This Is What a Recovery Looks Like

January's jobs number crushed even the most optimistic estimates this morning, adding nearly a quarter-million jobs for the month and pushing the unemployment rate down to 8.3% -- the lowest in three years.

The news was good all around.

  • The rate of underemployment, or those who would like a job but have given up looking and those working part time who want more work, fell to 15.1%, down from 17.3% a year ago.
  • November's and December's jobs numbers were revised higher, adding 60,000 more new jobs than originally reported.
  • Manufacturing added 50,000 jobs, the most since 1998. The average manufacturing worker is now working more hours than they have since 1997.
  • The employment-population ratio rose.
  • The household survey, an alternative measure of job creation that asks households instead of businesses how their job situation has changed, showed the highest monthly jobs gain in years.
  • Average earnings among all jobs grew 0.2%.

This chart doesn't even include January's improvement, but this, folks, is what a recovery starts to look like:

Source: Federal Reserve.

Still, keep these numbers in context. If job creation continued at this pace, it would still be several more years before we're back to pre-recession levels. In the meantime, millions have been out of work for more than a year and will struggle to get reintegrated into the labor market even when demand returns.

But we're moving in the right direction, and we're doing it faster than we have in years. That's something to celebrate, I think. How about you?

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On February 03, 2012, at 11:36 AM, DividendsBoom wrote:

    I was definitely surprised by that number

  • Report this Comment On February 03, 2012, at 12:21 PM, IdahoAve wrote:

    I do agree, yes indeed.

  • Report this Comment On February 03, 2012, at 1:38 PM, TMFGortok wrote:

    Funny thing about this 'recovery'. The BLS "labor participation rate" (You can't make this stuff up) fell in January by 1.2 million.

    http://www.zerohedge.com/news/record-12-million-people-fall-...

    What happened? Best available information is that the BLS revised how they calculate the unemployment rate and thus a few million people fell off the unemployment rolls.

    Even the BLS itself says we lost 2 million jobs last month:

    http://economix.blogs.nytimes.com/2012/02/03/wow-but-is-the-...

    But, due to the magic of government math, we gained jobs!

    Also, the unemployment rate does not track the 'discouraged' worker, or those people that haven't found a job in a while, and thus have 'stopped looking'.

    I can't take credit for this tweet, but it represents this situation accurately and humorously:

    "If 3.7 million more unemployed give up looking for a job, we can get this unemployment rate down to a respectable 6%." ( https://twitter.com/#!/ewoelke/statuses/165449135233826816 )

  • Report this Comment On February 03, 2012, at 1:54 PM, TMFHousel wrote:
  • Report this Comment On February 03, 2012, at 2:07 PM, TMFHousel wrote:

    I think this Tweet also represents the situation accurately and humorously:

    Embarrassing day for @ricksantelli & @zerohedge No, 1 million people did not drop out of the labor force bonddad.blogspot.com/2012/02/no-ric…

  • Report this Comment On February 03, 2012, at 2:14 PM, DJDynamicNC wrote:

    @TMFGortok - good of you to provide the link to the Economix blog to bolster your claim. I took the liberty of reading the entire post. If you had done the same, you'd see that the difference between the two numbers comes from the seasonal adjustments applied in January every year due to Christmas retail hiring.

    In order to measure trendlines, you have to make consistent measurements. Since previous years included the seasonal adjustment - and since the seasonal adjustment is used in order to more accurately describe the situation - that adjustment was once again included here. And because the figure reported is a plot point on a trendline, the gain in jobs year over year is relevant and accurate.

    From the article you yourself linked to:

    "Consider the annual change in nonfarm payrolls. Seasonal factors should have no effect there. Over the last 12 months, the economy added nearly two million jobs, more than in any similar period since early 2007. These numbers do make it appear that the economy is gaining momentum, even if the January gain does turn out to be overstated."

    You're also right that the topline unemployment rate does not track discouraged workers or those who would prefer to work full time but are stuck in part time positions. That's why many of us Keynesian types have long argued for the use of U6 rather than U3 as the official number, and believe it provides a more complete picture. Glad to have you on board for that.

    I'm also intrigued at your comments regarding labour participation rates. Is this something you feel should not be measured or accounted for when measuring employment rates? If so, why? How would that improve the model?

  • Report this Comment On February 03, 2012, at 2:48 PM, TMFGortok wrote:

    My comments re: Labor participation rates are how Orwellian the Phrase is "Labor Participation".

    The unemployment rate (even U-6) doesn't cover the 'long-term discouraged worker', which to me seems odd: Why call it 'unemployment' if it doesn't track actual unemployment?

    The government has a long history of changing its calculations to make its numbers seem better (documented in many places, but sites like shadowstats.com still use the 'old' calculations), and indeed if you use the 'old' calculations, our unemployment rate is closer to 22%.

    Now, think of your friends, family, and your friends' families. What's closer: 8% of them being unemployed? Or 22%?

    If you live in Virginia, it feels more like 10% than anything else (due in large part to the artificial reality bubble surrounding Washington DC), but to my family in North Carolina, it looks and fees much closer to that 22% than the 'official' 8% rate.

    Regarding Zero Hedge and Rick Santelli; I don't follow either of them with any regularity, but I'm always interested in people who challenge and question the official line, as those 'in charge' have a vested interest to make things seem better than they really are.

    That's also why I enjoy being a Fool (though I do not speak for The Motley Fool!), it's company that values differing opinions.

    Something that I would ask @TMFHousel: The DJI is roughly where it was in 2007. Have the fundamentals of our economy really changed? Has the debt been liquidated? Our we experiencing real growth? Or artificial growth brought on by QEx ?

  • Report this Comment On February 03, 2012, at 3:00 PM, TMFHousel wrote:

    <<The DJI is roughly where it was in 2007. Have the fundamentals of our economy really changed?>>

    The Dow was above 13500 for most of 2007. In real terms, it was more like 15,000. Earnings are also at a record high now, so I'm not sure why it's surprising that stocks have rebounded.

    But to your points:

    <<Has the debt been liquidated?>>

    A lot of it, yes. Household debt payments as a % of disposable income is at the lowest level in almost 20 years, and now below the 30-year average. Total debt to GDP (including govt debt, corporate debt, etc), is down by 16%. Still high, but well below pre-recession levels.

    <<Our we experiencing real growth?>>

    Slow, but yes. And much better for some than others.

    Any rebuttal to the Zero Hedge fallacy about 1.2m workers falling off payrolls last month?

  • Report this Comment On February 03, 2012, at 3:01 PM, TMFHousel wrote:

    Oh, sorry. See it in your comment.

  • Report this Comment On February 03, 2012, at 3:04 PM, TMFHousel wrote:

    <<Now, think of your friends, family, and your friends' families. What's closer: 8% of them being unemployed? Or 22%?>>

    A lot of people use this line to argue that nationwide statistics are conspiracies. Here's what's important: No single person's friends and families are indicative of a 310 million persona country. That's why we have nationwide statistics and averages.

    <<Regarding Zero Hedge and Rick Santelli; I don't follow either of them with any regularity, but I'm always interested in people who challenge and question the official line, as those 'in charge' have a vested interest to make things seem better than they really are.>>

    But challenging the official line isn't useful if you're just making stuff up, which is what arguing on national TV that 1.2m fell off the payrolls last month is.

  • Report this Comment On February 03, 2012, at 3:07 PM, TMFHousel wrote:

    One more:

    <<as those 'in charge' have a vested interest to make things seem better than they really are.>>

    Agree. But people like Zero Hedge have a vested interest in making things look worse than they are, too. People read his blog because he makes everything look bad and presents conspiracies. If he didn't do this, he'd just be one of a zillion other blogs out there.

  • Report this Comment On February 03, 2012, at 3:12 PM, DJDynamicNC wrote:

    @TMFGortok - it's fair to be skeptical. Just be sure you're skeptical in pursuit of truth. It is easy to simply doubt for the sake of doubting.

    Personally, looking around my friends, the unemployment rate is probably around 5%, but I recognize that anecdotal measurements are not particularly accurate. National unemployment is also an imperfect encapsulation of what is, in reality, an array of dozens of regional markets. Rochester is a particularly vibrant market at this time (best in New York, in fact) so your mileage may vary.

    Also, my friends tend to be poor, which means they can't afford extended unemployed time and will move across the country to get a job if that's what it takes to survive.

