2008 economic outlook - is something amiss?

[Deja Q]

We are told consumer spending drives something like 70% of our economy.

http://www.buildingteamforecast.com/...CA6408550.html

The strong growth industries will be financial and business services, capital goods (including buildings), government and income-sensitive consumer services. Consumer goods industries will be relatively weak.

In short, making a good for consumer goods? 2008 may not be the best year. This is the area most pertinent for you and I.

I disagree that government services will remain strong; most government agencies are strapped for cash and are looking to eliminate staff and services, or outsource (and offshore) them. (then wonder why you got that postcard in the mail about the public referendum to discuss adding to or replacing that prison complex in your city...)

Now look at this:
http://www.cbo.gov/ftpdoc.cfm?index=7731



If the GDP is composed from what consumer goods and services bring in, then it's clear -- more people have to make goods and services to sell. If more people made goods and services that were purchased, this would raise confidence and morale and we'd end up with an upward cycle rather than a downward one.

I'm no economist, so please tell me where my logic is all F!!!ED up.

Thank you much.
:bounce:

[NMDemDist2]

1. no way the social services will cost that much

with no health care, lots will die before they can collect

[upi402]

2. derivatives are a bad plan

http://www.oftwominds.com/blognov07/empire-debt1.html

[Warpy]

3. Nothing at all is wrong with your logic

What's wrong is that all these overpaid fools are missing the demand side of the equation. They've been so busy coming up with arcane formulas to fatten the paper profits of the rich that they've neglected the most basic part of ordinary business: if you don't have customers ready to buy your goods and services, you are going to go out of business.

They've delayed this by many years by substituting easy access to debt for inadequate paychecks, trying to make everybody happy by allowing the proles to buy toys while kidding the corporate that they're getting us all to work for peanuts. If said proles went into debt to buy a house, they felt like they were ahead of the game because there was increasing net worth tied up in the inflating price of that real estate.

However, such an economy is unsustainable. Those bills come due and that debt has to be paid off. As the real estate bubble starts to deflate, net worth disappears. As the service on the plastic debt mounts up, discretionary income (that not needed for food and shelter) tends to go down by as much, feeding the problem in a vicious cycle. At the same time, creditors start getting nervous about how much debt is suddenly unsecured because of evaporating net worth and tighten access to credit.

We're about to get lessons in why the economy of the past several decades is a really, really bad idea for everybody. You can't ignore the demand side of the equation and expect to have anything but eventual serfdom, or worse.

When "reform" consists of concentrating the wealth of a nation into as few hands as possible while everyone else is encouraged to assume debt in order to maintain the illusion of doing well, look out below. This is what happened just prior to the Depression and the same perfect economic storm is gathering now.

It will take very wise leadership to guide us through this one, and I don't see any of that inside the I-495 beltway around Washington, D.C.

[Deja Q]

4. Okay, now you're scaring me.

My logic isn't wrong? :wow: :cry:
(seriously; this isn't something I'd be sarcastic about. I question my mindset every day. Sometimes every hour, but then have to get back to my duties, which also includes scratching eczema, but I digress... )

None of us knows what the future will hold. But some of it may be for the best, at least when irony enters the picture. There is an old expression: "The truth is in the middle". There is also "Things are never as simple as they seem". Unfortunately, there's that other phrase, known as "Occam's razor - the simplest explanation is bound to be the correct one." One thing is an absolute - connecting the dots when some of them are missing typically paints a misleading picture. It's a matter of separating fact from inference; the latter we instinctively use because we do not like not knowing things. Even I, with my mouth, recognize my own shortcomings. It's the only logical conclusion.

Sadly, the point to my OP had more to do with selling one's own skills rather than being a wage slave, and I think that's one of America's best dreams for people to realize. And that might be a reason for offshoring as well. To get people to do their own thing. It's as much a possibility as anything else, and more plausible than all the tinfoil hat conspiracy ideas worthy of award winning (or losing!) fiction novels out there.

[flashl]

5. ..

"And that might be a reason for offshoring as well. To get people to do their own thing. It's as much a possibility as anything else, and more plausible than all the tinfoil hat conspiracy ideas worthy of award winning (or losing!) fiction novels out there."

If that's true, then why are our benevolent overlords taxing barter systems?

[SpiralHawk]

6. An astute analysis, Warpy. Thank you.

Know if only the freepers would get a clue about how the fatcat republicon homelanders have been screwing them, while they sheepishly applaud their own screwing.