Questions for economic specialists

[ShaneGR]

As a political science major I read my fair share of economic news and forecasts. Most of it is coming from pundits, rather than economic experts. So, can someone here provide me with an explanation of:

1. The economy is coming back

or:

2. The economy is not coming back

or:

3. The economy is coming back, but only in certain areas.

I think the economy is coming back, but only in certain areas of the country. For example, compare the economy in Ohio to most of the southeastern states. While Ohio lost 300,000 jobs in 3 years, Florida and Georgia gained jobs, or broke even.

Am I wrong?

[sallyseven]

1. But what kind of jobs.

[burythehatchet]

2. I studied

econ quite a bit and therefore really know nothing about which I speak. That having been said...I think the first thing we must do is define what "the economy" is. Because what this misadministration has succeeded in doing is segregate components of the economy. It is no longer a thriving and complex web of activity that helps all classes. Rather, it is a fragmented system that is designed to help selected classes.

[Warpy]

3. It depends on what you mean by "economy."

100% of Bush's economic plan (such as it is) has been directed toward fattening the rich so that they will in turn prop up the admittedly inflated Dow. This has happened nicely. If you think the Dow is the whole economy, or even a major part of it, then the economy is booming again.

If, however, you realize that 2/3 of the economy is consumer driven, then you get a completely different picture. This country is in serious trouble, with more people thrown out of skilled and semiskilled work every week and nothing but low paid, dead end jobs opening up. People who don't have money to spend and who are maxed out on their credit cards are not likely to contribute to the consumer economy. There is no reason for employers to add jobs, as the customers for goods and services are simply not there.

The problem is a difference of opinion on how the economy works. Most people on the left (and most classical economists) believe the money pump works from the bottom up. Feed consumers a little discretionary income, and they will spend it. The rich get richer on the profits. Neoclassical economists (the neocons and most economics majors under 45) think it is from the top down. Feed the rich and they'll start more businesses and employ the rest of us, their rising tide of wealth will lift our rowboats along with their yachts and trickle down will rain gold upon us all.

I leave it to you to figure out which is the correct view, given the economic history of the past 40 years.

[many a good man]

4. Economy will grow

at least through most of the second quarter and then sputter out. Job growth will never pick up in time. High energy and commodity prices combined with a slowly declining dollar will lead to more inflation and the beginning of a staircase of interest rate increases. Stock market will fall 25%. It will feel like the 1970s all over again.

Kerry will win convincingly in the fall which will reassure world markets. But his hands will be tied by Republican congress so stagflation will continue past the midterm elections. Then things will start to get interesting...