    Also, per your claim that those in charge have a vested interest in making things seem better than they are - that's true. But also note that there is an opposing group with a vested interest in making things seem worse than they are. It's not like the administration has an unimpeded voice in this.

    We all have an agenda, the best thing to do is be forthright about it.

  • Report this Comment On February 03, 2012, at 3:13 PM, DJDynamicNC wrote:

    ^^ OK, Morgan said it better.

  • Report this Comment On February 03, 2012, at 3:19 PM, FutureMonkey wrote:

    Nice article and chart Morgan. Our views are often colored by the recent past. In 2007 many were relectant to believe that the recession was coming, let alone actually happening. In 2012 many are reluctant to believe the recovery is coming, let alone actually happening.

    There are plenty of obstacles ahead and many individual stories of great suffering are ongoing; however we have good reason to be optimistic for the future.

    Question -- what would the employement numbers be if we hadn't lost all of the public sector employee positions -- seems to me that private sector hiring is advancing at a very nice rate and that continued downsizing in local, state, and federal employment is the largest drag on employment going forward.

    FM

  • Report this Comment On February 03, 2012, at 4:58 PM, TMFHousel wrote:

    @gorok:

    I got around to calculating it: In real terms, the Dow is still 26% below 2007 levels.

  • Report this Comment On February 03, 2012, at 5:00 PM, TMFHousel wrote:

    Or: If you use ShadowStats inflation numbers, it's roughly 57% below 2007 levels :)

  • Report this Comment On February 03, 2012, at 7:14 PM, MartyTheCanuck wrote:

    Good to see that the recovery is finally picking up steam, when Krugman et al were saying that the recovery would die without a second and larger stimulus.

    I guess gridlock is good, especially when the alternative is simply bailing out constituencies so they don't share the pain.

    Anyway it will be good for the market.

  • Report this Comment On February 03, 2012, at 7:29 PM, CaptainWidget wrote:

    This isn't growth, this is 0% interest rates. We're at the start of the next bull market...which will be shortly followed by the next " ____ Bubble" which will collapse, and inevitably be blamed on greedy corporations.

  • Report this Comment On February 04, 2012, at 3:41 AM, CrankyTexan wrote:

    The national debt is $15 trillion, and increasing by $1.5 trillion every year, and our corrupt politicians do not care. The current state of Greece is our future. The U.S. economy is NOT something to celebrate.

  • Report this Comment On February 04, 2012, at 3:54 AM, CrankyTexan wrote:

    And 8.3% unemployment is still horrible,

  • Report this Comment On February 04, 2012, at 7:16 AM, MartyTheCanuck wrote:

    I'm looking at the graph and the title could have been "This is what the slowest recovery looks like".

  • Report this Comment On February 04, 2012, at 1:41 PM, BluegrassInNYC wrote:

    As expected, conservatives are jumping into the conversation in a desperate attempt to convince fellow voters that the glass is half empty.

    If we elect a Congress that fails to repeal Gramm-Leach-Bliley, a President that appoints an SEC that allows TBTF investment banks to leverage their holdings 40-1 and a Fed Chairman who applies the "principles" of Ayn Rand on a national scale, conservatives undoubtedly will get what they wish for: an empty glass and a population pleading for apocalyptic redemption.

  • Report this Comment On February 04, 2012, at 2:41 PM, easystreet70 wrote:

    "As expected, conservatives are jumping into the conversation in a desperate attempt to convince fellow voters that the glass is half empty."

    give me a break...this is not a partisan issue; it's a matter of questionable models used to report unemployment [kind of like the cpi model to report inflation--excluding 2 items that hit people the hardest]. i suspect the truth is somewhere in the middle...but it's not as rosy as this article suggests.

    we have a congress/president who will have added $7 tn in debt in 4 years...to an already staggering debt load. that is pure insanity; and anyone with sense would be outraged at government spending & waste.

    i'm all for some optimism, but you better exercise some real skepticism, as well...especially when numbers/information is coming from any government or political entity.

  • Report this Comment On February 04, 2012, at 2:42 PM, CrankyTexan wrote:

    Bluegrass, your corrupt president is increasing the national debt by $4 billion every single day. If that's not a road to apocalypse, I don't know what is.

  • Report this Comment On February 04, 2012, at 2:47 PM, CrankyTexan wrote:

    Bluegrass, the glass is not half empty. It is completely empty and owned by China.

  • Report this Comment On February 04, 2012, at 5:43 PM, richie54 wrote:

    Every U.S. government bureacracy has a department of fuzzy math, especially the Labor Department. Funny how things seem to improve suddenly at the beginning of each election year.

  • Report this Comment On February 05, 2012, at 4:34 PM, TMFHousel wrote:

    <<Funny how things seem to improve suddenly at the beginning of each election year.>>

    2008 was an abysmal year for jobs. As was 1992. And 1980.

  • Report this Comment On February 05, 2012, at 4:36 PM, TMFHousel wrote:

    <<you better exercise some real skepticism, as well...especially when numbers/information is coming from any government or political entity.>>

    The privately calculated ADP job-creation numbers are even more bullish than the BLS figures. No one arguing the govt is cooking the numbers to make things look artificially good has been able to explain this to me.

  • Report this Comment On February 05, 2012, at 4:42 PM, AvianFlu wrote:

    Let us not forget that the non-partisan congressional budget office released the budget deficit figures on Christmas eve using the generally accepted accounting principles methods (GAAP). That turned out to be 4 to 5 trillion dollars. We are not going to be able to pay that with tax increases. Realistically, the only way to pay that is with "printing money".

  • Report this Comment On February 05, 2012, at 4:45 PM, AvianFlu wrote:

    ....so we may as well take Krugman's advice and do several trillion dollars worth of stimulus spending. Let's just make it an even 10 trillion dollars in annual deficits. Would that please the Keynesians?

  • Report this Comment On February 05, 2012, at 5:49 PM, CrankyTexan wrote:

    >>> Realistically, the only way to pay that is with "printing money". <<<

    Or by spending less, which liberals refuse to do.

  • Report this Comment On February 05, 2012, at 5:51 PM, CrankyTexan wrote:

    TMFHousel, you sure seem to have a lot of faith in our corrupt politicians.

  • Report this Comment On February 05, 2012, at 5:55 PM, CrankyTexan wrote:

    Frugality is a cornerstone principle of the Motley Fool. Government debt and spending is completely contrary to these principles. If were to "invest" like our government, I would buy all my stocks using margin, and then demonize rich people for not giving me even more money to invest. And all my stock picks would be penny stocks.

  • Report this Comment On February 05, 2012, at 10:29 PM, BluegrassInNYC wrote:

    <<TMFHousel, you sure seem to have a lot of faith in our corrupt politicians.>>

    I re-read the piece and comments, and don't see where he expressed faith in politicians, corrupt or otherwise. He's simply recognizing the pattern in generally-accepted statistics by comparing them to what has occurred historically.

    See Morgan, there's no use in pointing out facts to someone willing to pull any spurious argument out of the Limbaugh-rich air in Texas.

  • Report this Comment On February 05, 2012, at 11:27 PM, CrankyTexan wrote:

    Bluegrass, perhaps you can explain why increasing the national debt by $4 billion everyday will not result in a default. Or do you not care?

  • Report this Comment On February 05, 2012, at 11:31 PM, CrankyTexan wrote:

    Bluegrass, you want facts? I'll give you facts....

    http://www.usdebtclock.org/

  • Report this Comment On February 05, 2012, at 11:32 PM, CrankyTexan wrote:

    Correct me if I am wrong, but if the economy were recovering, the debt clock would be going in the other direction.

  • Report this Comment On February 05, 2012, at 11:38 PM, CrankyTexan wrote:

    >>> Rush Limbaugh should've been lynched a long time ago.<<<

    You are a good example of a violent leftist.

  • Report this Comment On February 05, 2012, at 11:45 PM, CrankyTexan wrote:

    FYI, lynching means murdering.

  • Report this Comment On February 05, 2012, at 11:50 PM, TMFHousel wrote:

    <<Correct me if I am wrong, but if the economy were recovering, the debt clock would be going in the other direction.>>

    If true, the economy has been in a near-constant state of decline for 100 years.

    And for what it's worth, total economy-wide debt as a percentage of GDP has been declining since 2007.

  • Report this Comment On February 05, 2012, at 11:52 PM, CrankyTexan wrote:

    What's Greece's total economy-wide debt as a percentage of GDP?

