic contraction in 2011/2012?

I'm going to be honest, it sounds as if you're not really sure what "economic factors" caused the contraction. Lucky for you, that more than qualifies you to have an opinion on what caused the contraction.

 

Prove your claim

After 2009 - is 2010. The deficit in 2009 was 1.4 Trillion dollars - The system has had a major meltdown - how many people lost their jobs in 2010 - accountants gone wild now having power. The commercial paper markets froze ... do you know what this means ?

If you are GE -and have a 5 billion dollar contract to build a nuclear power plant -you don't pull that money out of your bank account - you borrow from the commercial paper markets - and if these markets are closed - you don't do the contract.

It wasn't just the US - Global markets were hit - we had debt crisis in Greece, Italy Spain and so on.

Part of the reason for the 1.4 Trillion dollar deficit is because Gov't revenue decreased from 2.7 Trillion down to 2.1 Trillion. How long do you think it took for revenue to return to pre 2009 levels ? never mind increase ? ...

During this time - the deficit has to be decreased ... you don't have the luxury of throwing an extra 500 Billion in deficit increase into the economy .. like Reagan and Trump did.

Sounds to me like you did not factor any of the above in - and I was just getting started.

Whats is ridiculous is that you start out denying that you claimed the Fed was the sole impetus for 2011/12 contraction - and railing against my claim that there were other factors .. twirling around going "wrong .. wrong .. wrong" (also with respect to interest rates on our debt)

Then in this post you double down on your implied claim that the Fed was the sole impetus for the contraction .. demanding examples because you could not come up with anything.

I'm not going to take it ... anymore

 

This above confirms your lack of understanding of the subject matter.

In 2018, Real GDP increased from $18,108 trillion to $18,638 trillion, thus, by $528 billion/2.9%.

https://www.thebalance.com/us-gdp-by-year-3305543

Same year, Trump's GCE increased from $1.295 trillion to $1.372 trillion, thus, by $77 billion, Real; by $70 billion.

Federal Consumption Expenditures and Gross Investment (FGCE)

https://ycharts.com/indicators/us_federal_government_consumption_expenditures_and_gross_investment

https://fred.stlouisfed.org/series/FGCE

Thus, Real GDP, $70 billion equates to 0.4%, and ACCORDING TO YOU, said added Consumption Expenditures/Real GDP increase is "INSIGNIFICANT"

Who are you trying to fool?

 

Do you think everyone is a fool?
Every publicly traded company reports on operating profits. Stock buybacks have absolutely no impact on that figure.
Also, if most companies did buybacks and no growth was happening then the stock market would stay unchanged.

 

In addition to the above, here's an eye opening-chart, but first, a summary;

1. The four components of GDP are;

a. Personal Consumptions
b. Business Investment
c. Government Spending/Government Consumption Expenditures and Gross Investment
d. Net Exports

https://www.thebalance.com/components-of-gdp-explanation-formula-and-chart-3306015

2. Consumption expenditures and gross investment are the measures of government spending included in calculations of gross domestic product.

https://www.bea.gov/resources/learning-center/what-to-know-government

QUESTION: Were Reagan's/Bush's/Trump's tax cuts SOLELY responsible for boosting the GDP?

Answer; Negative!

Federal Consumption Expenditures and Gross Investment (FGCE), historical chart;



https://fred.stlouisfed.org/series/FGCE

 

You are forgetting about earnings per share. Buy backs reduce the number of outstanding shares.

 

CNN. Not a reliable source ..

They are trying to scare prople into a recession.

 

If you believe 0.4% is a significant portion of overall aggregate demand, who am I to convince you otherwise...

Put into context, Total Government Consumption Expenditures and Investment is a significantly less portion of GDP.



Today, GCEG is less than 17% of GDP. In response to the Financial Crisis of 2008 and the NASDAQ Bubble of 2000, it was 22% of GDP. In response to the Great Depression, it was 85% of GDP.

Today, GCEG relative to Real GDP is at the lowest now than at any point in time of our history. It's the lowest its been since 1930.

I'm not trying to fool you; I'm only trying to educate you.

 

Click the GDP forecast links inside the article. CNN simply reports them.
Bet you didn't see them on Breightbarf.

 

I never look at Breitbart they are however far more reliable than CNN.

 

Anyone who is being objective and intellectually honest can see the difference between the type of comments you post and the type of comments that I post. They're basically night and day.

Again, another poorly thought-out explanation that has nothing to do with the economic contraction in 2011/2012. And what system meltdown are you referring to? There was no meltdown that occurred in the U.S. in 2010. At this point, I can only conclude that you're being lazy or you just don't understand the question.

Sounds to me like you did not factor any of the above in - and I was just getting started.

I really don't know what you're talking about.