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Federal Reserve Foresees Slow Growth, High Unemployment Through 2012

Assuming the latest forecast from the Federal Reserve is accurate, the recovery from the 2008-09 recession is going to be very meager indeed:

The Federal Reserve slashed its outlook for the U.S. economy for this year and 2011 and projected that it could take several years for the economy to return to health.

According to minutes from the Fed’s November 3 meeting released Tuesday, more than half of the central bank’s policymakers thought it would take about five or six years for unemployment, growth and inflation to return to more normal levels. Other Fed members warned the full recovery could take even longer than that.

The Fed now expects the economy to grow between 2.4% to 2.5% this year, compared to an earlier forecast of growth between 3.0% and 3.5%.

The Commerce Department reported Tuesday that the economy grew at a 2.5% rate in the third quarter, up from 1.7% in the second quarter but well below the increase of 3.7% in the first three months of the year.

The Fed also trimmed its 2011 forecast to growth of between 3% and 3.6%. Its earlier estimate was for growth of 3.5% to 4.2%.

The central bank also said the unemployment rate is now expected to average out between 9.5% and 9.7% this year. The jobless rate was 9.6% in October.

And the Fed now forecasts unemployment will only fall to between 8.9% to 9.1% in 2011, well above the 8.3% to 8.7% unemployment rate it previously predicted for 2011.

The Fed also indicated it expects unemployment to only drop to between 6.9% to 7.4% by 2013. To put that into context, the unemployment rate was 4.6% in 2007, the last year before the recession.

Here are the numbers:

This is bad news all around.

Economically, it’s fairly clear that we’re not going to be anywhere near the level of economic growth needed to replace the jobs that were lost in the “Great Recession.” Slow growth also makes the economy more vulnerable to the unknown, whether it be domestic or foreign in origin, that could send the economy back into recession.

Politically, it sets up an interesting scenario for 2012. If the Fed’s forecast is generally accurate, then we would be in the middle of a modest recovery by the time the 2012 General Elections roll around. It wouldn’t be much of one, though, if unemployment rates are still in the 8% range when people are heading to the polls. Ordinarily, a growing economy inures to the benefit of the incumbent, but one can already see the GOP putting together a “Where Are The Jobs?” ad to point out the lack of job growth over the previous two years. The other unknown factor is what the attitude of the public will be two years hence. If vast numbers of the American people continue to believe that the nation is on the wrong track, regardless of what the economic statistics say, then who knows what the impact on the political climate will be.

Suffice it to say, though, that this new from the Fed makes it rather clear that happy days will not be here again for some time to come.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. john personna says:

    They’re not doing the QE2 because it is all roses.

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  2. Steve Plunk says:

    Government policies that create uncertainty and are hostile to business will lead to slow growth and high unemployment yet it seems only our president is surprised by this.

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  3. mantis says:

    Hmm, maybe if our Galtian overlords were to hire some people, we might be moving in the right direction a little faster.  But no, they want to keep it all for themselves.
    Corporate Profits Were the Highest on Record Last Quarter
    Good thing we’re probably going to give the rich an extension on their tax cuts!

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  4. mantis says:

    Government policies that create uncertainty and are hostile to business
    Do us a favor.  List those hostile-to-business policies that are creating uncertainty that prevents corporations from hiring, but not from achieving record profits.

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  5. Tano says:

    Government policies that create uncertainty and are hostile to busines…

     
    Ah yes, those policies that are so hostile to business. Why they have only led to the greatest quarter in modern corporate history.
    LINK

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  6. Steve Plunk says:

    Mantis,
    Obamacare, cap and trade, offshore drilling moratorium, open hostility to coal energy, no coherent national energy policy, EPA overreach, and the list goes on.
     
    Tano,
    A good quarter for corporations after how many bad?  And how many bad to come?  Taking profits before the coming tax hike might explain much of it.
     
    It’s silly to ignore this president’s hostility to business.  Everybody knows it but those who support him just won’t admit it.

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  7. mantis says:

    Obamacare, cap and trade, offshore drilling moratorium, open hostility to coal energy, no coherent national energy policy, EPA overreach, and the list goes on.
    Most of those are things that aren’t happening, haven’t happened, are figments of your imagination, or are decidedly not hostile to business.   Nice try though.  How about you list some actual policies and explain how they are hostile to business.
    It’s silly to ignore this president’s hostility to business.
    About as silly as ignoring the tooth fairy, and as real.