    What's California's total economy-wide debt as a percentage of GSP?

  • Report this Comment On February 05, 2012, at 11:54 PM, CrankyTexan wrote:

    TMFHousel, how big would the national debt have to be today in order to make you worry?

  • Report this Comment On February 05, 2012, at 11:59 PM, CrankyTexan wrote:

    And if the national debt is nothing to worry about, why are leftists demanding that rich people pay even more taxes?

  • Report this Comment On February 06, 2012, at 12:00 AM, TMFHousel wrote:

    It depends on interest rates.

  • Report this Comment On February 06, 2012, at 12:00 AM, TMFHousel wrote:

    No one ever said national debt is nothing to worry about.

  • Report this Comment On February 06, 2012, at 12:02 AM, CrankyTexan wrote:

    What's your source for declining debt compared to GDP? Every search I have done shows increased debt to GDP since 2007

  • Report this Comment On February 06, 2012, at 12:04 AM, CrankyTexan wrote:

    >>> No one ever said national debt is nothing to worry about. <<<

    Then this is not what a recovery looks like.

  • Report this Comment On February 06, 2012, at 12:07 AM, TMFHousel wrote:
  • Report this Comment On February 06, 2012, at 12:08 AM, CrankyTexan wrote:
  • Report this Comment On February 06, 2012, at 12:08 AM, TMFHousel wrote:

    (For clarification on that first link, TCMDO = total credit market debt outstanding.)

  • Report this Comment On February 06, 2012, at 12:10 AM, CrankyTexan wrote:
  • Report this Comment On February 06, 2012, at 12:10 AM, TMFHousel wrote:

    That's only federal government debt. Households, banks, and corporations have been shedding debt far faster than the federal government can go into it, hence falling debt to gdp.

  • Report this Comment On February 06, 2012, at 12:11 AM, CrankyTexan wrote:

    Government debt is what concerns me. Do you think we will share the fate of Greece? Why or why not?

  • Report this Comment On February 06, 2012, at 12:15 AM, CrankyTexan wrote:

    The charts I provided mention GDP, not just government debt.

  • Report this Comment On February 06, 2012, at 12:19 AM, TMFHousel wrote:

    GDP is gross domestic product, not a subset of debt. The charts you linked to only take government debt into account in the numerator. The first chart I linked to shows all debt in the economy -- federal debt, state and local debt, household debt, corporate debt, bank debt -- as a share of GDP. It's been declining for years. These are facts.

  • Report this Comment On February 06, 2012, at 12:22 AM, TMFHousel wrote:

    <<Government debt is what concerns me. Do you think we will share the fate of Greece?>>

    If you extrapolate current trends into infinity, yes. If you think more rationally and realistically, then probably not anytime soon.

  • Report this Comment On February 06, 2012, at 12:24 AM, CrankyTexan wrote:

    You're the expert. Please give me your best guess of when the USA will end up like Greece.

  • Report this Comment On February 06, 2012, at 12:25 AM, TMFHousel wrote:

    Sometime between today and a long time from now.

  • Report this Comment On February 06, 2012, at 12:26 AM, CrankyTexan wrote:

    If you are not sure, then this is not what a recovery looks like.

  • Report this Comment On February 06, 2012, at 12:27 AM, CrankyTexan wrote:

    And notice that you seem to agree that the USA will end up like Greece.

  • Report this Comment On February 06, 2012, at 12:28 AM, TMFHousel wrote:

    That's a rather arbitrary definition of recovery.

  • Report this Comment On February 06, 2012, at 12:30 AM, CrankyTexan wrote:

    When a patient is bleeding to death, he is not recovering.

  • Report this Comment On February 06, 2012, at 12:31 AM, TMFHousel wrote:

    <<And notice that you seem to agree that the USA will end up like Greece.>>

    If you time line is long enough, sure. I'd say the odds it happens in your or my lifetime is extremely low.

    Off to more productive matters. Have a good night.

  • Report this Comment On February 06, 2012, at 12:32 AM, CrankyTexan wrote:

    I am concerned with more than just my lifetime. I do not believe in kicking the can down the road. Goodnight to you too.

  • Report this Comment On February 06, 2012, at 12:34 AM, CaptainWidget wrote:

    <<That's only federal government debt. Households, banks, and corporations have been shedding debt far faster than the federal government can go into it, hence falling debt to gdp.>>

    And that's good for the economy how?

    There's only so much money to go around. The private market HAS to shed it's debt as the government spends more. That means less money available for productive economic use, and more money wasted by the bureaucratic rule of two.

    As to your comment about the interest rates, how do you know what the real interest rate is? The interest rate is the premium people are willing to pay for dollars now as opposed to having dollars tomorrow. There's no way to know the real market price of dollars since the fed arbitrarily makes a number, and then prints cheap paper money to fill the gap.

    The real market interest rate is much higher than 0.25%. If you judge on the informal loans market and venture capital, it's probably closer to 25% APR. The gap in between at which the government is borrowing money at an astronomical speed is simply filled by inflation.

    Thus the free market loses twice. Not only is capital being stripped away from productive citizens and given to the non-productive government, but it's also making the money that citizens managed to keep even less valuable.

    That has little to do with the article, but your lack of economic knowledge gets you suckered into these comment box flame wars that you're never capable of winning. You have no bearings on the way markets work, and it's painful to watch you get ripped to pieces by those who you're supposed to be "educating"........

    The very notion that increasing government debts and decreasing (meaning, defaulting) private market debts is a good thing for our nation is absurd. You need to ask for a refund on your econ education.

  • Report this Comment On February 06, 2012, at 1:41 PM, R2Big wrote:

    I don't think these stats really illustrate the state of the economy that well. If full employment is the goal, then we're doing a bit better. If quality of life is the goal, then people out there are still struggling. If you look at real interest rates and other telling factors, you're going to see a much less rosy looking picture IMO. This isn't a partisan comment, I think the the Republican and Democratic establishments alike have failed us.

  • Report this Comment On February 06, 2012, at 2:19 PM, 48ozhalfgallons wrote:

    Very entertaining flame war. The Texas spirit lives on. The captain sees outside the box. "And that's good for the economy how?" It's good for the economy of those in control. Remember that Romney has handed Obama a victory by stating that he is not concerned for the poor. Obama certainly is not concerned despite what he says. I can't support anyone so stupid for saying that. Even George Bush wasn't that vapid. Is Romney concerned for the working poor? Apparently not. Romney is concerned for Trump. Trump is concerned for Romney. Obama is concerned for the Fed. Anything changed here?

    The bigger government gets, the smaller everything else becomes.

  • Report this Comment On February 06, 2012, at 2:46 PM, BluegrassInNYC wrote:

    CrankyTexan is apparently unable to string together more than a single thought at once, so I won't even try to respond to every ill-conceived assertion. I am extremely concerned about the level of the national debt, but this is the result of a deliberate strategy to contract revenues via tax cuts while rapidly expanding defense spending and bogus social initiatives such as the Medicare Modernization Act and No Child Left Behind.

    Who put us on this perilous trajectory of debt?

    http://zfacts.com/p/318.html

    President Reagan, or Saint Ronnie as historical revisionists have attempted to rename him, got the shooting upward during his time in office. President Clinton got the debt back under control, but President Junior brought it back, with Cheney asserting that "Reagan proved that deficits don't matter." To people like CrankyTexan, they don't. As long as a Republican is in the White House.

  • Report this Comment On February 06, 2012, at 2:58 PM, DJDynamicNC wrote:

    @Texan: "Correct me if I am wrong, but if the economy were recovering, the debt clock would be going in the other direction."

    This has already been answered, but you doubled down and said "Then this is not what a recovery looks like." Multiple times.

    If you utilize the accepted definition of economic terms when discussing economics, rather than simply redefining them to suit your needs of teh moment, you will find yourself much better equipped to make your points.

  • Report this Comment On February 06, 2012, at 3:03 PM, DJDynamicNC wrote:

    @48oz: "The bigger government gets, the smaller everything else becomes."

    The Constitution was accepted in 1781. Since then, the economy has blossomed massively. Similarly, the government is much more expansive now than it was then.

    I'm curious how your statement fits into that set of facts.

  • Report this Comment On February 06, 2012, at 6:01 PM, CrankyTexan wrote:

    Bluegrass, blame whomever you want for the national debt. All that matters now is reversing the national debt. Only the current president can do this. And corrupt Obama does not care.

