Tuesday, February 10, 2009

Hiding the truth behind the numbers

I keep reading pieces by economists and journalists in the know about the impact of the current recession (it hits home in THIS home since we are now part of those numbers). While you can make numbers tell any story you wish, nothing written yet has told the REAL problem with the current crop of layoffs/firings/RIFfing.
The WHO part of it.
It's more white collar than blue collar this go-round and that is impacting the very segment of the consumer market that usually drives the economy. The rich will stay rich (when you've got millions, losses of a few thousands don't have the same impact). But families losing that $75,000-$100,000 income (paid for folks in IT, tech, telecom and related industries) aren't spending on anything - pending passage of the fog that has engulfed their future.
I know; we're in that boat and it ain't moving anywhere. So small things one usually takes for granted (flowers for Valentine's Day, jewelry, dinners this weekend; vacations; home improvements; you name it) aren't going to be purchased anytime soon. Forget cars, let's discuss small items that runs those small businesses. Women will not get their hair or nails done so often; dry cleaning will be left for another day; doughnuts will go uneaten.
People will think twice about adding to credit card debt.
I asked this last week in the Dallas Morning News' Community Opinions section and I ask it again: how will tax cuts help, or how can consumer spending be activitated, if you don't have a job?
Numbers cannot tell THAT story, or provide that answer.


Anonymous said...

You answer your own question. Two thirds of the economy is consumer spending. If 10% is unemployed (count people on unemployment and those who have given up), the tax cuts affect the 90% who still have jobs.

Lowering the tax brackets immediately puts more money in the paychecks because there is less withholding.

In regards to your point about job creation, cutting the payroll tax and lowering the corporate tax creates jobs.

The payroll tax greatly affects small businesses, which accounted for 70% of the jobs created in 2008.

For the same reason you have companies fleeing California, the USA needs to attract more corporations to HQ here as well. It's a global economy now. Our 35% corporate tax rate is the 2nd highest, behind Japan who just experienced a 13 year recession/depression (prolonged because they quadrupled their debt - sound familiar?)

Countries in Europe, for example, are all competing for the corporate HQs by lowering their corporate tax. How ironic is it that Europe is more conservative than the USA in this area?

Lowering the capital gains tax will increase investment here as well, along with loosening the insane knee-jerk regulations we created after Enron that chased VC out of New York and into London, which is now the financial capital of the world.

Chuck B. said...

Hey, I'm ALL for tax breaks - even for businesses. But let's not think that you can lose 650,000 jobs in a month and have the gap filled by Internet companies, tax preparation firms and, yes, NAIL SALONS!
Only a fool would believe that!

Anonymous said...

What is your point, Chuck? That someone unemployed isn't going to buy a new car. Thanks for the stating the obvious.

It's not the 7-10% out of a job that is driving the lower consumer spending. It's the fear or the other 90-93% that's keeping them on the sidelines.

Having a president who is using fear to sell a spending bill doesn't help.

Chuck B. said...

Right, we just had a president who used fear and loathing of otehr people to sell a goddamn unless war that killed Americans and too many other innocent victims.
All President Obama wants to do is turn this economy around, stolen from ordinary people (like me) by ... wait for it ... corporate greed and children of the corn Republicans.
And if you think the economy is SO great, try selling your home and recouping the money you put into it. Good luck with all of that!
And, FYI, I used to own my own small business so I've been there and did ALL of that.

Anonymous said...

I see, so scaring people so you can increase the discretionary spending of the U.S. by 80% in a single bill is fine, but scaring people about terrorists who actually killed over 3,000 Americans in the USA is way off. We don't want Americans to fear people who were planning blowing up the Brooklyn Bridge after 9/11, a plot we were able to stop because we wiretapped terrorists in the USA.

Yes, Chuck, I agree. Obama is full of it. His campaign rhetoric was all BS to get elected. He's just a politician like any other.

There will be no lobbyists in Obama's administration. Cough.

Your Bush Derangement Syndrome is very predictable. Invading Iraq had nothing to do with the multiple U.N. resolutions stemming from their invasion of Kuwait. It was just George Bush wanting to steal all their oil, right? Hey, when are we going to get some of that oil, anyway? George made up all those claims by all of those foreign intelligence agencies too.

Saddam purposely mislead the whole world. Where have you been? Not reading newspapers, obviously.

And your knowledge of the cause of the current recession is lacking too. The housing bubble was created by artificially low interest rates coupled with the Democrats in charge of Fannie and Freddie dictating sub-prime loans be made to people who couldn't afford them.

Hey, if you like living under Democrat policy, why don't you move to California. They are doing swell with 9.3% unemployment and another huge, multibillion dollar deficit caused by, wait for it, massive spending and anti-business policies.