-Make a prediction for the United States economy in 1-2 years. Will the economy be better or worse? Why?
The economy will be worst.
US census data suggests the U.S. population will shrink as the baby-boomers pass on in record numbers. The US economic expansion for the better part of the last century is correlated with the massive size of the baby-boomers and their population sets the trend of the overall economy. As they were born in the 1940's and grew up, they fueled demand for goods and services. Companies sprung to meet this growing demand for food, clothing, cars, tv's, phones, etc. Demographers explain that consumption decreases with age or at least the kinds of goods change. The consequence is a dramatic contraction in the US economy which is 60 to 70% consumer driven. I think we are headed lower especially if an aging population only further suppresses consumer demand. Theory has it that only after the dominance of the baby-boomers is slowly dissipated will the economy be able to find a bottom then recover. The bad news is that the worst is yet to come (2012 - 2014) and the good news is that the economy starts to recover in the later half of the next decade (the 2020's).
Some recovery before it goes to hell. Don't know when that will be. We can't keep spending trillions of dollars without very serious long-term effects. That's why.
It will be better but not spectacular. I can imagine about 2% growth in 2010, maybe a bit more in 2011.
A lot of the explosive growth in previous years was built on unsustainable credit growth. Also, real estate will probably cause a bit of a drag on the economy through next year.
Over the next two years there will be "reports" of growth and improvement in the economy. Not much will change in the way of consumer spending and the job market though. Why? Too much federal spending accompanied with unfunded federal mandates. In two years your finacial candle will be burning at both ends.
I guess, to answer this questions we must first figure out what is wrong with Economy, before we can predict what's going to happen in the future.
Presently, the "Economy", which is made up of several hundred thousand different "business to business" and "business to consumer" related companies, continues to operate on basic minimums.
Since the "unemployment" rate isn't about to come down, anytime in the next 1-2 years, the Economy will have only a "fake" recovery, because it is stimulated by infusions of government cash(taxpayer's tax revenue). The recovery already in progress is an illusion, due to the same stimulus package already in the works.
Many companies have cut costs, by cutting into the portions, which are already been established.
Example: Lay's potato chips.....put out 3 different packages people could buy....a $.99 grab bag......a $2.89 8.4ounce bag and $3.99 12+ounce bag.
How ever, the amounts in each bag have been reduced, but the prices have remained the same. This pushing inflation to the fore-front.
The "FED" and "Treasury" have made claim that they are going to keep interests low for an extended period of time, which is resulting in a weakened dollar.
This poor "monetary" policy isn't helping.
Many of the firms who operate on so-called "Wall Street" have been converted to Banking Institutions, away from their original business models.
What's scary is that these same companies are STILL acting as Banking Institutions, reaping huge profits at the expense of the Economy.
Why are these companies allowed to do this? Greed!
And, what most people don't know and many analysists have tried to come clean about "how bad the economy really was?", such as a Recessionary period or Depression era, and stopped everytime the subject appeared to be Depression era and not recessionary.
We've been in a depression era for at least a minimum 1 year.
Yet, the public hasn't been told.
But, if you're looking for a prediction- CRASH!
America's currency is about to flounder to the bottom of the sea of the deepest ocean on the planet, because of a lack of fiscal restraint and/or extremely poor monetary policy.
America's currency hits rock bottom- America will lose Global Reserve Currency status, which will greatly effect everything you purchase.
If America's currency no longer hold it's position as Global Reserve Currency, things you buy will be based on some other currency and pricing structures are going to severely increase under that pressure.
So, where will be the Economy really end up is anyone's guess, but my personal opinion- CRASH! CRASH!
Thanks for the analysis. Be prepared by doing what?
Pair down, Pay off, Save. If you have two vehicles and only need one, sell one and pay off the other. Save. If you want to hedge by buying gold or other precious metals do so "in hand" don't buy "paper gold" or precious metals that are not in your posession at the end of sale. Cut descretionary spending.
You are absolutely right in your thinking and direction.
American government is dependent on loans and debts and not on earnings.
America and American citizens are producing less and consuming more.
In fact, America is on the threshold of complete economic collapse.
I have written many hubs about the subject in 2008. I have pointed out reasons of economic crisis and financial problem of America in details. Even I predicted failure of banks long before they actually.
I have told many of my Indian friends that we will se Dollar @ Rs. 15 in coming years. It was @ Rs.50 at that time and still moving around the same.
However, I believe that it will come to level of Rs. 15 in near future.
Hopefully the housing market will bounce back a little more by then, but I don't foresee the job market getting to much better.
The housing market cannot rebound anymore than 1-2% per year, due to the fact that 40 Million people are homeless, 3.6 are in prisons, 20 million are unemployed and the TOP 1% don't need a house.
So, I don't see that happening anytime soon either, but nice thought though.
I hope the employment market turns SOON! If it doesn't we'll be selling our house.
Good advice. Americans have to change their spending and borrowing habit to avoid complete collapse. Perhaps, there is no alternate to this.
