Disclaimer: This is not for browsing, but to share information with those who don't mind reading and research.


One very common political point that is often discussed is the strength of the 'economy', but just what measure does that respond to?

economy: the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services.

in the US, we measure production with something called GDP, which since the recession has stuck between 1.5 and 3.0 ( a recession is generally a decline in GDP of two or more quarters, it becomes a depression if it lasts two or more years)

2010 up 2.57
2011 up 1.61
2012 up 1.47
2013 up 2.61
2014 up 2.70
2015 up 2.0
2016 up 1.88
2017 up 2.47
2018 up 2.89

http://www.multpl.com/us-real-gdp-growth-rate/table/by-year

these are much lower than other times when we reached a growth in the four percent range(Under Clinton)

or the 5 and 6.6 increase reached(under Carter)

or the 7.9 reached that ONE YEAR (under Reagan)


on the other hand, many people also highlight increase in debt, which doesnt line up with whether an economy has seen growth, being that under Reagan, though we did reach a record gdp growth of 7.9, we also increased debt nearly 200 percent.



All this is just to show how many details can be picked or overlooked when discussing the 'economy' and how numbers can be used to hype or to dismiss certain details when discussing the 'economy' (and all the details involved in it, which are rarely discussed collectively)

Its really not the simple talking point politicians and pundits make it to be, but such is life.


this site has many non partisan details about different aspects of our economy over time

http://ig.ft.com/sites/numbers/economies/us/

Americans are saving more. That's a good thing. Before the last crash people were overextended and living paycheck to paycheck.

Almost 80% of Americans say they live from paycheck to paycheck, many not knowing how big their next one will be.

https://www.theguardian.com/commentisfree/2018/jul/29/us-economy-workers-paycheck-robert-reich?CMP=share_btn_fb

Almost 80% of Americans say they live from paycheck to paycheck, many not knowing how big their next one will be.

https://www.theguardian.com/commentisfree/2018/jul/29/us-economy-workers-paycheck-robert-reich?CMP=share_btn_fb

Not meaning to pick on you for this, just using it to add to the point that I think msharmony is trying to get at:

it's an all too common mistake, when things go wrong, to look for one or two "core reasons" why things went bad, and then focus all the available energy on that one factor.

For example, you are right that savings can be an important indicator of how one segment of the economy is behaving, or be a sign of consumer self-discipline.

However, if you fail to look at WHY savings is or isn't happening, chances are very good, that your "indicator" of either good or bad times to come, will prove to have been illusory.

Something that my lifetime as a repair technician taught me (repeatedly), is that JUST going after a single symptom of concern, is very often a good way to ultimately destroy what you are trying to fix or preserve.

Example in a mechanism, is that something in the mechanism is supposed to be turning smoothly and quickly but it isn't. So the "fix it" person dumps lubricant throughout the device, until they movement speeds up to what they expect. The thing is, the reason it wasn't turning smoothly, wasn't a lack of grease, it was worn out bearings. Or it was misaligned gears and pulleys. Lubricating it ends up making the device more rapidly rip itself to shreds, at a higher velocity.

Economically, one of the common factors used to decide whether or not the economy is growing and healthy, has been housing prices. When housing prices are stable or rising, it is thought to be good, and when they are falling, it is thought to be a bad sign.

However, when the cost of housing is already too high to allow most people new to the market to afford to buy one, high hosing costs act only to force people to seek higher wages, without additional productivity. And that's not good for an economy.

So. JUST pushing on one aspect of the economy, and expecting that to result in the overall economy to become more healthy, is rarely wise. As msharmony's post also points out.

Jobs is #1. We have a housing shortage, driving up prices. That's good for home depot because more people are remodeling. Prices might drop a little but existing home sales are down due to lack of listing. Back before the crash a lot of people were taking out equity on their homes. That's not a good idea for most. I think GDP plus people saving is the best balance.

Despite a low unemployment rate and increasing wage growth, Americans still aren't saving much. That's according to a new survey from Bankrate.com, which found that 20 percent of Americans don't save any of their annual income at all and even those who do save aren't putting away a lot.Mar 15, 2018

http://www.cnbc.com/2018/03/15/bankrate-65-percent-of-americans-save-little-or-nothing.html

Some people will never save anything. No matter how much they make. It's personality and not economy. I've been reading up on the economy and housing market because I can make money on a crash. Unfortunately it's not happening anytime soon. The economy is strong.

The purchasing power of a US citizen is a lie.
Economy statistics includes credit.

If you wanted to have a real look at economy a few things would have to happen.

1. All credit is wiped out. Nobody owes anything anymore.
2. No credit will ever be given again. If you don't have the money right now, you can't have the goods or services.

