Monday, May 09, 2005

The strong economy

Ed Cone wrote

BlogNashville wrap: Maybe we should have reconvened the faith-blogging session at the Respectful Disagreement session...alas, I had departed for home by then, but if I'd been in the room, maybe I could have asked Stan, wow, you find Dave's comment that the economy is bad to be so wrong that you are laughing at it -- could this be a moment to step back from your strong views and Dave's strong views to look for things on this very specific subject on which we can all agree? What are some numbers that back up your claim that the economy is doing great, Stan? Can Dave agree on those numbers? On what those numbers mean? But that's not the way it went, and that's a shame.

First, I want to point out that what I found ridiculous was Dave Winer's assertion that we all agree that the economy is bad. Given how strong the economy is, his assertion that it is bad seems pretty silly. However, it is ten times more ridiculous to assert that everyone agrees it is bad.

In the end, however, we weren't there to debate economics and I chose not go there. I have no doubt that, if I had launched into such a debate, Dave would have jumped in with both feet to the dismay of everyone else there.

Ed Cone raised the question of what support I would have brought to such a debate. I'll leave it with Larry Kudlow:
Core private growth in the U.S. is actually over 5 percent in the past year. Today’s personal income report shows another big gain. Year-on-year, wages and salaries are rising nearly 6 percent. Entrepreneurial proprietors’ income is up 9 percent. And the core inflation rate is only 1.7 percent. Meanwhile, profits are rising at 19 percent in the first quarter, compared to a consensus estimate of only 10 percent.

Profits drive business. And business drives the economy. Which, by the way, is strong, not weak, with historically low interest rates.

I don’t know what the media has against the American economic machine. But once again, I’m here to report that the state of our low tax, low inflation, deregulated, high productivity, and technology-streamlined economy is quite healthy. And is likely to remain so for a good long period ahead.

Bottom line -- we have enjoyed record-setting productivity gains which are the engine that drives increases in the standard of living. We have low unemployment, low inflation, and low interest rates while enjoying huge growth in personal incomes. China and Europe have been buying as much of our debt and equities as they can in order to save enough to be able to pay the massive retirement costs of their aging populations (this is the reason for the trade deficit). They buy American assets because they view the US as having the strongest economy in the world.

Hope that helps explain why everyone doesn't agree that the economy is bad.


Blogger Sisyphus said...

BlogNashville's Winer, Winner and Grokker

12:17 AM, May 10, 2005  
Blogger Greg said...


Don't forget the creation of jobs, much stronger than expected, and they keep revising past figures upwards. :)

BTW, you did well in disagreement!

1:08 AM, May 10, 2005  
Blogger Rick said...

Well, as someone who was at the BlogNashville discussion, I'll agree that not everyone thinks the economy is terrible. But there are a lot of people who don't think it's going gangbusters (and they're not all liberal).

I spent a few years as a financial reporter, and if I learned one thing is that it's easy to find ten facts that will support any economic arguement. I could easily find a number of economic indicators that show the economy has some real weaknesses.

Which is part of the reason why the "how do you feel about the economy" question is always so closely watched. In the end, the market (and the economy) is as much driven by the heart as by the mind.

11:26 PM, May 15, 2005  
Anonymous OHenry said...

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7:59 PM, December 29, 2005  
Anonymous OHenry said...

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10:38 AM, January 08, 2006  

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