Is the US Economy on the Decline?

[infinitemeridian]

The ADP just released that job growth in April was down by almost 40,000 from the expected number:

http://www.usatoday.com/story/money/...pril/83893374/

Is this a sign of a weakening economy? Is the US heading towards another recession?

Still waiting on the Department of Labor's monthly report, but interested to hear other opinions.

[Independent voter]

World economy is dragging us down. If only everyone would be like us.

[BuckSparkles]

It's probably Bushes fault.

[Deleted]

World economy is dragging us down. If only everyone would be like us.

If the rest of the world is the problem, shouldn't one give notion that the problem might lie with oneself?

[Gheld]

nowai yougaize. Oil is up 12 cents a barrel (mind you, after it hemorrhaged back half of it's last speculation rally). Oil is back. The economy is back. The trickle will happen this year. Mark my words. 2016 will be the year it finally trickles down.

[breadisfunny]

nowai yougaize. Oil is up 12 cents a barrel (mind you, after it hemorrhaged back half of it's last speculation rally). Oil is back. The economy is back. The trickle will happen this year. Mark my words. 2016 will be the year it finally trickles down.

i have 10$ on 2017. IT'S THE YEAR OF AWESOME baby.

[Theodarzna]

I think over all we have structural economic weakness in that there aren't enough jobs, aren't enough that pay well, and increasingly we are facing the same demographic challenges as other western nations.

Production is hard to justify with shriveling domestic demand. With an anemic consumer base there is also less likelihood of people caring to sell to us.

[May90]

Job growth is just one of the factors. As long as job growth is proportional to the population growth, this factor is doing fine.

[Raeph]

I would say we are stable, but on weak footing. We have a healthy and diverse work force, regulation overall isnt onerous, corruption and graft is dealt with aggressively but education is holding us back.

Both secondary and post secondary education is failng thw workforce.

http://www.npr.org/sections/ed/2016/...ns-report-card

We are kinda just chugging along on the coattails of a few highly successful companies, with the rest of the economy stagnating. Until we have a better solution to educating the next generation beyond throwing more money into failing school districts or the oft repeated "local control only" slogans then we'll be stuck at stagnation.

Too long at stagnation and the economy will really start to have issues. Ignorance does not really promote the innovation neccessary for robust economic growth.

[Yvaelle]

I think over all we have structural economic weakness in that there aren't enough jobs, aren't enough that pay well, and increasingly we are facing the same demographic challenges as other western nations.

Production is hard to justify with shriveling domestic demand. With an anemic consumer base there is also less likelihood of people caring to sell to us.

^ This.

It all goes back to velocity of money. Consumption is down because the 99% don't have money with which to consume. Without consumers, a consumption-based economy doesn't function. A decrease in jobs is just a small and very lagging indicator of the much bigger problem - which is wealth inequality.

If nobody can afford new cars, then Detroit doesn't have anything to manufacture, and every dealership in the country doesn't need so many employees, etc. You can try to demand Detroit to keep their employees hired, by subsidizing the industry to pay for their employment with taxpayer money, but this is a goofy and short-term (or should be short-term!) solution - what is needed is the 'pull' of consumption.

Without that, you're just pushing rope.

[Skroe]

^ This.

It all goes back to velocity of money. Consumption is down because the 99% don't have money with which to consume. Without consumers, a consumption-based economy doesn't function. A decrease in jobs is just a small and very lagging indicator of the much bigger problem - which is wealth inequality.

If nobody can afford new cars, then Detroit doesn't have anything to manufacture, and every dealership in the country doesn't need so many employees, etc. You can try to demand Detroit to keep their employees hired, by subsidizing the industry to pay for their employment with taxpayer money, but this is a goofy and short-term (or should be short-term!) solution - what is needed is the 'pull' of consumption.

Without that, you're just pushing rope.

One thing I've been wondering for a while is the effect of modern-age recurring costs on the spending power of middle income Americans.

25 years ago, what did you have? Rent/mortgage, utilities, health insurance, car insurance, moderate student loans (maybe), car payment if it was a lease, and maybe the cable bill?

What do people have now?

Not only all of that (and usually much more expensive), but $200-300 a month cell phone bills, $150 wired internet/cable bills, streaming service bills, video game subscription bills. Oh and it gets better, because the next round of cell phone bills lots of people are going to find themselves in will be $30 greater PER PHONE due to the end of subsidized plans and start of monthly payment plans for the phone.

It just seems like, cut away the problem of wages and income inequality, the modern world taps the consumer's wallet in a recurring fashion that robs them of disposable spending money to a degree that wasn't the case even 20 years ago.

I'd love to see a study about this, if one exists.

[Deleted]

Well, didn't the USA (and other countries) bail companies that were going so bad they were close to bankrupcy? So, the biggest companies in the USA (and in other countries, mostly EU ones) already have shown bad management. Would you be surprised if they close up on bankrupcy yet again? Only this time even worse as they've grown since last recession?

[Reeve]

Seems a bit premature to try to predict doom for the US economy based on one number from one month.

[Daelak]

Seems a bit premature to try to predict doom for the US economy based on one number from one month.

shhhh, don't let him know his partisan bias is showing.

[infinitemeridian]

Seems a bit premature to try to predict doom for the US economy based on one number from one month.

Oh I absolutely agree, I just have right-winger/Bernie-Bro friends who are spouting the doom and gloom from this.