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  8. john personna says:

    Steve, are you familiar with:

    The Austrian business cycle theory, which attempts to explain business cycles through a set of ideas held by the heterodox Austrian School of economics. The theory views business cycles (or, as some Austrians prefer, “credit cycles”) as the inevitable consequence of excessive growth in bank credit, exacerbated by inherently damaging and ineffective central bank policies, which cause interest rates to remain too low for too long, resulting in excessive credit creation, speculative economic bubbles and lowered savings.

    http://en.wikipedia.org/wiki/Austrian_business_cycle_theory
     
    Now, you can overlay on that complaints about government programs, but I think they are a blemish on the butt of the real problem.

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  9. mantis says:

    A good quarter for corporations after how many bad?
    Seven straight quarters of huge profits, actually.  Since late 2008.  Who was president then?
    And how many bad to come?
    Hard to say.  Who knows how much damage the Republican House can do.

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  10. john personna says:

    (I don’t think ABCT describes every recession, but it seems made for this one.)
     

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  11. Steve Plunk says:

    john,  I don’t blame Obama for the recession.  Business cycle, housing crisis leading to banking crisis, and many other factors are to blame.  I do blame his policies for the anemic recovery.  Business will overcome but why not put policies in place that help the recovery along?

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  12. mantis says:

    Business will overcome but why not put policies in place that help the recovery along?
    Yeah, how will these businesses overcome their record profits and get back on their feet again?  If only there were policies to help them stay profitable in this era of record-breaking profits…

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  13. anjin-san says:

    > Government policies that create uncertainty and are hostile to business
     
    Bush was about as business friendly as a President could possibly be. How was the economy looking as he left office?

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  14. john personna says:

    john,  I don’t blame Obama for the recession.  Business cycle, housing crisis leading to banking crisis, and many other factors are to blame.  I do blame his policies for the anemic recovery.  Business will overcome but why not put policies in place that help the recovery along?

     
    Obviously any credit bust must be followed by a period of deleveraging and balance sheet repair.
     
    Not a few people want to pretend that isn’t true, and that it’s all the government’s fault that the repair can’t be magic and instant.

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  15. john personna says:

    “Yeah, how will these businesses overcome their record profits and get back on their feet again?”

     
    Your article calls out the unadjusted figures, and then talks about inflation adjustment, before coming around to:
     

    “Tuesday’s Commerce Department report also showed that the nation’s output grew at a slightly faster pace than originally estimated last quarter. Its growth rate, of 2.5 percent a year in inflation-adjusted terms, is higher than the initial estimate of 2 percent. The economy grew at 1.7 percent annual rate in the second quarter.
    Still, most economists say the current growth rate is far too slow to recover the considerable ground lost during the recession.”

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  16. Steve Plunk says:

    One factor consistently overlooked is the energy shock of 2008.  Couple that with the housing bubble collapse and it’s easy to see why the economy fell under Bush’s tenure.  Could he have done anything about oil?  No.  Not in the short term.  Could he have stopped the housing bubble from bursting?  No.  The damage done by loose credit was out of his control.  Dragging Bush into a discussion about this anemic recovery makes no sense and a president can be much more pro business than he was.
     
    Energy/oil is still a problem yet we have no serious energy policy.  This is about motor fuels and the effect they have on consumers and business.  Wind and solar won’t power cars and are nothing more than subsidized bones tossed to environmentalists.  If we get serious about energy we could see economic progress.  Until then it will be a drag on the economy.

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  17. john personna says:

    Energy prices are certainly a factor.  I think we’ve talked about that before, and Jim Hamilton’s analysis.  He’s been doing a number of studies, both on the impact of energy on the original turn to recession:
     
    http://www.econbrowser.com/archives/2009/04/consequences_of.html
     
    and, more recently, on impacts to the recovery:
     
    http://www.econbrowser.com/archives/2010/04/more_on_oil_pri.html
     
    It’s an ongoing theme at Econbrowser, and worth tracking.
     
    (To say that low interest rates are out of a President’s control is to ignore the real history.  Nixon pressured the Fed for low rates during his reelection campaign, triggering later inflation, as an example.  That is now well documented.  More will come out on Greenspan and Bush, I’m sure.)