Then and only then, will you have a true representation of the purchasing power of the people.
Then and only then, can there be accurate economic assessmement.

Consider that the government is made up of the citizens and the money available to such government is available mostly from taxes or costs of goods and services provided by the government establishment that initiates those goods or services.

It is a defined amount of money that is available in real time.
Governments should not be allowed credit or loans to or from other governments.
The people are supposed to control the money their government has avaiable.
If another country is in an emergency and needs help, the people should decide to give and how much money to give. Not a loan, a gift.
If the government has so many policies and programs that it can't afford to cover those costs, those policies and programs should be dismantled. A government should never spend more money than it has available.

As far as I'm concerned, if you're in debt, wealth and prosperity is an illusion. Its a lie we tell ourselves. A delusion.
Any economic figures that include debt is also an illusion, a lie.

Credit is great for getting people the things they need and a great way for investors (elderly) to make extra money. Some people just take things too far and have too much debit. They think they are doing well because they "can afford it". Then sickness or a layoff and things come tumbling down. That's why a little less spending is better for our economy in the long run.

Not all debt is bad. That's part of what John Maynard Keynes argued when he proposed his economic theories.

Debt allows those with excess money to temporarily increase the purchasing power of those lacking money. It's kind of like trickle down economics but in reverse - meaning rather than trickling from above (like rainwater), it rises up from below (like a well or a spring). The result is that borrowing can buoy demand for common goods at a time when such demand is lagging or declining. That preserves jobs, which in turn keeps money flowing through the economy, fighting stagnation and decline.

The problem is that our country went overboard with debt -- on ALL levels.

A lot of "billionaires" went belly-up when the housing bubble burst. Many of those "billionaires" were only such on paper due to assets which had been acquired through borrowing.

I tend to think too many people downplay the effect of our federal debt on the economy. An ever-rising government debt generates inflation. It leads to higher taxes, and those taxes affect every facet of the economy, raising prices while creating a demand for higher wages.

Simply put, I believe the simplest way to improve the economy is to bring government spending under control and to begin reducing government debts. Sure, government debts only get charged 2.0% - 3.5% interest, but when the debt doesn't get paid down, that interest accumulates, which is why our government focuses on just paying the interest rather than the principle. Every year of deficit just causes that interest payment to increase beyond the growth rate of the GDP.

We tend to focus on the federal debt because it's so large, but we're also getting hit by state and municipal governments that are also struggling with deficits. Successful pressure from the public to rein in federal debt would also bring more pressure to do the same on the local level en masse. That is simpler said than down, however. We would probably achieve more by focusing our influence on the state and municipal levels, which might create groundswell support that could eventually influence the federal level to a greater degree.

Credit causes people to live beyond their means.
It depreciates prosperity.
Economic figures represent 'ghost' prosperity.

I'm fortunate to no longer have any debt at all.
I own absolutely everything I have.
I pay bills (billing cycles of utilities are not debt because you are billed for your usage). Up until I get a utility bill, I do not owe them any money. As long as I pay the bill in the time allotted, I have no debt.
I live BELOW my means.
I put excess money in savings for items I want to buy or services I want to hire in the future so I don't have to use credit to survive.
If I can't afford something, I do without it until I have the money to pay for it.
Economically, my figures are true and accurate.
I have no 'ghost' wealth.

I played the debt game.
It caused me many problems I no longer have.
I got my debt paid off and refuse to 'go there' again.
I had to adjust my lifestyle to accommodate my income but it can be done.

I don't own my own home but not very many people do.
Most people's banks or loan companies actually own their homes.
In a SHTF scenario, any creditor could call a loan any time.
If that were to happen, what would you lose?
You would lose your 'ghost' property.

Are you eating 'ghost' food? Did you pay for your groceries on credit or did you use debit or cash?
Did you buy those Christmas presents you gave or are you still paying for them?
Are you driving YOUR car or a bank's car that they allowed you to get?
Is that your bed, your furniture, your clothes?
Are your children attending college because its fully paid for or is it ongoing credit?
What happens if the money dries up, will they still be in college, will you still have a bed, will you still have your house, your car?

If my income stops right now, nobody will be coming to take my stuff.
I might be evicted, my utilities might get shut off and my meds will stop but I can sell my possessions and keep the money instead of paying back people I owe.

This is the reason I feel economic statistics are an illusion.
Because most people and entities that these statistics are gathered from are based on 'ghost' money.

Debt generally only works if:

a) you have the means to pay it back, and
b) can pay it back in a reasonably short period of time, and
c) actually completely repay it.


Without those 3 things, it is indeed "ghost" money.

With them, it's simply leveraging future income against immediate acquisition without depleting current financial reserves.