[Skroe]

Seems a bit premature to try to predict doom for the US economy based on one number from one month.

Oh yeah it's incredibly premature, considering how strong the US economy has been for years now.

We're in 80 months, and counting, of economic expansion, since July 2009. Projections indicate it could continue until at least 2020, which would make it one of the longest in American history (it's already the 4th longest).

http://money.cnn.com/2016/01/11/inve...recovery-ever/

All of a sudden the doom-and-gloom crowd has lots to crow about: China is suffering a scary slowdown, Latin America is imploding and geopolitical threats are on the rise. And the U.S. stock market is off to its worst start to a year. Ever.
Yet the optimists at Morgan Stanley believe the American economy will not only withstand this global turmoil, it may keep growing until at least 2020. That would make the much-criticized recovery from the Great Recession the longest U.S. expansion in the post-war period.
Last week during the market mayhem Morgan Stanley reiterated its 2020 call, pointing to evidence that suggests the U.S. economic expansion isn't ready to call it quits just yet.
Here's a recap of why the economy could just keep chugging along:

1.) Fundamentals are looking solid: The latest economic reports suggest the American economy continues to look like the best house in a bad neighborhood.
The U.S. added about 200,000 jobs a month in 2015, its second-best year of employment gains since 1999.
The labor strength is buoying consumer confidence, a powerful force in an economy that is mostly driven by consumer spending. The University of Michigan's consumer sentiment index averaged 92.9 last year, the highest since 2004. That's a big improvement from the 2008 low of 55.
That confidence is also driving home buying, which continues to rebound from the recession lows.

2.) Fewer Americans are drowning in debt: Consumers have been hard at work repairing their balance sheets. Morgan Stanley notes that the amount of debt relative disposable income has come down a lot. It currently stands at about 106%, down from 135% in 2008.
The ratio of payments to after-tax income has slipped near the lowest levels of the past three decades.
In another sign of improved finances, the percentage of loan balances that are over 90 days delinquent recently fell below 4% for the first time since the recession ended.

3.) Corporate America isn't overly exuberant: Morgan Stanley sees little evidence that CEOs have overextended themselves into a situation that will create a bubble. If anything, big companies are still reluctant to splurge on big items that drive growth.
For instance, capital spending declined in key sectors like energy, materials, telecom and consumer staples during the third quarter.
Morgan Stanley expects the ratio of capital spending-to-sales at S&P 1,500 companies to slip to 4.6% by the end of 2016, excluding energy and utilities. That metric stood at 6% and 9% before the last two recessions.

Big companies have also dramatically improved their balance sheets. S&P 500 companies have a very manageable $100 billion of loans coming due this year and just $300 billion in 2017, Morgan Stanley says. Nonfinancial companies in the S&P 1500 are also sitting on an incredible $1.7 trillion in cash.

Citigroup: 65% of recession in 2016
Of course, there's no guarantee the U.S. economy will keep growing for the next four months, let alone the next four years. The Atlanta Federal Reserve's GDPNow forecasting model thinks growth in the fourth quarter of last year slowed to an anemic pace of just 0.8%.
Other Wall Street firms are more pessimistic than Morgan Stanley. Even before chaos erupted in China, Citigroup warned last month there is a 65% of a U.S. recession in 2016.
In the longer term, the American economy is susceptible to unforeseen shocks. After all, few in 2006 thought the U.S. was about to enter its worst recession since the Great Depression.

If no recession, S&P 500 could soar 50%+
But if Morgan Stanley is right and the U.S. economy keeps growing until 2020, the current expansion that began in mid-2009 would take the crown as the longest post-World War II expansion, dethroning the one that took place between March 1991 and March 2001.
That would be very good news for the U.S. stock market, which is struggling to fight off another China-fueled panic attack. If the economy keeps growing, Morgan Stanley thinks corporate profit growth could lift the S&P 500 to 3,000 by 2020. That would represent a 56% surge from the index's depressing close of 1,922.

[Underverse]

If we do see another recession, it won't be as bad as the last one. But yeah, I think the market is ready for a pullback.

[Reeve]

Not only all of that (and usually much more expensive), but $200-300 a month cell phone bills, $150 wired internet/cable bills, streaming service bills, video game subscription bills. Oh and it gets better, because the next round of cell phone bills lots of people are going to find themselves in will be $30 greater PER PHONE due to the end of subsidized plans and start of monthly payment plans for the phone.

Seems a bit excessive.

My company pays my cell phone bill, but before they did, it was ~$60/month.

My internet is $75/month.

Streaming services are $8 for Netflix (maybe they just upped it to $9?), $15 for Amazon Prime (which also gives me free 2 day shipping), $15 for HBO NOW, $15 (I think?) for Hulu Plus. This ~$54 is more than offset by the fact that I no longer pay for cable, which was $100/month. If it WERE seeming onerous to me, I could happily fall back to just Netflix and HBO Now.

I have no video game subscriptions.

[Vyxn]

President Obama will be the first president in history that never had a years GDP growth over 3%. he will be lucky to average a 1.55% GDP growth rate.
he will go down in history as the worst president ever when it comes to the economy

[breadisfunny]

President Obama will be the first president in history that never had a years GDP growth over 3%
he will go down in history as the worst president ever when it comes to the economy

because the economy is totally under his control.