I suspect a lot of it is the fact that on the upper half of the income curve, people have made enough progress toward paying down their own personal debt that they feel comfortable not putting everything they have into savings and/or getting out of debt. I know that we bought a house in 2009, and despite effectively doubling what we were paying for monthly rent, we also have paid off something like $30k in debt in the intervening 3 years. That basically means that as we get the last of our debt paid off, we theoretically should be freeing up 40-50% of our income as “discretionary” again.
(I say theoretically because we also had a child in that time span which eats up all of our discretionary income again, but I think in terms of overall net income flow it’s fair to look at what we’re spending on the kiddo as “discretionary”.)
Scuzz
1962
Since when is spending on kids “discretionary”? :)
jeffd
1963
Yeah add household deleveraging to the list of possible reasons why. Isn’t macro fun!
Houngan
1964
Certainly. Keep in mind that the economy, barring disasters, inherently grows. Fear can slow down that growth, but unless something concrete happens it’s going to grow anyway. That’s really the crux of the GOP/Democrat economic disagreement, and why I’ve somehow found myself an economic Democrat as the party has handled itself over the last twenty years. While the GOP side has a valid point to make about avoiding restrictive taxation and promoting growth through business incentives, they fail to recognize that sometimes, when the shit hits the fan, you have to spend your way out of it. Add to that the very responsible and business-friendly programs and taxation that the Democrats have pushed since Clinton and I really think the “social liberal, fiscal conservative” label applies 99% to the Dems.
When times are good, less government is better. When times are bad, you bank against those good times and get out the jumper cables. If the GOP could come back to center and agree with that basic premise, then they could have a more active role in shaping how those jumper cables get applied. Unfortunately they’ve talked themselves into a corner with absoute positions on topics that are anything but.
Scuzz
1965
What do you think the odds are that after the November election, even with an Obama win, many of the GOP who are holding up items (farm bill, vet benefits etc) will suddenly have a change of heart and realize those items are worthy?
Houngan
1966
Excellent, the only question is degree. They’re going to have a hell of a obstruction hangover from the last four years.
jeffd
1967
Lots of the routine stuff will pass, but it’s going to depend on the makeup of Congress and to what degree Democrats are willing to use the expiration of the Bush-era tax cuts as a hostage.
That seems to be the case, as credit card delinquency has fallen pretty sharply recently. I think a lot more people have burned off their debt and are now more willing to turn that excess towards new purchases.
Hugin
1969
About as good as GOP politicians who derided the stimulus taking advantage of that money when it became available.
jeffd
1970
One thing that’s kind of fun: create the set of politicians who say the fiscal cliff spells doom for our economy. Then create the set of politicians who say Keynesian stimulus doesn’t work. See what the overlap is.
Yeah, it only “doesn’t work” when the lack of it isn’t biting them in the ass.
Dejin
1972
The Bay Area economy and in particular the Silicon Valley Tech Economy seems to be completely divorced from the rest of the country. I think there was a bit of a slow down maybe 2008-2009, but if anything, things seem a bit overheated right now.
What you’re seeing is the effect of Federal Reserve action on future relative inflation and demand expectations. Enough of that eventually gets investors out of their shell-shock and starts the invest/consumption cycle again.
The stimulus helped some, because without that demand would be even worse, but it’s nowhere near as big an effect as all the tricks the Fed has tried.
It speaks to a bigger question about what happens to the Republican party after the election. Generally, I’d predict a fairly solid Obama win and good performance for the democrats down-ballot. They’ll retake a few seats, but won’t take the house.
The changing demographics of the country are a slow-moving flood and the Republican’s are standing at the edge of it, wondering how they managed to get their shoes wet.
They are going to have to remake themselves sooner or later. Part of that might include realizing that their obstructionist tactics are contributing to their unpopularity. I sort of doubt that’ll happen, though.
I think the water will be up to their neck before they decide to do something, and then it might be too late.
Since I and the wife made the reasoned decision to have the kid? :)
(Seriously, financial impact was one of the things that got weighed in my decision since I don’t really have a “permanent” job. Luckily for all the fun stuff that money could have done instead of buying clothes/diapers/etc… I still think the entertainment value of having a kid outstrips any other use of the money. Or, alternatively, he keeps us too tired to notice the fun we’re not having. ;) )
Yeah, that’s all people are talking about today at work!
“Hey, did you see the job report?”
“Man, great job report last night, huh?”
“Yeah, got some friends together and read the new job report. So great!”
No one’s really talking about the debate anymore, now that the new job report came out. That makes sense though: As we all know, Presidential elections are won or lost based on job reports, while hardly anyone remembers anything about debates.
JeffL
1977
You’re referring to the sum total of the Fed’s actions, not the most recent one (alone,) correct?
The only easy-to-see direct correlation between a federal action and business actions I’ve noted in the last few years is when they gave some breaks on taxes on capital acquisitions. When was that, 2009? I recall being at one customer in Tulsa, guys who make industrial size air conditioning units, and the plant manager pointed out several pieces of equipment that are used to bend and punch holes in sheet metal. They were purchasing and installing the units, and needed to have the PO’s completed by December 31 to get the tax breaks. Each unit cost around a million dollars. He said they would have put off the purchase for “some time” but the break was enough it pushed them to go ahead and purchase. That was pretty common across a number of our customers, and we did the same ourselves (push up capital purchases we would have otherwise held back on.)
I say that not to argue your hypothesis on the cumulative result of the Fed actions but just to point out one area of Washington action in which the cause/effect was direct and simple to connect. It’s a lot more challenging to connect the Fed actions from the last couple of years or so with the very slow and erratic business choices of the last 3 years.
I know you’re being facetious, but the first half is probably truer than it is false. And while there were a few historic debates, there were many, many more forgettable ones.
Snoop officially endorses Obama.
Good for a laugh.
Off the top of your head, how many historic debates can you name? Now, how many historic jobs reports?
Yes, I was being facetious: After the arguably historic debate from Wednesday night, no one is looking at the jobs numbers today and saying, “Debate? What debate?”