  • Report this Comment On February 06, 2012, at 6:04 PM, CrankyTexan wrote:

    >>> If you utilize the accepted definition of economic terms when discussing economics, rather than simply redefining them to suit your needs of teh moment, you will find yourself much better equipped to make your points <<<

    I suppose if we use YOUR definition of economic terms, Greece's economy is wonderful.

  • Report this Comment On February 06, 2012, at 9:11 PM, ChiliDogg17 wrote:

    This thread contains a lot of arguments about subjects for which we do not have sure numbers, such as inflation, the unemployment rate, and the growth rate. They are based on surveys of a relatively small number of households, corporations, etc, followed up by various calculations, seasonal adjustments, etc.

    Rather than quibble about the figures from one month, which are squishy, I am going to try to state some big picture things that I think we can say with some certainty (but not perfect certainty) about these issues and the arguments in this thread.

    1. TMFHousel states that the US is reducing debt, and it's a good thing, and cites an article to back up his point. So how are we deleveraging? The article he cites states:

    "The vast majority of that decline has come from defaulting on mortgages. Importantly, another quarter-trillion dollars of bad mortgages remains in the foreclosure pipeline, McKinsey reckons. That should mean more debt reduction in the near future."

    Defaulting is not a great way to deleverage.

    2. One good month - assuming the numbers are correct, which is debatable - does not a recovery make. We need 250K new jobs for the next 3 or 4 years to get back to the numbers from 2007.

    3. The total number of people with jobs is millions below what it was 5 years ago. We don't know whether the number will go up or down in the near future.

    4. People on the left and the right will skew the numbers, such as they are, and omit certain information to further their political agenda.

    5. The survey of households is like any other survey - it has a margin of error, probably 2 or 3 percent. It is not an exact number. Getting too excited about a 0.2 percent decline in the official unemployment number is much ado about little.

    6. We are mired in the slowest recovery since the Great Depression.

    7. The federal government has added trillions to the national debt faster than ever. Someone will have to pay that money back. We are piling that debt on millions who had no vote in the matter.

    8. The Obama Administration is still offering sub-prime loans, as Pres. Obama criticizes banks for making the subprime loans that the government forced them to make. (I know this point is outside the scope of the article, but I thought you should know. This fact gets zero media attention, unless I missed the back page that day they mentioned it in the paper.)

    9. The politicians, Republican or Democrat, will not do anything about our financial problems. They might have to try something serious eventually, but it will be too little, too late. This is the history of human beings, esp. those with power who don't feel the effects of their laws. The results will not be good. (Is that fate unavoidable? In theory, yes. In our real system, doubtful.)

    10. BluegrASSinNYC comes across as a real condescending jerk. Sorry, just had to say it for his own good.

    Thanks for your time.

    Chili Dogg

  • Report this Comment On February 06, 2012, at 9:16 PM, ChiliDogg17 wrote:

    P.S. I meant to add one other thing: Do not rely on Z-facts for your information. I emailed the guy at least 10 reasons why his chart on national debt - which he uses for purely partisan political reasons - is grossly misleading. He wants to blame his political opponents for everything, which leads him to gross distortions and misrepresentation. I hate that kind of behavior!! ARGGHH!!!

  • Report this Comment On February 06, 2012, at 9:17 PM, TMFHousel wrote:

    <<Defaulting is not a great way to deleverage.>>

    It's not a good way to stabilize the banking system, but it's a very good way to deleverage.

  • Report this Comment On February 06, 2012, at 10:23 PM, CaptainWidget wrote:

    Good for whom? It may be good for you to default on your home loan, but now you've killed granny's retirement by destroying the stock price of your bank (who happened to account for 20% of granny's 401K)

    I think you're just attempting to argue semantics, and that's fine, but if you're genuinely attempting to suggest that defaulting is good for the economy, you're sadly mistaken. All actions have costs, something I think you've truly failed to realize at this late stage in your life.

  • Report this Comment On February 06, 2012, at 10:29 PM, TMFHousel wrote:

    It clearly would have been better if there never was a debt bubble to begin with and trillions of bad mortgages didn't need to be defaulted on. But there was. Best to deal with realities than dwell on what could have been. Chemo therapy has costs too. That doesn't make it bad.

  • Report this Comment On February 06, 2012, at 11:07 PM, CaptainWidget wrote:

    Those who don't know history are doomed to repeat it......

    Knowing what you now know about history, do you think that low interest rates and government mandates/guarantees should be avoided to keep massive debt fueled _____ bubbles from happening again?

  • Report this Comment On February 07, 2012, at 1:40 AM, kevinh68 wrote:

    "Bluegrass, blame whomever you want for the national debt. All that matters now is reversing the national debt. Only the current president can do this. And corrupt Obama does not care."

    Correct me if I am wrong but I thought Obama offered over 4 trillion in deficit reduction only to be rejected by the tea party members when behner could not get them to accept a good deal. To me it seems like Obama was the adult in the room offering a great deal of compromise including cutting programs near and dear to the democratic base. I believe Obama does in fact care. He has two young daughters who will pay for the mess we made just like our sons and daughters if we don't get our house in order soon. The road to recovery starts with making compromises. That is the adult thing to do and it shames me that so few people want to act that way.

  • Report this Comment On February 07, 2012, at 1:50 AM, whereaminow wrote:

    Austrian School economist Robert Wenzel has been predicting this boom (it's not really a recovery, but another unsustainable cheap credit boom) for months.

    Check out his analysis at http://www.economicpolicyjournal.com/

    David in Liberty

  • Report this Comment On February 07, 2012, at 2:33 AM, CrankyTexan wrote:

    Bluegrass, Obama offered 4 trillion in tax cuts OVER

  • Report this Comment On February 07, 2012, at 2:43 AM, CrankyTexan wrote:

    Bluegrass, Obama's debt reduction plan was a joke.

    But you already knew that.

    http://www.aolnews.com/2011/02/15/opinion-obamas-2012-budget...

    If Obama truly care about the deficit, he would had done something about THREE YEARS AGO.

    Democrats and Republicans are both scumbags, yet you are naive enough to actually trust Democrats.

  • Report this Comment On February 07, 2012, at 2:45 AM, CrankyTexan wrote:

    >>> He has two young daughters who will pay for the mess we made just like our sons and daughters if we don't get our house in order soon. <<<

    Obama is part of the 1% His kids will always be rich.

  • Report this Comment On February 07, 2012, at 2:49 AM, CrankyTexan wrote:

    Entitlements must be cut in order to eliminate to deficit. There is no way Obama will do this. He is the food stamp president. He is the president of free healthcare. This is why he will probably be reelected. When you offer people handouts, people vote for you.

  • Report this Comment On February 07, 2012, at 2:52 AM, CrankyTexan wrote:

    At least Bluegrass acknowledges the seriousness of the national debt. This is not what a recovery looks like.

  • Report this Comment On February 07, 2012, at 3:00 AM, CrankyTexan wrote:

    Bluegrass, the president has a Democrat house and Senate for a whole 2 years. He could have passed any budget he wanted. He chose not to.

  • Report this Comment On February 07, 2012, at 3:09 AM, kyleleeh wrote:

    I think that a lot people on this thread are confusing the difference in "recovering" with "recovered" nobody is saying we are out of the woods with this jobs report, just heading in the right direction.

    Arithmatic is not a matter of opinion, 8.3% unemployment IS a smaller number then 10% unemployment. You have to do some serious mental gymnastics to argue that creating 250k jobs is not an improvement from having 250k people collecting unemployment and food stamps.

  • Report this Comment On February 07, 2012, at 3:16 AM, CrankyTexan wrote:

    kyleleeh, more people are on food stamps today than ever in history.

    And unemployment is not the only metric to measure the state of the economy.

    Even TmfHousel admits that the USA is on track to eventually end up like Greece.

  • Report this Comment On February 07, 2012, at 3:29 AM, kyleleeh wrote:

    250k "less" people are on unemployment and are now are paying taxes instead of collecting entitlements. Improvements don't have to come in enourmous numbers to still qualify as improvements. Unless it's an election year in which case we are told that they do.

    As for our debt future I disagree with both of you. Nations that control their currency are at risk of inflation but never at any real risk of default. The situation in Greece came about becaue they gave up control of their currency to the EU. If Greece was still on the Drachma and not the Euro they would just print more money and inflate their way out of default.So in answer to your question about when we will end up like Greece...unless we stop printing money, probably never.