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  18. Steve Verdon says:

    Manits,
    I would say that health care reform created a great deal of uncertainty for many businesses.  There was the whole carbon trading scheme, granted it has pretty much died, but for awhile there it was an issue.  Those are the biggest two off the top of my head.
    Also, Dave Schuler pointed to a small business survey a few weeks ago that when you combined, going by memory, taxes and regulations/red tape those two combined were of approximately similar size to lack of demand as business concerns.  While the government has, at best, clumsy tools for stimulating demand, they do have pretty good handle on red tape and taxes.
    The bailouts probably were not good either at fostering a strong economic environment.  Many business leaders might be wondering how we are going to pay for these things and the near take over and politicization of some of the management decisions for GM is another thing that probably didn’t help.
    Steve,

    A good quarter for corporations after how many bad?  And how many bad to come?  Taking profits before the coming tax hike might explain much of it.

    Actually the article says it has been seven consecutive quarters.  Problem is while rising profits is good, it isn’t a complete measure and might actually be a sign of the uncertainty you are mentioning.  When a firm decides to sit on cash vs. putting it to work that says to me that there might be something off.  Ideally we’d want firms to take that money and plow it back into the business or even disburse it to shareholders…or maybe invest it elsewhere.  Cash is the most liquid way to hold wealth thus it might actually not be such a good sign.
    For example further down in the article you get this:

    Still, most economists say the current growth rate is far too slow to recover the considerable ground lost during the recession.
    “The economy is not growing fast enough to reduce significantly the unemployment rate or to prevent a slide into deflation,” Paul Dales, a United States economist for Capital Economics, wrote in a note to clients. “This is unlikely to change in 2011 or 2012.”

    Anjin-san,

    Bush was about as business friendly as a President could possibly be. How was the economy looking as he left office?

    I think there is a difference between a president promoting strong economic growth and crony capitalism.  And are you really saying that solution for the economy is an environment hostile to economic growth?
     

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  19. Steve Verdon says:

    Could he have stopped the housing bubble from bursting?  No.

    Our last two president’s have been more than happy to claim credit for bubble economies.  This isn’t a partisan issue, but not letting a bubble form in the first place is a good idea.  What lead to the bubble was the result of many years, even decades, of policies that were ill thought out.  For example, having the Fed and gov’t step in and help ensure the creditors for Long Term Capital Management didn’t suffer was probably a mistake.  Allowing various derivative markets remain so opaque to investors as well as regulators was probably a mistake.  Promoting home ownership to the degree that it was was probably a mistake.  Keeping interest rates as low as they were for as long as they were was probably a mistake.  We have done damn little to rectify these mistakes and instead have used the full faith and credit of the American taxpayer to prop up zombie banks.  It didn’t start with Obama, but with Bush.  Obama however, has been more than happy, or at least willing, to continue the policy.

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  20. sam says:

    @Plunk
    “It’s silly to ignore this president’s hostility to business.”
     
    <a href=”http://www.nytimes.com/2010/11/24/business/economy/24econ.html”>Corporate Profits Were the Highest on Record Last Quarter</a>
     

    American businesses earned profits at an annual rate of $1.659 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or noninflation-adjusted terms. The government does not adjust the numbers for inflation, in part because these corporate profits can be affected by pricing changes from all over the world and because the government does not have a price index for individual companies. The next-highest annual corporate profits level on record was in the third quarter of 2006, when they were $1.655 trillion. Corporate profits have been doing extremely well for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history. As a share of gross domestic product, corporate profits also have been increasing, and they now represent 11.2 percent of total output. That is the highest share since the fourth quarter of 2006, when they accounted for 11.7 percent of output.
     

    Some hostility.

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  21. john personna says:

    I always thought  Long Term Capital Management’s “bailout” was a good model, not a bad one, because as I understand it, not a penny of our tax dollars went into it.  The government just put business in a room an told them to fix it.  It was just social pressure, and social contract, even then.  There was no Russian style gulag for objectors.  There was no Chinese style bullet in the neck.
     
    It was Wall Street being told to fix Wall Street, and doing it.
     
    Now, there are other examples (including earlier examples) where our tax dollars were put at risk in bailouts.  For example, the 1980 Chrysler bailout:
     
    http://www.ritholtz.com/blog/2009/04/the-1980-chrysler-bailout/

     

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  22. john personna says:

    (I think ‘moral hazard’ is real, just that LTCM is not the best example.  It really hearkens back to Morgan’s and Rockefeller’s private rescues of the last century.)
     

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  23. sam says:

    @Steve V
    “When a firm decides to sit on cash vs. putting it to work that says to me that there might be something off.”
    But it must be putting some cash to work (a lot if the profit figures are to be believed). How else account for the the profits?

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  24. john personna says:

    “When a firm decides to sit on cash vs. putting it to work that says to me that there might be something off.”
     
    Of course something is off … orders.

