SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: mishedlo who wrote (53519)2/12/2006 12:59:04 AM
From: GraceZ  Read Replies (1) of 110194
 
Let me get this straight, if income is unequal, more weighted to the top, then it is flowing more to those who have the marginal propensity to save and invest rather than consume. That if incomes were more evenly spread than more would go to those with a marginal propensity to consume thus giving a boost to GDP. I don't disagree with this, if this is what you are saying.

Where I think you are making a mistake is in thinking that unequal equals a lower GDP. The GDP has three different sectors, consumer, investment and government. Almost all the drop off in the growth rate in the fourth quarter can be accounted for in a reduction in the government sector. Capital spending is up and in the previous four quarters the consumer showed few signs of fatigue.

We're talking about GDP in the previous year, not the up coming year. CB was claiming we're already in recession and I say that is doubtful considering how much tax receipts are up. In the absence of large changes in the tax rates, tax receipts are a pretty good check on whether or not GDP is positive or negative.

Now if you look at the recession in 1991, tax receipts were still slightly positive, but that was due to the fact that Bush I went back on his "read my lips" promise and raised the marginal rates in 1990.

In most of the recessions the US has seen, tax receipts fell, sometimes very sharply. When you see that the third quarter receipts are 20% higher than the 3rd quarter of the previous year it would be difficult to say we are already in a recession.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News