    Not to make that sound like like inflation is a good thing...it's not. But like it or not in my opinion it's about 100x more likely an outcome for us then default is.

  • Report this Comment On February 07, 2012, at 3:42 AM, CrankyTexan wrote:

    kyleleeh, celebrating an 8.3% unemployment rate (which I don't believe) is like celebrating that only half of the bones in your body are broken.

    >>> unless we stop printing money, probably never. <<<

    so we are either going to end up like Greece, or the U.S. dollar will become worthless. In either case, this is not what a recovery looks like.

  • Report this Comment On February 07, 2012, at 4:06 AM, kyleleeh wrote:

    <<celebrating an 8.3% unemployment rate (which I don't believe) is like celebrating that only half of the bones in your body are broken.>>

    If 60% of the bones in your body were broken the day before then yes, the patients condition is improving. As I stated in a previous post I think your confusing the difference in the words "recovering" and "recovered" Nobody is saying things are great, just improving.

    <<so we are either going to end up like Greece, or the U.S. dollar will become worthless. In either case, this is not what a recovery looks like.>>

    Could be, I can't rule it out. But keep in mind in 2000 we were predicted to have no debt by this time. Things change, you can't make a prediction like that with any kind of accuracy.

    Our currency certainly isn't worthless to nations like China, they happily trade us real products for our printed paper, they even peg the Yuan to the Doller establishing that our paper is always worth more than their paper no matter how much of it we print.

    Maybe that will change, maybe it wont, there are to many variables in these things for you or I, or anyone to say what is or isn't going to happen.

    The only thing I can predict is that tommorow 250k people will be contributing money to our budget instead of drawing money from it...and I think that's a good thing. Baby steps in the right direction are better then steps in the wrong direction, or no steps at all.

  • Report this Comment On February 07, 2012, at 4:35 AM, CrankyTexan wrote:

    >>> Our currency certainly isn't worthless to nations like China, they happily trade us real products for our printed paper <<<

    Things are going to get a lot worse. The U.S. economy was downgraded for the first time in history last year.

    >>> The only thing I can predict is that tommorow 250k people will be contributing money to our budget <<<

    You don't know that. Half of all Americans pay zero federal tax. Lot of employed people get food stamps.

    >>>> Baby steps in the right direction are better then steps in the wrong direction, or no steps at all. <<<

    Again, you are judging the entire economy just by the unemployment rate. The national debt is much more important right now.

  • Report this Comment On February 07, 2012, at 6:21 AM, CaptainWidget wrote:

    <<As for our debt future I disagree with both of you. Nations that control their currency are at risk of inflation but never at any real risk of default.>>

    I took the liberty of looking up the definition of "default" for you...

    [b]to fail in fulfilling or satisfying an engagement, claim, or obligation.[/b]

    You could hardly claim that a bond holder, paid back with devalued currency, would be satisfied with the engagement.

    Don't be obtuse. Defaulting on the value of a bond is exactly the same as defaulting on the monetary figure. Someone bought a security expecting a repayment of the principle plus interest, and then fail to receive it back. If you inflate the money supply, the bond is essentially defaulted.

    BTW-This is not conjecture, this is proven history. The Weimar Republic issued hundreds of millions in bonds. Absolutely no one accepted the old devalued notes as payment. So the new government paid off the bonds they could at the rates they could (in the new revalued currency of course) and defaulted on the rest.

    If anyone could have printed their way out of debt, it would have been the Weimar Republic...and they failed....miserably. They defaulted. End of story.

  • Report this Comment On February 07, 2012, at 10:37 AM, ChiliDogg17 wrote:

    <<<<Defaulting is not a great way to deleverage.>>>>

    TMFHousel wrote in reply:

    <<It's not a good way to stabilize the banking system, but it's a very good way to deleverage.>>

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

    LOL!!

  • Report this Comment On February 07, 2012, at 10:40 AM, ChiliDogg17 wrote:

    Wait, make that ROTFLMAO!!

  • Report this Comment On February 07, 2012, at 12:50 PM, kyleleeh wrote:

    @captainwidget

    Legaly satisfying a debt and emotionaly satisfying a debt are not the same thing. If I owe you $1000 and I give you back $1000 just because that money wont buy as much as it did when you lent it, that dosen't mean I defaulted.

    You probably wont be willing to lend me any more money in that currency, and thats what happened in Germany and many other nations, but existing debt holders had their contracts fullfilled exactly as they were written regardless of whether the currency is inflated or not. Buy you're logic if I lock in a 30 year mortgage at 4% and then interest rates go up to 12% I'm defaulting on my mortgage if I don't pay the bank 12%, when in truth I'm fullfilling the contract exactly as it was written.

    Again to be clear I'm not advocating inflation as a good thing, i'm just responding to Texas that I think inflation is far more likely an outcome for us then a Greek like default.

  • Report this Comment On February 07, 2012, at 12:52 PM, kyleleeh wrote:

    *by

  • Report this Comment On February 07, 2012, at 1:05 PM, DJDynamicNC wrote:

    @Texan: "Things are going to get a lot worse. The U.S. economy was downgraded for the first time in history last year."

    The U.S. economy was not downgraded. S&P - the same ratings agency that was rating bundled subprime mortgages AAA investments - downgraded the United States' credit rating and directly cited the political impasse being created by Congress in opposition to the Administration as the reason.

    The market wholeheartedly ignored this rating and continued to snap up TBills at ever lower yields, and the remaining two ratings agencies continue to rate the US at their highest category, so I'm not sure how valuable your argument here is.

    --> "You don't know that. Half of all Americans pay zero federal tax. Lot of employed people get food stamps."<--

    Blatantly false. Half of all Americans pay no federal INCOME taxes (just as a great many corporations pay no effective corporate taxes - but I imagine you're fine with that). They still pay payroll taxes, sales taxes, property taxes, and a host of other taxes.

    Of course, you're just dropping a red herring anyway. Kyleleeh's point was that 250,000 more people being employed is better than them not being employed, and since you can't argue that, you're trying to distract from the issue, which I find quite telling.

    --> "Again, you are judging the entire economy just by the unemployment rate. The national debt is much more important right now." <--

    This is an ideological position, not an economic position. The market in no way agrees with you. Neither do any of the unemployed people. Neither does history.

  • Report this Comment On February 07, 2012, at 1:06 PM, DJDynamicNC wrote:

    --> "You could hardly claim that a bond holder, paid back with devalued currency, would be satisfied with the engagement." <--

    Since EVERY long term security is issued with the understanding and expectation that yields will be impacted by inflation, absolutely EVERY bond holder has been paid back with devalued currency and been satisfied with the arrangement. Do you disagree?

  • Report this Comment On February 07, 2012, at 1:16 PM, kyleleeh wrote:

    >>Again, you are judging the entire economy just by the unemployment rate. The national debt is much more important right now.<<

    I disagree, we only have to pay the interest on the national debt, and the debt being issued is currently at very low rates.The difference in our debt situation and the Greek situation is that it is not consuming a big part of our GDP to service the debt.

    The current deficit spike came about from a decrease in tax revenue combined with a huge increase in demand for unemploment benefits. If you can think of a better way to fix that situation other then getting people back to work I'd love to hear it.

    @CaptainWidget

    You're overlooking a very important difference in our situation and the Wiemar Germany situation. After WWI the allies demanded war reparation from Germany that was denominated in the currency of their nation, not German currency. It is almost impossible to print you're way out of debt when the debt is denominated in someone elses currency, no argument with you on that one. But our debt is not denominated in any other currency then our own.

  • Report this Comment On February 07, 2012, at 4:04 PM, CrankyTexan wrote:

    You liberals are living in your own world. You think the U.S. economy is just fine. You actually trust corrupt politicians. You think a $4 billion per day increase in debt is no big deal.

    If I were to think like liberals, I would get a personal loan today for $100,000 and spend it all. Then I would call my personal finances "excellent."

    I'll ask this question again. If the economy is just fine, why are liberals demanding that rich people pay even more taxes even more than they are now?

  • Report this Comment On February 07, 2012, at 4:10 PM, kyleleeh wrote:

    For the third and last time Texas NOBODY IS SAYING THINGS ARE FINE. we're only saying that things are starting to improve.

  • Report this Comment On February 07, 2012, at 4:17 PM, CrankyTexan wrote:

    >>> The U.S. economy was not downgraded. S&P - the same ratings agency that was rating bundled subprime mortgages AAA investments - downgraded the United States' credit rating and directly cited the political impasse being created by Congress in opposition to the Administration as the reason. <<<

    You left out the part about the national debt being the reason for the downgrade.