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  25. john personna says:

    “Also, Dave Schuler pointed to a small business survey a few weeks ago that when you combined, going by memory, taxes and regulations/red tape those two combined were of approximately similar size to lack of demand as business concerns. ”
     
    Yeah, yeah.  If you combined enough categories THEN they were bigger than falling orders as the number one concern.
     

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  26. Gerry W. says:

    Well, this is what I saw through the years. Our factories closed and we have nothing to replace them. Look at the list of jobs lost. And no one is giving an answer in how to replace the lost jobs. An estimated 4 to 8 million jobs lost. And along with the factories so goes small business. So far, all the pundits, the democrats and the republicans provide no answers. The only answer you get is lower interest rates, lower dollar to create exports. And what will we be exporting? And how long will this fictitious monetary policy go on? How long can we go on with spending in the wrong directions? How long do we go on with the trickle down which has failed as globalization is more powerful than all of the failed policies? How do we deal with 2 billion cheap laborers?
    Ohio and rest of U.S. not creating jobs in economic sectors with import competition – Reader comments at The New York Sun
    http://www.toledoblade.com/assets/pdf/TO51488727.PDF
     
     
     

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  27. anjin-san says:

    > And are you really saying that solution for the economy is an environment hostile to economic growth?
     
    Ummm. Where did I say that? I would be obliged if you could point it out. Otherwise, don’t try to put words in my mouth.
     
    I work for a Fortune 500 company, I am very much in favor of growth and profits. I am just a little tired of the stupidity around “Obama is anti-business”. You know who I never hear saying that? Executives for major corporations. When you consider where we were when Obama took office, we are doing pretty well today.
     
    Given the loss of much of our manufacturing base, unemployment is going to be a real problem unless a driver comes along to generate growth. What might that be? Don’t really know. The anti-science, anti-innovation policies the right embraces certainly are not the answer. Sarah Palin’s platitudes about “time tested, common sense solutions” will not put a single person back to work (course she is getting rich off this nonsense).

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  28. anjin-san says:

    > Could he have done anything about oil?  No.
     
    Really? Maybe he could have told Cheney no secret meetings with oil companies in the White House. We still don’t know what went on. What we do know is that oil prices went up under Bush. Way up.  Oil companies made some of the largest profits in the history of our economy. Funny how things work out. Well, funny unless you are a consumer.

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  29. ponce says:

    The incoming Republican economic wizards will soon whip the economy into shape..or take the fall in 2012 if they can’t.

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  30. john personna says:

    Gerry, it is hard to believe given the news, but the US is still the world’s largest manufacturer.
     
    http://mjperry.blogspot.com/2009/10/us-still-worlds-largest-manufacturer.html
     

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  31. Gerry W. says:

    Yes, but football games have been lost after leading for three quarters.
    China is gaining and will take over manufacturing in a decade or two. There are towns that are devastated. There is no jobs where I live. 60 minutes showed Newton, Iowa and that town is devastated as Maytag moved to Mexico. The scenario is that it starts with cheap labor, we lose market share, and then the industry is gone. We have done very little in dealing with the globalization issue. Any way you look at it, there is a potential 2 billion cheap laborers who want our jobs. It will put pressure on the middle class on jobs and wages. Obama, the fed, and everyone else is relying on exports. And I don’t get it, because relying on exports has to be a less of an impact than relying on the manufacturing we had. I have to question what we will export. Sure there are expensive items to be sold, but on the opposite side, the toasters and microwaves are foreign made. I also wonder what will replace the closed factories. Large companies are selling their ingenuity for short term profits. China already has a plane that is similar to the Boeing 737 and they will buy their goods first. Tata motors will be importing their cars in the next year of two.
    I don’t understand destroying communities with policies or failed policies. The headline says so growth. Heck, in my town it will be no growth at all for as long as I can see. The democrats go toward welfare kind of policies (extension of unemployment benefits and cash for clunkers), the republicans believe in their trickle down which will not effect my town at all, and the fed is printing money. I find it all hilarious.
    We are doing nothing to deal with globalization and the factories keep closing and moving overseas or they will close as cheap labor competition will make them close. Technology, lean principles, and 2 billion cheap laborers tells me that there is no upward movement for the middle class.

    Some comments & questions (my observation):

    1. The Bush tax cuts is spent money. It did not create the jobs and prosperity that it was supposed to do.

    2. You cannot create jobs, if jobs are going overseas. And if you send private sector jobs overseas, then the government steps in.

