Economic forecast for 2004

[BTox]

From the Conference Board - more bad news for the dems:

Revising its year-end economic forecast sharply upward, The Conference Board today projected that real GDP growth will hit 5.7% next year, making 2004 the best year economically in the last 20 years.

The forecast, by Conference Board Chief Economist Gail Fosler, expects worker productivity, which set a 20-year record in the third quarter, to rise at a healthy 3.6% next year. That would follow a gain of 4.3% this year.

conference board 2004 forecast

 

[Nasarius]

I think it's appropriate to mention that in "The Demon-Haunted World" (chapter 3), one of Carl Sagan's first examples of pseudoscience was long-range economic forecasting.

Just so ya know

 

[Drooper]

I think it's appropriate to mention that in "The Demon-Haunted World" (chapter 3), one of Carl Sagan's first examples of pseudoscience was long-range economic forecasting.

Just so ya know

I didn't read that, but long range economic forecasting is the most accurate kind.

 

[SlippyToad]

From the Conference Board - more bad news for the dems:



conference board 2004 forecast

Well, this would be good news for working Americans, except for the part you didn't repost:

While the U.S. economy is expected to generate more than one million new jobs next year, the unemployment rate will edge down only slightly, averaging 5.6% in 2004.

You see, the GDP only matters to voters if they get something from it. Generating one million jobs next year will just barely keep our collective heads above the water, and since healthcare costs will continue to skyrocket next year with nothing being done, those of us still employed will surely be wondering where all that growth is going.

 

[shanek]

I didn't read that, but long range economic forecasting is the most accurate kind.

This is very true, because many of the factors that affect the economy in the short run get smoothed out in the long run.

 

[BTox]

Re: Re: Economic forecast for 2004

You see, the GDP only matters to voters if they get something from it. Generating one million jobs next year will just barely keep our collective heads above the water, and since healthcare costs will continue to skyrocket next year with nothing being done, those of us still employed will surely be wondering where all that growth is going.

So only generating one million new jobs is bad news for the repubs? OK. Do you think a booming economy will have any impact on raises?

And surely all those seniors getting prescription discounts will be furious...

 

[WildCat]

Re: Re: Economic forecast for 2004

You see, the GDP only matters to voters if they get something from it. Generating one million jobs next year will just barely keep our collective heads above the water, and since healthcare costs will continue to skyrocket next year with nothing being done, those of us still employed will surely be wondering where all that growth is going.

You realize that it is thought that unemployment can't fall much below that, don't you? Economists call it the natural rate of unemployment, it would more accurately be called full employment.

And what do health care costs have to do w/ it?

 

[spejic]

I didn't read that, but long range economic forecasting is the most accurate kind.

What makes you say that? I don't any evidence of that at all. Don't forget that the same people have been saying a recovery is 6 months away since Bush the Younger was first elected.

 

[jj]

And what we don't see behind this whole report is the slow and sure exporting of jobs to 3rd world economies, and the resulting shrinking of the internal workforce in first-earner jobs, which is creating a false measurement of higher efficiency AT THE PRESENT.

Until the people out of work start to make money, the enconomy is likely to stay stuck in the mud.

 

[reprise]

I suspect that voters in the US - like voters here - no longer see "economic growth" as a measure by which they can predict the likely quality of their own lives, and no longer believe that just because something is "good for the economy", it will be of benefit to the average citizen.

 

[shanek]

Re: Re: Re: Economic forecast for 2004

You realize that it is thought that unemployment can't fall much below that, don't you? Economists call it the natural rate of unemployment, it would more accurately be called full employment.

Except that, judging by the last boom, the natural rate of unemployment was about 3%. Unless there's been something that affects that, it has some room to drop.

Of course, the government is raising the retrement age, and is talking about raising the minimum wage. Those two actions will cause natural unemployment to rise, but I don't think by as much as 2%.

 

[Jocko]

What makes you say that? I don't any evidence of that at all. Don't forget that the same people have been saying a recovery is 6 months away since Bush the Younger was first elected.

Baloney. The slowdown was only a year old at the time Bush was elected, and no one was seriously expecting things to be turned around that quickly. Besides, you may have noticed we had a little jolt to the ol' system around month 8 of his presidency?

Productivity is up, inventories are down and the GDP is blowing away records. If that's not fast enough for you, try parallel parking an oil tanker some time if you want to know how difficult and slow it is to move the economy.

In school, I was taught that 5.5-5.8% unemployment was full employment; that extra 5+% was largely accounted for by transient workers between jobs. So I don't see where there's any reason to complain... things only look to get better.

 

[shanek]

What makes you say that? I don't any evidence of that at all. Don't forget that the same people have been saying a recovery is 6 months away since Bush the Younger was first elected.

That's short-range forecasting, which is extremely difficult to predict. The long run in the economy covers years if not decades.

 

[shanek]

Until the people out of work start to make money, the enconomy is likely to stay stuck in the mud.

Keep in mind, though, that the job market is "stickier" than GDP. GDP goes up when people start spending more, like they're doing now. But that takes awhile to have an affect on the job market. Production and consumer purchasing can easily fluctuate in the short run; employers look at more long-term prospects when they hire. So give it time. It takes a few months for the employers to realize that production is increasing enough to make it worth their while to hire new workers.

 

[jj]

It takes a few months for the employers to realize that production is increasing enough to make it worth their while to hire new workers.

Indeed, and where they hire them as well.

 

[T'ai Chi]

I think it's appropriate to mention that in "The Demon-Haunted World" (chapter 3), one of Carl Sagan's first examples of pseudoscience was long-range economic forecasting.

Then he was off base by far.

He was hardly anywhere close to anything resembling an expert in the area of economic forecasting.

(Correct me if I am wrong, please)

 

[reprise]

Keep in mind, though, that the job market is "stickier" than GDP. GDP goes up when people start spending more, like they're doing now. But that takes awhile to have an affect on the job market. Production and consumer purchasing can easily fluctuate in the short run; employers look at more long-term prospects when they hire. So give it time. It takes a few months for the employers to realize that production is increasing enough to make it worth their while to hire new workers.

In an increasingly global labour market, increased domestic spending isn't necessarily going to mean increased domestic employment, though.

 

[Drooper]

This is very true, because many of the factors that affect the economy in the short run get smoothed out in the long run.

In part, yes.

But the most important point is that the long-run is governed by the supply side (did you read my post in the Macro thread). The supply side is governed by relatively stable factors.

 

[Drooper]

What makes you say that? I don't any evidence of that at all. Don't forget that the same people have been saying a recovery is 6 months away since Bush the Younger was first elected.

By that I mean that I would place much tighter confidence limits around a forecast for an annualised rate of growth of, say, 3% over the next 10 years, than I would for a forecast for 3% annualised growth over the next 2 years.

 

[shanek]

In an increasingly global labour market, increased domestic spending isn't necessarily going to mean increased domestic employment, though.

Yes, it does. Where is the money going to go? There are really only two things you can do with dollars: spend them in the American economy, or invest them in the American economy. So unless Americans start paying for lots of things with pesos, their dollars are going to go back into the local economy and result in either more spending or more investment in the American economy. If the company runs a factory in another country, it has to either pay those workers in dollars or exchange them for the native currency—but the exchange just puts the dollars in someone else's hands who's going to either spend or invest them in the American economy.

I got flamed for making this point in another thread, even though—as the Macroeconomics thread proves—you'll learn this in an introductory macroeconomics class.