    >>> The market wholeheartedly ignored this rating and continued to snap up TBills at ever lower yields, and the remaining two ratings agencies continue to rate the US at their highest category, so I'm not sure how valuable your argument here is. <<<

    Your rosy picture does not change the fact that the first downgrade in history happened on Obama's watch.

    >>> Blatantly false. Half of all Americans pay no federal INCOME taxes <<<

    It was implied that I meant fed taxes, which is by far the largest chunk of taxes that taxpayers pay (the ones that do pay income tax that is).

    >>> They still pay payroll taxes, sales taxes, property taxes, and a host of other taxes. <<<

    Which is a tiny sum compared to fed income taxes.

    >>> Kyleleeh's point was that 250,000 more people being employed is better than them not being employed, and since you can't argue that, you're trying to distract from the issue, which I find quite telling. <<<

    The "issue" is that the unemployment has been over 8% for years even though Obama promised that it would never surpass 8% during his presidency.

    >>>>--> "Again, you are judging the entire economy just by the unemployment rate. The national debt is much more important right now." <-- This is an ideological position, not an economic position. The market in no way agrees with you. Neither do any of the unemployed people. Neither does history. <<<

    The market is still lower than it was 13 years ago. What does unemployed people's opinion of the debt have to do with anything? Most Americans (like you) don't give a darn about the debt. In fact, most Americans don't know that the national debt is $15 trillion and growing by $4 billion everyday. Neither does history? The economy of Greece is history. Very important history. And you are failing to learn from it.

    Just live in your own world. Ignore the debt. Kick the can down the road. Hope, like TMFHousel, that the economy doesn't fall apart until at least the next generation.

  • Report this Comment On February 07, 2012, at 4:18 PM, CrankyTexan wrote:

    >>> For the third and last time Texas NOBODY IS SAYING THINGS ARE FINE. we're only saying that things are starting to improve. <<<

    The national debt is improving?

  • Report this Comment On February 07, 2012, at 4:25 PM, TMFHousel wrote:

    <<Which is a tiny sum compared to fed income taxes.>>

    In 2010, individual income taxes totaled $898 billion, and payroll taxes totaled $864 billion.

  • Report this Comment On February 07, 2012, at 4:33 PM, CrankyTexan wrote:

    TMFHousel, I think you realize that I was talking about an individual basis. People WHO DO pay fed income taxes pay most of their taxes there.

    Look at your latest pay stub. Which tax amount is highest?

    Of course the national total will be lower because 50% of Americans do not pay fed income taxes.

  • Report this Comment On February 07, 2012, at 4:36 PM, CrankyTexan wrote:

    I would be ecstatic if I didn't have to pay fed taxes. But then I wouldn't be paying my "fair share".

  • Report this Comment On February 07, 2012, at 4:55 PM, NOTvuffett wrote:

    I guess I am another cranky Texan. THIS is not what a recovery looks like. Even if we believe the numbers cranked out by the govt. the progress is dismal.

  • Report this Comment On February 07, 2012, at 5:06 PM, kyleleeh wrote:

    >>the progress is dismal<<

    dismal progress is still progress, perhaps the pessimists on this page could cite a monthly jobs creation number that would make them happy and then tell me when was the last time in history that that number occured. But I strongly suspect that your pessimism has more to do with "who" is running the country and little to do with "how" they are running it, and that most likely a smaller jobs number would have you cheering if a republican was in office.

  • Report this Comment On February 07, 2012, at 5:11 PM, CrankyTexan wrote:

    kyleleeh, both Republicans and Democrats are corrupt. You either do not realize that Obama is corrupt, or you do not care that he is corrupt. It is very unwise for you to trust politicians.

    Your celebration of the lousy 8.3% unemployment won't mean a thing when the USA ends up like Greece.

  • Report this Comment On February 07, 2012, at 5:12 PM, CrankyTexan wrote:

    >>> most likely a smaller jobs number would have you cheering if a republican was in office. <<<

    Proof that your adoration of Obama is blinding you from the horrible economy.

  • Report this Comment On February 07, 2012, at 5:12 PM, CrankyTexan wrote:

    >>> most likely a smaller jobs number would have you cheering if a republican was in office. <<<

    Proof that your adoration of Obama is blinding you from the horrible economy.

  • Report this Comment On February 07, 2012, at 5:32 PM, rooskisrue wrote:

    Glenn Beck predicted this a month ago. Election time is rapidly approaching. Things must improve or at least appear to.

  • Report this Comment On February 07, 2012, at 5:42 PM, NOTvuffett wrote:

    @kyleleeh I don't much care if Democrats or Republicans run the govt. as long as it is good for business. I am surprised that you didn't imply I was a racist somehow, lol.

    When people of limited means get told there is no inflation when food and fuel which are large expenses to them and it is not used in the cpi

    number, that pisses me off.

    I get multiple people hungry for work showing up at my door everyday. I have to tell them "not hiring now". I get resumes from people layed off all the time, they all want to be a manger, lol

  • Report this Comment On February 07, 2012, at 6:23 PM, CrankyTexan wrote:

    Why work when Obama will give you everything for free?

  • Report this Comment On February 07, 2012, at 6:31 PM, TheDumbMoney wrote:

    This thread is hilarious.

    CrankyTexan sure has named him or herself well.

    (To which CrankyTexan is sure to respond, "so has dumberthanafool.")

  • Report this Comment On February 07, 2012, at 6:33 PM, CrankyTexan wrote:

    I'll be here all week.

  • Report this Comment On February 07, 2012, at 6:52 PM, NOTvuffett wrote:

    There is no shame in doing honest work even if it is not the thing you desire.

  • Report this Comment On February 07, 2012, at 7:22 PM, Gato337 wrote:

    Very entertaining flame war, I must say. And Morgan, excellent thought-provoking article as usual, I appreciate your moderate straightforward approach to dealing with politicized subjects (as well as your awesome and reasonable comment rebuttals).

    As for you @CrankyTexan: You sir (or madam?) are a troll, and a hysteric one at that. I hope you are not as ugly as you sound, troll.

    This article was about January unemployment numbers and the optimistic speculation that maybe the worst is over and that we can hopefully look forward to better times ahead (at least until the next bubble pops).

    And yet, you managed to dominate the comments with your apocalyptic preaching on the frighteningly fast growth of national debt.

    However, repeating hysterical and previously-debunked statements over and over again will not make your argument any stronger, and certaintly will not make (reasonable) people listen to your carefully researched (im sure) hypotheses.

    I suggest you find a new writing style if you hope to preach to anyone but your own choir.

  • Report this Comment On February 07, 2012, at 7:33 PM, NOTvuffett wrote:

    national debt to GDP doesn't matter, lol.

  • Report this Comment On February 07, 2012, at 7:41 PM, CrankyTexan wrote:

    >>> And yet, you managed to dominate the comments with your apocalyptic preaching on the frighteningly fast growth of national debt. <<<

    Since you seem to be another radical leftist, I will ask you the same question I have asked twice.

    If the national debt is "no big deal", why are leftists demanding that rich people pay even more taxes?

  • Report this Comment On February 07, 2012, at 7:42 PM, CrankyTexan wrote:

    Gato wrote, "Very entertaining flame war"

    Then Gato wrote, "I hope you are not as ugly as you sound."

    Pot...... Kettle.......Black

  • Report this Comment On February 07, 2012, at 7:49 PM, NOTvuffett wrote:

    how was this even remotely close to a flame war when most of it was just about disagreements on how to interpret data, or to judge the importance of data points?

  • Report this Comment On February 07, 2012, at 7:53 PM, CrankyTexan wrote:

    It became a flame war when Gato called me ugly.

  • Report this Comment On February 07, 2012, at 8:09 PM, CrankyTexan wrote:

    "Rule 5: Ridicule is man’s most potent weapon. It’s hard to counterattack ridicule, and it infuriates the opposition, which then reacts to your advantage."

    - Saul Alinsky

  • Report this Comment On February 07, 2012, at 8:26 PM, kyleleeh wrote:

    With the exception of precious metals I can not think of one thing including food and fuel that cost more now then they did in the summer of 2008...that's why the CPI is down.

