Is the economy really improving?

ZRod

ZRod

Active member
Some interesting data to look at. This is a metric I've never seen referenced before, and it's a bit disheartening... Is the economy really doing better?

http://www.businessinsider.com/the-job-market-is-getting-worse-because-of-population-growth-2016-8?amp

Despite the re-appearance of millions of jobs since the depths of the Great Recession in 2010, the Employment-Population Ratio didnt improve to any meaningful extent until 2014. In other words, over the first four years of the recovery, the number of jobs created barely kept up with the growth of the working-age population.

Then in 2014, employment growth picked up enough to grow faster than the population. But this too began to stall in March 2016, with the ratio at 59.9%. The ratio has since dropped to 59.7%.

In terms of total population: in April 2010, there were 2.37 people per job. Now there are 2.23 people per job only marginally better. And this miserably inadequate improvement from the lowest levels of the Great Recession is what individuals are seeing.
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**misleading scale**


And another possible contributor in all this. I've long thought that CEOs are over payed and don't deserve the safety nets they enjoy while they cut the ropes out from their employees. They need to get their heads out of their asses and focus on what's best for the company, and not the stock holder. So much money abd innovation has been wasted on mergers, for so little gain...

http://wolfstreet.com/2016/08/04/acquisitions-share-buybacks-financial-engineering-fail-to-produce-organic-economic-growth/

Their companies are failing to grow organically, he said in a blog post. Instead of investing in growth-producing activities, CEOs go out and buy other companies, particularly their competitors.

Buying competitors effectively getting rid of competition takes pressure off these companies to innovate and perform, and theyre all hoping to gain some pricing power with these strategies. This has worked miracles in healthcare, where prices have shot up as consolidation has become a pandemic strategy, no matter how large and unwieldy the company, or how concentrated and monopolistic the sector...

But imagine what companies could have done with the nearly $3 trillion they blew on share repurchases since 2010, and with the many trillions they blew on buying each other out. It might have actually produced a vibrant economy.
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Just going off my own experience in the business world. I don't think many people rally realize how bad things really were.

Just looking at my own industry, we have had small gains in sales growth the last 4 years. So, companies cut, cut, cut to survive, then....yes, we started making money again but the market wasn't there still to warrant more hiring.

Just this year our sales have finally taken a good jump. There are still companies not going well do it makes sense to go buy them.

Once that happens, organic growth will pick up if the sales growth continues.

 
Easy answer...NO. The primary measure for how an economy is doing is GDP growth, and it continues to remain anemic, and was only 1.2% the most recent quarter. This is the worst economic recovery in history, and Obama is the only POTUS ever to never have 3% growth as President. Wages are down, income inequality has risen. Persistently low interest rates are about the only thing that has helped keep the job market moving ahead, though there aren't enough good paying jobs still. Typically jobs/employment is a lagging indicator for GDP growth, and it can sometime lag 6 months to a year later, so we will likely see a drop in jobs in that timeframe.

 
Two things; That liney graphy thingy is way out of scale. It only represents about a 7% sliver in the middle of a much bigger chart. Makes it look worse (not that it would be good news in scale, just sayin). I would also like to see it in relation to a much longer timeline and not just the period of time where we were attacked on 911, engaged in wars, and 8 years of Obama inspiring confidence in our economy.

And two, the comment about CEO's should do what is right for the company and screw the stockholders.....that's quite misguided advice. Not too sure any company will function very well if it tells the owners they aren't important. A company's primary function is to make money for the owners, providing jobs for the sake of providing jobs is way down the list. Sorry but companies don't exist for social good.

 
A company's primary function is to make money for the owners, providing jobs for the sake of providing jobs is way down the list. Sorry but companies don't exist for social good.
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Woah. If that's true, then social goods -- provided there is a societal interest in achieving them -- must be encouraged through policy, and not left to unfettered invisible hands?

 
zoogs said:
A company's primary function is to make money for the owners, providing jobs for the sake of providing jobs is way down the list. Sorry but companies don't exist for social good.
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Woah. If that's true, then social goods -- provided there is a societal interest in achieving them -- must be encouraged through policy, and not left to unfettered invisible hands?
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Sadly, It's true. Look at how many companies have moved jobs over seas. Although, I not sure what that has to do with, social good.

 
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JJHusker1 said:
Two things; That liney graphy thingy is way out of scale. It only represents about a 7% sliver in the middle of a much bigger chart. Makes it look worse (not that it would be good news in scale, just sayin). I would also like to see it in relation to a much longer timeline and not just the period of time where we were attacked on 911, engaged in wars, and 8 years of Obama inspiring confidence in our economy.

