So good news for Ford doesn't necessarily mean good news for the economy or for you. If Microsoft were to cut their North American employees by 50% their profits would look great for a while, but sooner or later the company would begin to suffer. By outsourcing Ford looks great, but what about Ford's suppliers here in North America? Do you suppose that if Ford outsources production that they will continue to purchase from North American suppliers?
Economy in U.S. Grew at 5.7% Pace, Most in Six Years
Jan. 29 (Bloomberg) -- "The economy in the U.S. expanded in the fourth quarter at the fastest pace in six years as factories cranked up assembly lines and companies increased investment in equipment and software.
"New York University Professor Nouriel Roubini said more than half of the 5.7 percent expansion reported yesterday by the government was related to a replenishing of inventories and that consumption depended on monetary and fiscal stimulus. As these forces ebb, growth will slow to just 1.5 percent in the second half of 2010, he said."
For the year, even with that massaged 5.7 percent fourth quarter number, overall growth for the year was negative, -2.9 percent. So if we take Professor Roubini at his word and fourth quarter growth was only half, or 2.85 percent, what does that do to the annual number? Who is this Nouriel Roubini, you might ask. He's the man that predicted the stock market crash in 2008. Let's parse the fourth quarter numbers even further. What do most of us do on the 25th of December? What do we do in the weeks leading up to it? The year 2008 was the worst Christmas shopping season on record, and 2009? It was 1 percent worse, employment was down in December because merchants didn't hire for Christmas and profits were up because of it.
So rising profits have little to do with employment numbers; on the contrary employment hurts profit numbers. Yet the numbers are proclaimed as good news, yes, good news, the economy is turning around.
"News Release: Personal income Rises by .4 Percent in November.
"Private wage and salary disbursements increased $16.1 billion in November, compared with an increase of $3.2 billion in October. Proprietors' income increased $12.3 billion in November, compared with an increase of $14.8 billion in October." Dept. of Labor
So, with a private labor force of 154,235,000 we divided $16.1 billion between us, while "proprietors," (you know, the boss) proprietors divided $12.3 billion between themselves. You got one buck and how many proprietors are there? They don't say and it's not a number that I found readily available, so let's guess. If the number were one million proprietors, that's $1,542.35. Two million? Divide it in half. Ten million? That's $154, but you got a buck!
We're not done yet! "Rental income of persons increased $1.7 billion in November, compared with an increase of $2.2 billion in October. Personal income receipts on assets (personal interest income plus personal dividend income) increased $6.7 billion, compared with an increase of $6.6 billion. Personal current transfer receipts increased $11.3 billion, compared with an increase of $2.8 billion." Dept. of Labor
So, if you're a "proprietor" with rental income and other personal assets, then by God this economy is doing great! If, however, you work for a living, then not so much. The civilian labor force declined by 661,000 in December, but those "proprietors" are rocking out!
"Sales of new homes in November took an 11.3% plunge, a sign of just how dependent the fragile housing recovery has become on government subsidies. Sales of new single-family homes stood at a seasonally adjusted annual rate of 355,000 units, the Commerce Department said Wednesday, a 9% drop from the same month a year earlier." Los Angeles Times, December 24, 2009
So, when we compare this month to last month, 355,000 units isn't such a bad number. In 2008, however, new home sales were at 525,000 annually, and the worst year on record was in 1981 at 338,000. So the $8,000 tax credit is life support for the home industry. We spent $15 billion to keep the home building industry at 17,000 units above worst year ever. Does that sound like a recovery to you?
The President in his State of the Union address claimed that two million workers more would be unemployed if it hadn't been for the stimulus bill. It's the God's honest truth! Only the original purpose of the stimulus bill was to increase employment, not to backstop it. State governments were supposed to use highway tax funds and stimulus funds to generate new projects to hire more workers. Only highway tax revenues fell. California tax revenues fell by 40% so the stimulus funds were used instead to protect those employed and not to increase them. What will happen this year remains to be seen.
The President has asked the major banks nicely and pointedly to invest in the economy and now promises to take TARP funds repaid by the banks to fund community banks which are failing at a record rate. What are the big banks doing?