Neocon-Artist Economy

[unlawflcombatnt]

Today's reported GDP growth is the latest example of Neocon math. GDP has allegedly "grown" 3.8%, despite the lack of positive numbers.

Real hourly wages DECLINED 2.0% during the 3rd quarter. Katrina caused the loss of 500,000 jobs. Unemployment INCREASED 0.3%.

Total Durable Orders DECLINED 3.7% during the 3rd quarter. Capital goods orders DECLINED 12.7%. Factory Orders DECLINED an estimated 1.0%.

Retail Sales were unchanged from the 2nd quarter. Domestic Vehicle Sales DECLINED 9% during the the 3rd quarter.

Personal Spending, using the numbers provided from Briefing.com, increased only 1.1% This comes from a 1.2% increase in July, a 0.5% DECLINE in August, and an estimated 0.4% increase in September. Again, this would lead to roughly a 1.1% increase, not the alleged 3.9% increase reported by the Dept. of Commercials. Apparently the Bush junta uses its own "privatized" set of numbers to misinform the public.

Leading indicators declined each month of the 3rd quarter, for a total DECLINE of 0.9%. This is especially noteworthy, since the Bush administration altered the calculation in July to make the numbers more positive. Yet they still came out negative for 3 months straight, declining by 0.7% in September alone.

Existing Home Sales DECLINED 1% during the 3rd quarter. New Home Sales DECLINED 5.8%. New Home Inventories INCREASED 14% over the 3rd quarter. Thus, the supply of new homes is exceeding the demand.

Adding insult to injury, Consumer Confidence also declined sharply during the 3rd quarter. Consumer Confidence dropped to 86.6, which was the lowest point since October 2003. The September DECLINE of 19% was the largest monthly decline since October of 1990. Consumer Confidence DECLINED another 2.6% in October, following its astronomical decline in September. (Maybe consumers don't believe all the economic propaganda published by the Bush administration.)

All of these statistics can be found at: http://www.briefing.com/Silver/Calendars/EconomicCalendar.htm

All of these negatives have occurred despite the DECLINE in personal savings, which usually implies increased spending of income. Even with if there was an consequent increased spending of wages, spending on most items still declined. Since consumer spending is 2/3 of economic activity, its difficult to see how its contribution to GDP accounted for a 3.8% increase. Furthermore, the contribution of Investment spending should have DECREASED GDP, as capital goods orders declined 12.7%. Given that Aggregate Demand is supposed to = GDP, it's difficult to see how all of the negatives regarding orders and sales results in an increase in GDP.

At the very least, the alleged 3.8% GDP "increase" grossly distorts our economic status. More likely, it's the product of statistical manipulation by the Bush corporatocracy. This is not an economy that is "strong, and getting stronger." It's an economy that's "weak, and getting weaker."

unlawflcombatnt
EconomicPopulistCommentary
___________
The economy needs balance between the "means of production" & "means of consumption."

[Ready4Change]

1. Were latest, massive, oil company profits during same quarter?

That might do it.

[unlawflcombatnt]

2. Oil Company Profits

That might be some of it. But the income and spending numbers made available to the public don't show enough increase in anything to explain a 3.8% GDP increase. It may be that they've gone back and radically altered previously posted numbers. That seems par for the course for this administration.

unlawflcombatnt
EconomicPopulistCommentary
___________
The economy needs balance between the "means of production" & "means of consumption."

[Ready4Change]

3. Hmmm

US annual GDP has probably been around 11 trillion. 3.8% of one quarter of that is around 100 billion (I think?) So the 10-12 billion profits big oil reported isn't enough.

:/

[unlawflcombatnt]

5. Oil Profits

The oil profits should be reported as income somewhere in the larger picture. With a yearly GDP of $12 trillion, quarterly GDP would be $3 trillion. So $10 billion, or $0.01 trillion, would be about 0.3% of quarterly GDP. So at best it would account for an increase of 0.3%. However, it's the increase we're measuring, not the total amount. If the previous quarter's profits were $5 billion, the increase would only be half of that, or about a 0.15% GDP increase. I don't think this is going to make much of a dent in the alleged 3.8% GDP increase.

unlawflcombatnt
EconomicPopulistCommentary
___________
The economy needs balance between the "means of production" & "means of consumption."

[unlawflcombatnt]

8. I Stand Corrected

I stand corrected. I should have used the $100 billion number, or something related to it. A 3.8% in annual GDP growth would be about $456 billion annually, or $114 billion quarterly. In the Exxon article I posted, it states profits are up 75% from the 3rd quarter of last year. I'd have to assume sales are up a similar percentage. Assuming sales are also up 75%, then the annual increase would be $75 billion for Exxon alone. That makes a quarterly increase of about $19 billion. Other oil companies also report large increases in sales. So oil company sales probably do make up a large part of this increase.

Unfortunately, much of the revenue for these sales simply "leaks" out of the economy, and is neither spent by consumers or re-invested by business. The Exxon article states Exxon's "cash-on-hand" account increased $4 billion. Though this amounts to a minuscule 0.13% of GDP, the total amount leaking out of the economy via cash-on-hand accounts is much larger. Exxon's cash-on-hand increase is just the tip of the iceberg. The same increases are occurring throughout Corporate America. This "leakage" of money out of the economy is increased by excessive corporate profits. This doesn't "grow" the economy. It "shrinks" the economy. It causes economic contraction, not expansion.

