Hi Baldur Fjölnisson; Re: "U.S. manufacturing has lost jobs for 27 consecutive months."
Twenty-seven months ago, US manufacturing employment was at 18,542,000, and that was a local peak. But if you look back in the data, the previous peaks were 19,453 back in May of 1989 and 21,162,000 back in June 1979.
research.stlouisfed.org
As a percentage of the total population, US manufacturing has grown steadily lower for decades. This is not a new trend. Our factories use less and less labor, so fewer people work in that industry.
You want to see decline? You should take a look at what has happened at the US job situation in mining, it's lower now than it was in 1946:
research.stlouisfed.org
I know that the economists are always talking about how "manufacturing" is decreasing in importance, but the fact is that they are fairly clueless. Modern manufacturing requires massive amounts of effort that end up being classified as "services". For example, if I design an IC, my efforts do not get classified as "manufacturing" despite the fact that my design ends up being manufactured. What has happened is that instead of manufacturing becoming a less important part of our economy, instead the way that figures are toted up has caused what should be counted as manufacturing related activity to be instead counted as "service" or something else.
For example, I used to use "data books" from manufacturers. Now I use the internet. Instead of a book being manufactured, instead a service is offered. But the transfer of information is the same.
You're probably using an Intel or AMD processor in your computer. Maybe the chip itself was manufactured in Ireland or Germany. But the designs for that chip were developed in the US by US engineers.
Re: "It is saddled with overpaid workers ..."
This is completely opposite to the facts. As a percentage of GDP, US workers are still quite underpaid. That's what ran the stock market up, all that cash flow that went into companies rather than labor. If anything, the next 20 years will see rising wages in manufacturing as the dollar drops.
The comments on the death of US manufacturing remind me of what people were saying about the US back in 1979. Japan was going to be the next world powerhouse, manufacturing in the US was dead. I had people swear to me that nothing high tech would be made in the US, LOL. The truth is that these things are cyclic.
Re: "The U.S. labor pool has contracted in the last two years."
So? It does this now and then.
Re: "Unemployment is massively understated."
The "emratio" now shows 62.5% of the population is in the labor pool. Back in 1964 the number was 55.1%. The highest it ever got was 64.8% back in April 2000. If all that drop of 2.3% from the absolute peak of the emratio was due to secret unemployment, the result would be a 3.5% increase in the current unemployment level. Adding that into our current unemployment rate of 6.0% increase it to 9.5%, which is still well below the 10.8% peak of late 1982. But 1982 only had a participation ratio of 64.2%, so to be consistent, you'd have to similarly increase their numbers to around 11.7%
In other words, times are tough, but they're not the worst we've ever seen. And there is no doubt in my mind that the unemployment benefits now are considerably better than they were in 1982.
research.stlouisfed.org
research.stlouisfed.org
Re: "Besides 2-3 million people reside in U.S. jails and part of the unemployment problem is hidden there."
If there has been an increase in people in jail, (I think there has, but I'm unsure), then it's only reasonable to back that number out of the emratio given above. That decreases the magnitude of the current situation that much more.
Re: "There is rampant overcapacity everywhere. Just look around you."
What you want to avoid is selling into a bottom. Six months ago, there were no engineering jobs to be had. Now, there are opportunities starting to show up in many places. This is the first wave of a recovery. After the new products are designed, the companies will hire the workers back, and the economy will grind on.
It is important to note that predictions of economic doom are incessant and almost invariably wrong.
Re: "Bush has increased public debt by 800 billion dollars in the last two years. Since the new fiscal year started on 10/1/2002 he has increased it by $180 billion."
Bush had little to do with it. When he arrived, there was already an economic recession started. Hell, even you're quoting figures from 27 months ago, which was before Bush was even elected, much less took office, and even further less had any effect on the economy.
Re: "It may not look like much to you but 800 billion still comes to ten thousand dollars per U.S. household and is nothing but a tax increase which must be discounted sooner or later."
The Fed will simply print the money, and it will disappear overseas just like it's been doing for 20 years. I agree that this will eventually stop, but when it does, who has the advantage here? The foreigners with all those dollars who will be desperate to buy anything with it (and avoid having it depreciate further, so even the shittiest US manufactured goods will sell), or the US?
It hasn't stopped already. Foreigners "invested" $715 billion in the US during 2002, that's where "Bush's" deficit got paid, not by US citizens:
research.stlouisfed.org
Yes, someday the tides will turn and the dollar will fall, but it ain't happening yet. I'd wait until a substantial percentage of the world has become so wealthy that they trust their own currency as a store of value. And frankly, I don't think it could happen a moment too soon, because the trade deficits that have resulted have hurt our manufacturing sector for decades.
By the way, the Euro is still only worth $1.0194, hardly changed from 3 years ago:
research.stlouisfed.org
-- Carl
P.S. Link to statistics:
research.stlouisfed.org |