And two, the comment about CEO's should do what is right for the company and screw the stockholders.....that's quite misguided advice. Not too sure any company will function very well if it tells the owners they aren't important. A company's primary function is to make money for the owners, providing jobs for the sake of providing jobs is way down the list. Sorry but companies don't exist for social good.
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Good catch on the scale, I should have seen that. But the fact still remains that we haven't caught up with pre recession numbers, and we started taking a down turn this year (wait and see how we finish though). I'm just saying that maybe our recovery hasn't been quite as good as we'd all like to think. Something some people already know, but some of us haven't seen the data to bear it out. The other thing it shows is that we never fully recovered from 2001, which could have compounded problems.
Regarding my stock holder comments; I think the focus is in the wrong areas (and there is also a moral delima). Yes they should be making the stock holders money, but not at the expense of the company and in turn the economy. The strip and flip... it makes the shares of the company more valuable in the short term, but in the long run it can ruin the aquired company. What about these CEO that come in and gut a company then bail out unscathed? How is that ok? They've destroyed middle class jobs with no repercussions. Even Fiorina and HP's merger with Compaq, in the long run it didn't pay off and cost quite a few jobs. Now we have yahoo and verizon... To steal a line from Jurrasic Park, it seem like the CEOs and boards are so preoccupied with whether or not they can, they don't stop to think about if they should. Or maybe I'm way off, and just blowing uniformed hot air...

 
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I'm not saying gutting a company for short term profit is okay or good. However, I don't think that type of turn and burn mentality is a rampant problem. Generally speaking, what is in the best interest of the health of the company is also in the best interest of the stockholders. Sure there can be situations where an unscrupulous ceo can line his pockets, trash a company, and not be held accountable by the stockholders. I just don't think it's very widespread. Makes it pretty tough to get that next ceo gig. I just wanted to point out that companies exist primarily to generate profits for their owners and not to provide jobs for society. Luckily though, those two things typically go hand in hand.

 
zoogs said:
A company's primary function is to make money for the owners, providing jobs for the sake of providing jobs is way down the list. Sorry but companies don't exist for social good.[/size]
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Woah. If that's true, then social goods -- provided there is a societal interest in achieving them -- must be encouraged through policy, and not left to unfettered invisible hands?[/size]
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IF that's true.....? Of course it is true.

And I'm not sure where that next socialist leap is coming from. "Social goods must be encouraged through policy"? Well, I suppose, if that is what you want but the moment you link it together with the economy, you can expect both items to go south fast. Where is this idea coming from, that businesses owe something to society? Most good businesses will provide jobs and support their community through various charitable means but the second they quit making a profit is the second that they become unable to do anything. That is what that liney graphy thingy is showing us. When policy starts affecting a company's ability to make a profit, one of the first things to suffer is the jobs they can provide. Look at the graph.....that steep line down is not just some random chance thing, it correlates to when Obama took office. I would argue that businesses pulled back on growth and hiring because of uncertainty over what "social policy" was going to adversely impact them next. And the meager slow uphill line is simply the result of a poor economy and that uncertainty being slightly overcome by the desire of companies wanting to grow and do more but really being unable to overcome circumstances.

There are a whole bunch of failed economies that ended up that way precisely by the way you seem to want things to work. Might be a good idea to study why that way doesn't work before ruining our system and economy with this pie in the sky socialist crap.

 
knapplc said:
JJHusker1 said:
knapplc said:
Where are all of our job creators?
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I'm right here. *raises hand*

Whatcha need?
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More jobs, please.
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I wish it were that easy.

Actually, I shouldn't have raised my hand. Job "creation" is somewhat of a myth. Business owners come closest to it (much closer than any politician anyway) but we (my company) really just fill a niche need in the market. If the market demand is there, then we are able to provide jobs. If anybody is really creating jobs it is my customers, and the thing that enables them to buy things is money, the needs of their customers, or a need by the end consumer. It's just that simple....demand and supply. The only real difference I see between business owners and others is the willingness to take a risk and gamble personal money in the hopes of making more money. Some people just don't have that gamblers mentality. I believe that is why economics can get a little convoluted in larger companies. The true stakeholders are not the ones directly doing the gambling. And that is probably a good thing as far as jobs go. I have a very small company and I could not handle the stress if it were it on a much larger scale. Nobody is creating jobs out of thin air.

 
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