    @Texas

    If national debt to GDP is the end all of economic indicators then we must have been set up for decades of economic despair at the end of WW2 when the debt to GDP was even higher then it is now. But that's not what happened is it? Stop thinking you have some magic crystal ball to see into the future, you can't take current trends and extrapolate them into infinity because trends don't stay current for long. I never denied that our future might be very bad, but Texas, you seem to insist that's the only possibility, and I don't agree with you on that.

    I'll end this debate by saying this:

    This amount of unbridled pessimism and instance that we are perpetually screwed for life is EXACTLY what you see right before downturns turn into expansions.

    @NOTvuffett

    I should have broken the last post into two paragraphs so it didn't look aimed at you...my apologies. Texas had made a comment about liberals living in their own world and thinking the economy is fine, which is what I meant to respond to.

  • Report this Comment On February 07, 2012, at 8:32 PM, CrankyTexan wrote:

    The dollar was backed by gold back then.

    If you think the economy is on the right track, then I would love to see how you handle your personal finances.

  • Report this Comment On February 07, 2012, at 8:34 PM, CrankyTexan wrote:

    By the way, kyleleeh, you are ignorning the fact that TMFHousel agreed that the USA is currently headed to end up like Greece.

  • Report this Comment On February 07, 2012, at 8:41 PM, CrankyTexan wrote:

    kyleleeh, how big would the U.S. debt have to be in order for you to start worrying?

    20 trillion?

    50 trillion?

    100 trillion?

    500 trillion?

    Give us a number.

  • Report this Comment On February 07, 2012, at 9:08 PM, CrankyTexan wrote:

    The economy would not had recovered after WW2 if they had the percentage of people on entitlement programs that we do now.

    Entitlement programs are what causing the U.S. debt to increase by $4 billion every day.

  • Report this Comment On February 07, 2012, at 9:13 PM, CrankyTexan wrote:
  • Report this Comment On February 07, 2012, at 9:34 PM, kyleleeh wrote:

    >>kyleleeh, how big would the U.S. debt have to be in order for you to start worrying?<<

    I never said it was no concern, what I have said ad nauseam is that it is in my opinion that the US will probably deal with it's debt through inflation rather then default, and I added on two occasions that that's not a good thing just a probable outcome.

    >>By the way, kyleleeh, you are ignorning the fact that TMFHousel agreed that the USA is currently headed to end up like Greece.<<

    What he said was this:

    "If you extrapolate current trends into infinity, yes. If you think more rationally and realistically, then probably not anytime soon."

    You can't extrapolate current trends into infinity, is what both of us have told you.

    >>Entitlement programs are what causing the U.S. debt to increase by $4 billion every day.<<

    I said that myself in a previous post...here I'll repost it for you:

    "The current deficit spike came about from a decrease in tax revenue combined with a huge increase in demand for unemployment benefits."

    That's exactly why I think it's good news that 250k people are now off unemployment and in the work force, but for some reason you keep insisting that it's not.

    I'm going to leave this thread now as it's become clear that selective reading is going to make it impossible to have a reasonable debate with you...good talking to you and best of luck Texas.

  • Report this Comment On February 07, 2012, at 9:38 PM, CrankyTexan wrote:

    kyleleeh, your anger does not change the fact that we are going to end up like Greece.

    TMFHousel wrote, "If you time line is long enough, sure. I'd say the odds it happens in your or my lifetime is extremely low."

    kyleleeh, your logic is that the U.S. will never default on its debt because it's never happened before. That's very, very poor logic. Explain to me how the debt clock will be reversed. If you were president right now, what would you do to reverse the debt clock? You will not answer because you have no answer.

  • Report this Comment On February 07, 2012, at 9:39 PM, CrankyTexan wrote:

    Motley Fool Rule number one of investing.... GET RID OF YOUR DEBT.

  • Report this Comment On February 07, 2012, at 9:40 PM, CrankyTexan wrote:

    kyleleeh, by your logic, you will never die, because you have never died before.

  • Report this Comment On February 08, 2012, at 8:47 PM, Gnilresdor wrote:

    Liberal fiscal policy is a cycle of dependency so entrenched, it won't die even on the brink of default. See: Greek riots.

    There is no hope of convincing anyone in this thread of anything by invoking debt, Texan.

  • Report this Comment On February 10, 2012, at 8:26 AM, DJDynamicNC wrote:

    >>> You left out the part about the national debt being the reason for the downgrade. <<<

    Politicial impasse over the debt was actually the cited reason: http://blogs.wsj.com/marketbeat/2011/08/05/sp-downgrades-u-s...

    It is important to cite the facts.

    >>> Your rosy picture does not change the fact that the first downgrade in history happened on Obama's watch. <<<

    My "rosy picture"? I simply stated that the market ignored S&P's downgrade. That's a fact. You may disagree if you like; that doesn't make it false.

    >>> Which is a tiny sum compared to fed income taxes. <<<

    You can't claim BOTH that payroll taxes are a tiny sum compared to federal income taxes (which is false) AND that entitlements - which are largely paid for through payroll taxes - are "bankrupting" America.

    >>> The "issue" is that the unemployment has been over 8% for years even though Obama promised that it would never surpass 8% during his presidency. <<<

    The issue is NOW that unemployment has been over 8% because you were wrong about your initial claim and are backpedalling. THis is called "moving the goalposts." It is also called "being wrong."

    >>>>The market is still lower than it was 13 years ago. What does unemployed people's opinion of the debt have to do with anything? Most Americans (like you) don't give a darn about the debt. In fact, most Americans don't know that the national debt is $15 trillion and growing by $4 billion everyday. Neither does history? The economy of Greece is history. Very important history. And you are failing to learn from it.<<<

    This completely avoids addressing my point, and then throws in some demonization of people who are unemployed for good measure.

    Oh, but for the record, you're right - the market is, by almost every measure, still lower than it was at the peak of the dotcom bubble. Very astute. I'm very interested to hear what exactly you think that proves?

    Here are some other facts:

    1) Yesterday the DOW hit the highest point in four years.

    2) Yesterday the NASDAQ hit its highest point in 11 years.

    I'm eager to find out why that's bad news for Obama and the economy. Wait, let me guess - DEBT DEBT DEBT DEBT!

  • Report this Comment On February 10, 2012, at 2:07 PM, nancydog wrote:

    I have not, in a long time, have so much hot air blow through my computer. This wide ranging discussion is like a recording secretary report I made, 45 years ago, of a congregational meeting-------A long discussion was had. Nothing was said----.

  • Report this Comment On February 10, 2012, at 5:11 PM, 48ozhalfgallons wrote:

    @ kyleleeh: "Texas had made a comment about liberals living in their own world and thinking the economy is fine, which is what I meant to respond to."

    I only wish it was true that libs lived in their own world.... Genuine conservatives prefer to live and let live. However, my experience with liberals is they require all to live in their world lest it be imperfect. Assimilate all in the name of purity. Borg society in Star Trek Voyager is a perfect example of a liberal's nirvana for all.

    And to DJDynamicNC: Before you go and get all tripped up in your own jargon, centrally planned economies are a liberal model. Even Keynes, Roosevelt and Truman were well right of where libs stand today.

    It is the relentless push toward a totalitarian socialism which concerns me about progressives (The preferred nomenclature for today's liberals) Definition of progressive: Proceeding in steps; continuing steadily (relentlessly) by increments.

    This (progressive) philosophy for human existence is not a pilgrimage as liberty requires; it is a cause bent on a replicative cloning of thought, behavior, tastes, resources, and mold which must conform to a collective preconceived artificial code for existence..... just like the Borg.

  • Report this Comment On February 11, 2012, at 1:21 AM, TomBooker wrote:

    "you Liberals" WTH does that mean?

    Anyway....

    I agree with Morgan that this is what a (net) "Recovery looks like".

    I still believe it appropriate to question reliability of BLS data. No matter how thorough the methodology or apparent "consistency" for which statistical models strive,..assumptions, and conclusions based on those assumptions still precede the creation and execution of the model.

    Which actually softens my yearning for fair trials followed by first class hangings for an unspoken Conspiracy within the BLS to keep us occupied with statistical bread and circuses, while the predominant Economic Belief System grinds Americans into feudal serfs. ;)

    It's more of a guideline, than an outright rule, but I like to keep my imagination free of unnecessary restraint.

    I think a far more pertinent and compelling question is one of "validity."

    OK... the data is telling us we have a Recovery (or was it meant "under way"?) on paper.