The only "growth" occurring is in CEO salaries, stockholder dividends, cash-on-hand accounts, and the tumor inside Bush's head that passes for a brain.

unlawflcombatnt
EconomicPopulistCommentary
___________
The economy needs balance between the "means of production" & "means of consumption."

[unlawflcombatnt]

6. Oil Company Profits

I found a Washington Post article that gives an idea of how large oil company profits were, especially those of Exxon Mobil. It also gives some idea of the "economic" fate of those profits. Much of those profits simply "leak" out of the economy into cash-on-hand accounts. Such leakage doesn't "grow" the economy, it shrinks it. This is a perfect example of how excessive corporate profits cause economic contraction, not growth. Here's the link: Exxon



unlawflcombatnt
EconomicPopulistCommentary
___________
The economy needs balance between the "means of production" & "means of consumption."

[NuttyFluffers]

4. just wanna say i love "Neocon-artist"

it works so well. usable for everything. could even just call conservatives in general "con-artists." love it, gonna use it from now on.

[unlawflcombatnt]

9. Neocon-Artists

Thanks. I've been using it quite a bit, but no one else has picked up on it. It's a perfect label for those advocating Bush economic policies. Not only are they "con-artists," but they've "con-cocted" a lot of economic theories to justify why the affluent should pay less taxes, or even no taxes at all.

unlawflcombatnt
EconomicPopulistCommentary
___________
The economy needs balance between the "means of production" & "means of consumption."

[PsycheCC]

7. Thanks for running the numbers Unlawful.

This business of estimating and revising the numbers until they say just what they want each month should be criminal. There has to be a way to keep this administration from lying to the people.

I know the "Neocon-artists" claim to be able to create reality, but this is the sort of hubris that got Scooter Libby indicted.

And didn't they just recently decide to completely alter the way they figured the leading indicators, claiming that it was necessary in order to properly show the growing strength of the economy??? Give me a break!!! What we need are more Bush administration indictments, not more fake numbers.

Keep debunking the myths Unlawful! Thanks for taking the time to run the numbers. Voted best page.:applause:

[unlawflcombatnt]

10. Leading Indicators

PsycheCC,

Thanks for your comments. They just recently changed how they calculated one of the factors used to calculate leading indicators. The change is in how they use the interest rate spread between 3-month rates and 10-year rates. Until June of this year, the interest rate spread addition to leading indicators was done by calculating the change from one month to the next between the 3-month interest rate and the 10-year interest rate. It the spread narrowed any, it contributed a negative number to the leading indicator calculation. However, this was changed in June or July so that in order for the "spread" to contribute a negative number, the 10-year rate had to drop below that of the 3-month rate. As long as the 10-year rate is higher than the 3-month rate, it contributes a positive number to the sum total of leading indicators. As a result, the interest rate spread is now contributing a positive number to the total, even when the spread narrows. This has significantly increased the sum total of the factors that go into the Leading Indicators. It is more difficult for Leading Indicators to be negative, since a number that was usually negative has been converted to a positive.

unlawflcombatnt
EconomicPopulistCommentary
___________
The economy needs balance between the "means of production" & "means of consumption."

[Ready4Change]

11. So, their numbers are affected by the years from 1995-2005?

That would mean this spread, which is the only thing bolstering their numbers, comes in large part from the Clinton economy?

[unlawflcombatnt]

12. Clinton & Interest Rate Spread

That's a good question. I'll have to get back to you on that one.

However, I did want to try to more clearly simply restate the change. Prior to June 2005, if the interest rate spread narrowed, it reduced the total number for Leading Indicators. Now the interest rate spread is always a direct addition to the Leading Indicator total. For example, if the spread narrows from 1.0 to 0.8, it is now a positive addition to the total. In the past, it would have been a negative 0.2 change, and would have subtracted from the total.

Again, I'll have to get back to you about the interest rate spread during Clinton's years.

unlawflcombatnt
EconomicPopulistCommentary
___________
The economy needs balance between the "means of production" & "means of consumption."

[unlawflcombatnt]

13. Clinton & Interest Rate Spread

That's a good question. I'll have to get back to you on that one.

However, I did want to try to more restate the change more clearly. Prior to June 2005, if the interest rate spread narrowed, it reduced the total number for Leading Indicators. A reduced interest rate spread contributed a negative number to the total. Now the interest rate spread is simply a direct addition to the Leading Indicator total. The spread itself is being added to the total, not the change.
(The only way it can be negative is if the 10-year rate drops below the 3-month rate.) For example, if the spread narrows from 1.0 to 0.8, it is now a positive addition to the total. In the past, it would have been a negative 0.2 change, and would have subtracted from the total.

Again, I'll have to get back to you about the interest rate spread during Clinton's years.

unlawflcombatnt
EconomicPopulistCommentary
___________
The economy needs balance between the "means of production" & "means of consumption."