Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (222732)	3/9/2005 11:33:21 AM
From: RetiredNow	Read Replies (2) \| Respond to of 1573432

I never said I was an economist. However, are you saying you don't think wage growth, oil prices, manufacturing growth, the semi's B2B etc are unimportant? Hi tejek, yes all those indicators are important. However, I had asked what is the PRIMARY indicator of U.S. growth? Anyway, the answer is GDP, which recently has been growing at 4.4%. That is a very healthy figure and is the highest since the peak of the bubble years. The equation for aggregate demand is as follows: AD = Business spending + consumer spending + gov't spending - taxes Of course, there is a multiplier effect that I'll ignore for now. However, you'll notice that when gov't spending is high and taxes are low, which is what we have today, aggregate demand is high. This is why we see GDP so high. However, economists will tell you that high gov't spending is good in the short term in order to spend our way out of a recession or out of a deflationary environment, but over the long run deficit spending creates debt, which crowds out business and consumer spending. Other indicators impact this primary indicator. Oil acts as a tax. High worker productivity and slow wage growth can often mean less consumer spending, but it often is offset by higher business spending. Manufacturing growth has been humming above 50 for awhile now, which indicates nice growth. Semis have been up and down, but that is one small portion of the economy. Overall, the economy is doing very well. Even non-farm employment growth has been great over the last year, growing at an avg. 90K higher than workforce growth per month for the last 12 months. The stock market is a good indicator of how well the underlying economy is doing. The stock market growth of the last two years is a symptom of good economic growth, but it is also a harbinger of good growth to come, at least the collective mind's best estimate of growth to come. So by all economists' standards, this economy is in goldilocks mode. Only bitter Democrats will say that the economy is not doing well. The only main two main thorns in the side of this economy is high oil and deficits. Bush is already throttling back the deficits. But I worry that he is a cause of the oil problems and not the solution. If we're right about that, then oil will not come down until we have another President. Let's hope our economy can hold out against that huge tax until he leaves office.