Not so great for investment (like buying stocks or bonds on-the-margin), but can be a good investment for increasing income or productivity in the near term.

Using it to purchase luxuries or non-essential items....well, that's poor money management for the average person.

When it comes right down to it, many (if not most) people don't use debt appropriately as a tool. That's what gets them in trouble.

I'm not saying credit is bad.
I'm saying that credit cause economic figures to be inaccurate to the actual wealth and prosperity of the nation.

All government debt indicates that the government is functioning beyond their means.
Since the citizens of that government dictate how much taxes they provide, there should never be a point where a government needs credit.
If the money is not there, it doesn't get spent.

There are examples of this type of thinking right now.
One example is the home heating help program (HEAP or LIHEAP)
Every year there is only so much money available for the program.
Once that money is spent, there is no help available until more money is provided to the program, usually annually.
Some people have to make due without assistance because the government does not seek credit to help all people all the time.
There are many programs like this with this type of policy.
HEAP does NOT spend money it doesn't have.

If all government programs were to adopt this strategy, no credit would be needed but many things people want will also not exist, unless they were willing to pay more taxes to make them exist.
As it sets, we enjoy things that we shouldn't have because we don't have the money to cover it. We have them because we allow credit to provide it.

To remove any debt you have to actually pay it off then stop creating more. We pay off debt but we continually create more. Its an illusion of prosperity.

Very true.
You must have economic education.
Personally, I was a mechanic.
Economics bore me.
I do know what I experience in life and it can apply to others but it takes discipline.

My participation in this thread is not to advocate or dismiss credit or debt. Its to relate how I see economic figures and statistics.


Its my way of saying "garbage in / garbage out"
The economic data that is available for consideration to research or discuss is not a true representation of the actual conditions.

When a person can pay cash and avoid Debt it gives a feeling of accomplishment.

You own Nothing, when you OWE everybody. Credit card debt is booming among. families. Many use them instead of cash.

Good credit is Great! However, Debt is not.

Economy is growing now, thanks to This administration.

Understood. We're just discussing different views.

I've always paid back debt as quickly as possible to save money on interest. I got good deals on homes that wouldn't have been possible without debt.

More millennials are living with parents than previous generations. More homes have multiple incomes. It makes a stronger economy. If one person loses income the other family members can take up the slack.

During the crash a portion of what happened was fear. Investors pulled their money out of the market and people intentionally let their homes foreclose because of being under water. It would be interesting to know the result if fear hadn't been a factor.

After the divorce the credit union wouldn't issue me a credit card. Not because I was a bad investment but I had no history with them as a single person. I obtained a debit card and for the first year things were tight. Since then I've disciplined myself to only buy what I have money for. If the cupboard becomes a bit bare then I lost weight. Monthly bills come first.

Credit card companies are constantly pushing me to use their cards but I refuse. It sure feels good to not owe anyone at the end of the month. Do things get tight now and then? Sure, but I put a little aside every month for those emergencies. I don't see myself ever obtaining a credit card again.

I think the people who are talking about how their personal lives feel so much better because they got rid of their debts, are missing a VERY important point.

That is, that it isn't going into debt or not going into debt which is important. There is not only nothing magic about not borrowing money, it can actually be a horrible decision to stick to.

Because what matters economically, is WHY you go into debt.

Whether we are talking personal finances, or national economies, what you do regarding debt can be smart, conservative self-discipline, or it can be stupid, short-sighted and self destructive idiocy.

Simple example: your car engine throws a rod, and dies, through no fault of yours. Just bad luck. It will cost more than you have in cash, to pay for the repair. The "never borrow money; if you can't afford it, don't do it" car owner will sit down and say "okay, no car till I find the cash." In the meantime, no car, means they have to quit the higher paying job that they had on the other side of town, and find something in walking distance, or with free transportation provided, so that they can continue to pay for the rest of their life needs. Because they refuse to borrow, their life declines in quality accordingly.

The comparative person who thinks that SOME debt, which is actually necessary to further the big picture best interests, is a GOOD thing. So they get the car fixed or replaced, and gradually work their way out of debt.

On a national scale, if the reason for spending more than the government took in in revenues is so that people can do self-indulgent things which contribute nothing permanent to the economy, everything will go to crap. But if they are spending more in order to do things such as fund higher education, or to fund research to enable better use of resources, then the added debt will be a brilliant act that will BENEFIT the nation.

Historically, when nations have refused all debt, and simply waited for money enough to do things, their economies have been worse than sluggish, and have had to wait for serendipitous occurrences such as the sudden discovery of gold deposits or something, in order to progress.

INTELLIGENT use of debt has worked consistently well.