    Now, can we find a different yardstick of the "Recovery" to validate that the "Recovery" we have, is what we really need out of Recovery?

    An example of that to which I am speaking is the discussions which went on regarding GNP and GDP.

    IMHO, the GNP was more valid in assessing the standard of living in the Country. In, and of, its intention it was not as mooshy as claimed, it just lacked the torture testing and improvement, which has been brought to bear from advances in the now vast fields of Statistical Analysis over the past 30 years.

    GDP is a superior measure of the Nation's productivity. This is crucial information for Markets and for the ebb and flow of the important aggregated granular activity of price discovery.. plus assumed better utilization of capital.

    We have become a Market(s) conscious nation, so it makes sense we would tend to mosey over to the alter of GDP.

    At the same time, we have assumed that total net production is an overwhelming component of the standard of living and its balanced distribution through the society of the nation.

    Although there are (I think) some decent analytics behind my definition of "standard of living" it's basically that an average (or median if you prefer) person, of average aptitude and average motivations will garner average outcomes in their life.

    The further refinement being that average outcomes don't completely suck for an average human being.

    Going back to my proposition that as the Recovery is well upon us, we should look at it and make sure it is what we need.

    The practical problem is that we have no consensus as to what we need, nor consensus on what measures we should use. This is not to mention we are in the dog-chasing-its-tale situation of large groups of people. you are going to have to rely on quants, and samples, and generalizations based on model.

    The reason I press on the deeperish validity of this Recovery is because we had what appeared to be a very swift and efficient Recovery from the Recession circa 2000.

    We definitely got what we wanted. But it wasn't "real" capital appreciation and it definitely wasn't what we needed. Unless one needs a lot of destructive excitement in their life, and the lives of family and friends.

    Note that I have differentiated between want and need. I consider it the fundamental flaw which permeates the air around us in a society of "more". Companies meticulously quant what we want, and then provide it. That's how you end up with mainstream media news which only validates or titillates. When what you need is responsible and accurate reporting. But that's for another day...

    So, if we're looking to find if this is the Recovery we actually need. My answer is No. And that's not what Morgan was getting at.

    That which drew me to this article was the use of the January Non-Farms Payrolls Report.

    Through trial and error, I believe I have gotten better/faster over the past few years at unwinding the Report into a usable understanding.

    However, it's a rule, more than a guideline, that I never act on the January NFPR, particularly this one. I wait until the Market reacts to the report.

    The reason being that normal point of perspective can get skewed or, in this January, completely flushed.

    Every January the BLS plops in the annual non-institutional population adjustment for the entire year. This year an adjustment for the 2010 Census was plopped in.

    That's how you get 1.25MM people shoved off the dock and from the workforce in 1 month. That's how you find out that 699,000 more people are suffering part-time employment in 1 month, by which a quick interpolation can have you believing 90% of the 243K jobs were part-time. That's how net 1.5MM more people suddenly appear in the non-institutional population.

    We natural Doubters are further fed by the infamous Table C which presents everything from

    non-institutional population down through counts of employment and unemployment.... with and without population controls.

    But then you still can't just math the data which was smoothed,... for a simple Dec to Jan comparison.

    I used the word "plop" because couldn't we do population controls month to month?

    So these nominals are statistically distributed down the tree and to see how/why everything happened you're going to have to deal with an arcane monstrosity named X-12 ARIMA.

    My big take-aways:

    There were about 50K jobs in the sector that has UPS Fed-EX etc in it, which didn't go away like normal.

    Did the BLS really nail the population control on the 16-24 and 50+, which are behaving quite differently now, than last times they threw in the Census bombs?

    And Morgan Housel is no fun because he cherry-picked numbers which supported his thesis AND aren't a bugger to explain, even though the BLS made this month incomprehensible.

    This is a Recovery, but am convinced it's neither what we want or need. I go by nominals of Food Stamps and poverty, inequities of distribution, completely horsebleep monetary artifices and a whole bunch more.

    I will take issue with one point, which is pretty lightweight. And it's an important one for me...

    "The employment-population ratio rose."

    Effectively, IMHO this only confirms a painfully protracted pause in trend and we don't all get properly well until this makes one heck of a comeback..

    http://tinyurl.com/57mub4

    or another 4-5MM could fall out of the workforce, and that 8.3% would get perfectly healthy.

    Then we declare post-Recovery Boom-Time? ;)

  • Report this Comment On February 11, 2012, at 2:55 PM, Bill292 wrote:

    I find it funny that the troops get pulled and the economy starts to improve just as Obama starts preparing for his re-election bid. Any trick to skew the numbers to help us forget the last three years would not only be used by the current administration but any administration in power. So, I guess what I am saying is this a recovery or smoke and mirrors?

  • Report this Comment On February 12, 2012, at 12:56 PM, aleax wrote:

    On February 03, 2012, at 2:48 PM, TMFGortok wrote:

    ...

    """The unemployment rate (even U-6) doesn't cover the 'long-term discouraged worker',"""

    You're wrong! See http://www.bls.gov/news.release/empsit.t15.htm : discouraged workers are counted from U-4 up (they're part of the "marginally attached" contingent, as made clear in Note by the phrase "Discouraged workers, a subset of the marginally attached").

  • Report this Comment On February 13, 2012, at 1:25 AM, ChrisBern wrote:

    This article makes the common mistake of focusing on coincident indicators when analyzing the trajectory of an economy. It would be more valuable to an investor to read an article on how the leading indicators look.

  • Report this Comment On February 15, 2012, at 1:47 PM, DJDynamicNC wrote:

    "Before you go and get all tripped up in your own jargon, centrally planned economies are a liberal model. Even Keynes, Roosevelt and Truman were well right of where libs stand today."

    You mean to tell me that Franklin "public works project and maximum wage caps" Roosevelt was to the right of Barack "our stimulus package is half tax cuts" Obama?

    That's an intriguing position to take.

    If you're just going to make arbitrary assertions, you might as well go big and call Obama a Kenyan Socialist.

  • Report this Comment On February 17, 2012, at 7:41 PM, CrankyTexan wrote:

    >>> If you're just going to make arbitrary assertions, you might as well go big and call Obama a Kenyan Socialist. <<<

    He's not Kenyan socialist. He's a Keynesian socialist.

    And he's a very corrupt politician, but you do not seem to mind.

  • Report this Comment On February 17, 2012, at 7:44 PM, CrankyTexan wrote:

    Obama will probably be reelected because people love freebies. When you offer people freebies, people vote for you.

  • Report this Comment On February 17, 2012, at 7:50 PM, CrankyTexan wrote:

    Today the Nasdaq is 42% lower than its all time high. That is nothing to celebrate.

  • Report this Comment On February 17, 2012, at 7:52 PM, CrankyTexan wrote:

    >>> You can't claim BOTH that payroll taxes are a tiny sum compared to federal income taxes (which is false) AND that entitlements - which are largely paid for through payroll taxes - are "bankrupting" America. <<<

    Are you dense? Do you actually think entitlements are funded solely by payroll taxes? They are paid mostly by loans from China.

  • Report this Comment On February 18, 2012, at 1:43 AM, CrankyTexan wrote:

    1. Federal debt has increased by 44% from $10.6 trillion to $15.23 trillion.

    2. Americans living in poverty have increased by 16% from 39.8 million to 46.2 million.

    3. Total unemployment (U6) has increased by 21% from 19 million to 23 million.

    4. Price of gasoline has increased by 80% from $1.86/gal to $3.35/gal

    5. Grocery prices have increased by 17%. [CPI Food price index of 119.6 to 164.3]

    6. Americans on food stamps have increased 42% from 31.8 million to 45.2 million

    7. Healthcare premiums per family have increased by 19% from $12,680 to $15,073.

    8. US Bank failures per year have increased by 268% from 25/yr in 2008 to 96/yr in 2011.

    9. Home foreclosures per year have increased by 34% from 850,000 to 1,140,000

    10. Total bankruptcy filings per year have increased by 31% from 1,117,641 to 1,467.221.

    11. US credit rating was downgraded by S&P for first time

    12. Median Household income has declined by 4% from $50,939 to $48,950.

    13. Median value of existing homes has declined by 17% from $197,233 to $162,500.

    14. US dollar compared to foreign currencies has declined by 7.7%. [US dollar index on Jan 20, 2009 versus Dec 30, 2011]

    15. US dollar compared to gold has declined 89%. [$855/ounce to $1617/ounce]

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