The housing market is the key to the recovery short term and long term it is the continued investment in energy, infrastucture and education.
I'm not mocking your response, so please don't take it that way, but your response is complete in exact wording all "politicians" have been using for the last decade.
Unfortunately, people buy into it like they know what they are talking about. And, I mean, citizens buy it.
Especially, without any real clarity?
You can put those fields.....Energy......Infrastructure(do you really think the average person knows what that means?) and education(everyone knows what that means, but the funds are never available for some reason or another)?
The average person is too busy with their own life, mixed up running in circles, like a dog chasing his tail, and that's the main reason why CONGRESSIONAL officials can do whatever they want.
The people HAVE TO TAKE it, because they don't have much of choice.
How about looking at Japan as your crystal ball.
A decade or two of a jobless recovery and stagnation.
Others are doing much better. Australia is now concerned they over reacted with their large and swift stimulus. The Australian dollar was at 60 cents a year ago. It will reach parity with the greenback in the next month or so. China will push ahead, the resource boom will continue apace as a result.
The only good news i see for America is the devalued dollar will be a great help to exporters (and the tourism industry). I think the dollar will go low and stay low.
Crash more severe than 1929 within the next several months. Civil unrest, possibly accompanied by civil war.
We could have another major housing crisis next year because of what are called Alt-A and Option ARM mortgages, vulture mortgages that make the sub-primes look like an ice cream cake. While the sub-primes set consumers back by a trillion, the Alt-A & Option ARM mortgages could be double that. However, if we use the PATRIOT ACT to seize the assets of these brokers and then have the Nat'l Guard raid the Fed, we might just break even.
The thing that is MOST appalling?
Here's is a perfect example of FULL RECOVERY in one swoop.
How ever, was NOT done!
The Financial Sector collapse- cost $700 BILLION of taxpayer's tax revenue-----Right?
Well, that $700 Billion payout could have given EVERY Citizen OVER 18 year old----a ONE-TIME LUMP SUM of $250,000.00 tax free.
Here is why it wasn't done in the above manner-
American Government REFUSED to trust citizens to do the right thing and pay-down debt.
So, they chose to give it to the Banks.
HOW IS THAT FAIR?
Not sure how this myth gets spread. I have seen it on the internet lots of times. $700 Billion divided by 300 million is $2500 only. Granted it might be a $7 or 8 thousand dollar payment if you only take those 18 and over.
But what would that do? It is a pittance compared to the amount of debt. People would just spend on a big screen TV, some lotto tickets, and maybe pay a debt or two (get the electric turned back on). So what? We end up in the same place. It is all just monopoly money anyway. It is not real.
Well, first off.....I might be helpful if you knew the correct population of America, before you make that assessment.
You're going by what? the last population consenus was 306 Million households in all.
That's not including the 40 million homeless or the 3.6 million convicts in prisons. Who are over that age.
And, another thing you're not taking into account is how many people are in the U.S. UNDER 18 years old?
Plus, the upper 1% would have to be excluded, because they cause this problem, with their bad business practices, such as sub-prime mortgages....which the SEC should have shut down, before it ever got started.
So, how to figure it out?
Don't take it the wrong way, but that goes to show what people are not told.
The point is not the exact population of the United States over the age of 18 plus the convicts minus the top 1%. The point is that people can't do basic math and come up with an outrageous payment of $250,000 per person which is off by a factor of 100!
Then, we could have put all of that money in credit unions and totally destroy the banking system altogether. Or how about just forgiving all of the world's debt since the debt is pure fiction created by the 'economic' sector in the first place?
How did you arive at that 250K figure?
I agree with you, Cagsil.
Policy of America and its citizens remained as to get credit. Eat, drink and be merry. American federal Government shamelessly advertising on their official site that the world is ready to fund them.
Even the Government is not thinking of production and saving, instead they are looking for loan and debts.
Banks support government and government supports the banks.
This is a vicious circle and citizens have to suffer their own.
They have to woke up against all these scandals and scams.
Law of average will soon prevail marine hehehe the economy outlook in the future will be bright hehehe hopefully...
great thread, marine.
no mention here of the double dip recession that was ever so briefly discussed several months ago. we're in the uptick typical of this occurrence. soon to follow is the real crash. long gone are the glory days.
also not mentioned here is the fact that most carbon energy generating countries are way beyond peak production (one gallon of oil beyond peak production is way beyond). the wars will escalate. throw in diminishing water supplies, decreasing air quality, increased population, and the almost complete transfer of wealth.
you can read my hub on the emergency tool or you can google continuation of the national emergency. or, you can read nspd-51 in its entirety.
call it pessimism. or call it reality.
The economy will get better very soon. And by the way, do not give any credit to obama saving this economy. What the heck has he done for this economy, much less for this country? He is president and needs to wake up and do something good for it before we bring impeachment! (haha, I wish )
Why not America concentrates on manufacturing and even agriculture?
