tag:blogger.com,1999:blog-10563856.post111497731681724168..comments2023-10-23T11:10:05.945-04:00Comments on Karen Duncan: Life in the Time of Coronavirus: Take A Walk on the Demand SideKaren Duncanhttp://www.blogger.com/profile/13954405672195734097noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-10563856.post-1115154486159699492005-05-03T17:08:00.000-04:002005-05-03T17:08:00.000-04:00AnonymousIsAWoman,Thank you for your compliments o...AnonymousIsAWoman,<BR/><BR/>Thank you for your compliments on my blog, as well as your very inciteful posting here.<BR/><BR/>I would like to add a "nuance" to the 3.1 GDP figure. Many economists consider the "final sales" of GDP more important than the GDP. The final sales of GDP for the 1st quarter was 1.9%. This means that 1.2% of the GDP was not even sold, which means companies made 0 profit off that portion. That remaining 1.2% represents overproduction in relation to Demand. This 1.2% is inventory increase. The point here is that the current GDP overrepresents how well our economy is doing. Couple this with last months 2.4% decline in durable goods orders (which declined January and February as well), the evidence indicates our economy is worsening. And it is worsening even more than the GDP growth decline indicates. <BR/><BR/>In addition, a consistently greater increase in inventories vs. sales indicates production is greater than demand. If production exceeds consumer demand, demand for labor to produce goods will decline. Reduced labor demand reduces hiring and puts more downward pressure on wages, which reduces aggregate consumer income. Reduced consumer income, which reduces consumer spending, will further reduce labor demand. Consumer income and labor demand have a negative feedback on each other -- a decrease in one causes a decrease in the other. Thus, there is a snowballing effect. And the snowball is picking up size and speed.<BR/><BR/>Today's Fed rate increase will also contribute to the decline. This will almost directly reduce the rate of increase in home equity values. It will directly reduce spendable income for homeowners with adjustable rate loans, which may account for up to 1/3 of home mortgages. (It will immediately increase their monthly mortgage payments.)<BR/><BR/>Outsourcing contributes even further to the decline in American consumer income, further reducing consumer spending potential. The consistent loss of American jobs to cheap foreign slave-labor is accelerating. The latest act of economic treason involves outsourcing to a cruise ship 3 miles offshore. Here is a copy of the letter I'm posting at as many sites as possible. It includes the link to the LA Times article that describes this:<BR/><BR/>[OUTSOURCING TO A SHIP]<BR/><BR/>[The most egregious outsourcing plan yet is one by a company named SeaCode. They plan to outsource 600 IT jobs to a cruise ship just off the California coast. The ship will be outside the 3-mile limit, thus exempting it form California labor and environmental regulations. The workers won't need H1B visas, unlike other foreign employees that work in the United States. This will provide American IT companies with cheap foreign slave-labor without going overseas. It will also greatly enhance downward pressure on American IT worker wages. The link to the LA Times story is:[url=http://www.latimes.com/business/la-fi-golden2may02,1,4320743.column?coll=la-headlines-business]LA Times: Offshoring to a Ship[/url] http://www.latimes.com/business/la-fi-golden2may02,1,4320743.column?coll=la-headlines-business] <BR/> <BR/>Our economy is going nowhere except down. The only question is how fast. We have an administration whose economic policies come from a pre-determined agenda. These policies have nothing to do with solving economic problems, and everything to do with their pre-determined agenda. Instead of adusting policy to solve problems, they confabulate explanations about how their illogical agenda is "helping" the economy. As Paul Krugman would say, their economic policy consists of "solutions looking for problems," rather than problems looking for solutions. They already have all the solutions. They just need to find (or create) a problem to apply them to. (Like Social Security.) The administration remains unencumbered by logic, honesty, or reality. <BR/><BR/>This is the only administration that has refused to alter bad economic policy in the face of real problems. All previous presidents, including Ronald Reagan, have been willing to alter agenda to solve problems. But the current "economic axis-of-evil," Bush/Mankiw/Snow/Greenspan, refuses to correct bad policy. Instead, they create an "alternate reality" and tell us how strong our economy is. <BR/><BR/>Mike (unlawflcombatnt)<BR/>http://www.unlawflcombatnt.blogspot.com/unlawflcombatnthttps://www.blogger.com/profile/09023628392835748327noreply@blogger.com