Instead of bail out plan of $700 B government could support manufacturing industries by means of tax rebates and subsidies. Why are not they withdrawing MFN status to China that has ruined American manufacturing industries?
Unemployed can work for low wages and salaries. At least they can earn some. Labor cost will be low in that case.
Why would the unemployed work for low wages or salaries?
I wish I knew Jyoti.....The trade deficit with China is out of controll. Even McCain said the "Manufacturing" Days of America are over. I think he's wrong. I believe both parties believe that America's future is in the Tech sector...developing new technologies, not manufacturing them.
I think when we come out of this economic funk manufacturing will return.....however America is going to be humbled over the next few years. I belive many will be surprised at how hard they are willing to work for so little.
Developing new technologies can earn big money but can not create a lot of jobs. Common Americans survive on jobs and not on big money generated by few big corporations.
Moreover, other countries will also start researching and develop new technologies. Manufacturing countries can develop their own cheaper technologies and there will be no buyer for American technologies.
Why people lost their jobs are not interested in working low paid?
But it is better to have some than nothing. Is it enough to live without a job and without pay?
Think rationally. All days are not equal.
All days are not equal true, but creating an economy based on low wages would be a backward step. I'd rather that we concentrate on what we can do to go forward.
It will not be a recreating of the economy. It will be an economic reckoning.
How can you recreate economy without manufacturing industries and how can you sustain manufacturing without cheap labor?
The problem is the cost of living here. Even so, lots of people do work for low wages. Many of them don't live indoors. Lots of homeless people here are employed, but of course we don't advertise this fact.
The U.S government doesn't care about getting manufacturing back. All the government cares about is finance and insurance, which loot the world. That's why the rest of us are screwed. Only the very rich matter right now.
You are right. The Government of the US do not care for the poor or the common. Job loss and unemployment rate is too high. It may reach to 13% in few months according to some survey results.
Finance and insurances are Tertiary sectors and can not survive long without support of primary and secondary sectors.
The US has to go back to agriculture and manufacturing to sustain and survive.
Anything else can mess and ruin everything.
I think there are plenty of people who will work for lower wages because like you said anything is better than nothing. The problem is there are corrupt organizations called Unions in this Country who demand a much higher wage than a job is worth. The cost of living is higher in areas with unions, non union States like Texas that still manufacture or not falling into disparity like Detroit Michigan.
America is a democratic country. Why people are not protesting these unions? Why the Governments do not act against them?
After all. American constitution guarantee personal freedom. Hence, people want to work let be allowed to.
I have written some hubs about economic crisis and financial problems of America. I have focused a lot in those articles.
Don't forget inflation Tex. That's the real killer and why our wages have become so non-competitive with the rest of the world. It's just too expensive to hire an American and there is far too much red tape. Much easier to ship those jobs overseas and take advantage of the cheap labor and less overhead. Unions played their part too, but they never were a majority of the population.
Thank you FDR.
American citizens have to go and search for root causes of the problem. Nothing can be happened blaming Government, politicians and unions.
Are the citizens themselves not at all to blame? Who elected this politicians to run Governments? Who empowered these unions? Who encouraged red tapping?
You can view hub about economic crisis of America; Root causes.
Second crash, followed by years of civil unrest and ultimately a poorer country overall. More of a gap between rich and poor once all the shouting stops--like in South America.
From what I have heard and been able to gleen from the press, it looks like Obama will pursue the bankers at every opportunity.
Obama is smarter than some Americans give credit for, and although he has to deal with the most outrageously stupid false claims about him being anything from a Muslim to an Antichrist, he remains calm and in control.
Some Americans have far fetched conspiracy theories as the base of their beliefs about Obama that any 5 year old could debunk.
America will recover under Obama if he can survive the massive hate campaign from the terminally ignorant, the Fox hate campaign and the ignorant rants from all the radio crazy shock-jocks!
I just go on the principle that after a downfall their will be an upward turn. It might not be big but I do think the government are trying real hard to improve the state of the economy.
I don't think it's going to be much better. Why? Seventy percent of our gross domestic product is based on consumer spending. The unemployment rate is 9.8% and expected to rise even higher. Even though unemployment is known to stimulate the economy, each time we have another unemployment extension, it's taking the Senate longer and longer to pass. Furthermore, if the current extension does pass, it's only good for 14 weeks. The jobs aren't going to improve that quickly. Right now, there are six applicants for every job opening. So, what happens when all the unemployed need another extension in 14 weeks. In the meanwhile, more and more mortgage forclosures and bankruptcies are taking place. I think even when the jobless do go back to work, they're going to be scared to spend any money they absolutely don't have to spend. If consumers aren't spending money, businesses are not going to invest and expand their payrolls. I think it's going to take a long time for people to get back on their feet again. Although many people disagree, I do wonder if the Great Recession is going to turn into another Great Depression.
I think that it's just gonna go downhill for a little while then sprout back up.
Runaway inflation coming, will compete with unemployment for highest percentage. Not looking good, unless you're a typische Liberal with rose colored goggles.
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