    3. The government can set the conditions for creating jobs and wealth. So far, neither party knows how to do that.

    4. Our biggest problem is globalization and 2 billion potential cheap laborers. It means less in jobs or pay and a diminishing middle class.

    5. What widgets can be made here and not some other country?

    6. How can you support small business in small communities with factories closed?

    7. If you put the money in the hands of the consumer, over half the products on the shelves are foreign made. How does this help our economy and employ more people?

    8. The tax cuts was for the here and now. What did it for our future?

    9. The fed is printing money and the republicans want more tax cuts to create jobs. However, a lot of our jobs went overseas. So what good is printing more money or having more in tax cuts if they don’t work?

    10. The only way to move our country forward is to invest in our country, in our people, and in the future. This will take 10 to 20 years.

    11. Bush said “stay the course” on the economy and on two wars. They were all ran into the ground. And on the economy to get unemployment down to the 5% level will take some 10 to 20 years.

    12. You cannot keep having tax cuts for the wealthy and ignore the middle class.

    13. You need upward movement for the poor and the middle class. With jobs gone, there is no upward movement. New products being made by Apple, as an example, are made in China. What jobs do you intend to create in the future, without them going overseas?

    14. You cannot run the country on an ideology. We saw eight years of that. Come up with some pragmatic answers.

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  32. Rick DeMent says:

    >Could he have done anything about oil?
    Well the oil collapse pretty much made Reagen’s economic legacy so … yeah that was part of it. but that assumes the economy was zipping along before the oil spike. It wasn’t

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  33. john personna says:

    Gerry, as your points illustrate, there are many things going on at once.  Some trends are superimposed, and some trends interact.  In the big picture, I think we are still seeing shakeoutfrom the fall of the Soviet Union.  We and the Chinese reacted to it by moving right.  They went from communism to a kind of market-communism, and we went from a regulated market economy to a slightly less regulated market economy.
     
    But I really think the Chinese policy change is the one that shakes the world, and their move from insular communism isn’t something that can really be countered by minor policy moves of our own.
     
    I think there’s a quote attributed to Mao which said “every mouth has two hands to feed it.”  It was considered a scary pro-population-growth statement at the time, but … I think that 10% Chinese growth rate has something to do with 3 billion hands working (long hours).
     
    Can we really grow in the same world, with only 600 million hands working (less)?

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  34. Gerry W. says:

    We are going to have to find ways to create growth within our economy, I believe. Exports are important, but we seem to be over relying on exports as more of our jobs go overseas. And that is why I have suggest in the past of energy independence, high speed rail, high speed internet, and whatever else on our infrastructure. I have also suggest massive vocational training as jobs will require more training, and I have suggested more in federal research grants to create future jobs. As time goes by, as we give up more of our industry, as cheap labor cuts into our middle class, as large corporations eat into the small business and drive them out of business, it will be harder and harder to produce the jobs needed to maintain our lifestyle. I think it will be challenging.

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  35. john personna says:

    I can see energy independence and high speed internet giving a good return on investment.
     
    I don’t see that for high speed rail, and worse I see it as the kind of dangerous distraction that sells on sex appeal rather than ROI.  People who want high speed rail want it, even before you tell them where you’d put it, or how many passengers you project for it.  They just want it.
     
    We can do much better education, but we have to start by abandoning many of our current programs.  We have to burn the ships.  To do otherwise, to make new education initiatives additive, would bankrupt us.

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  36. john personna says:

    Shorter: Re-Invention of Government.  Not simply less.  Not simply more.

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  37. Gerry W. says:

    On the high speed rail, I would test it in the Northeast corridor. I just used high speed rail as an example. We need to find a way to keep jobs in our country by having a structure that won’t move out of the country you can create jobs. It is a danger to go overboard with any concept, just looking for ways to create and maintain middle class jobs. On high speed rail, my thinking is to connect airports that are close together. That way, you can limit the amount of air traffic, and you can rely on other airports for other destinations and still be connected with high speed rail to the other airport. Not all flights would have to originate out of a major airport. Of course there would be a backlash with the airport or port authorities. But as a major transportation concept, it may be a good idea.
    I do agree with re-inventing government.

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  38. john personna says:

    Out here in California it is a less than one hour hop from Los Angeles to San Francisco by plane.  They are actually planning to “replace” that with a two hour and forty minute high speed rail trip.
     
    It’s workable to pop up for a meeting with one hour air travel, two hours total.  Five to Six hours in a train?  Seriously?

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  39. Gerry W. says:

    This is the one problem that I have with government. Some of the thinking or non thinking that goes on with proposals. If it does not make sense, then it should not go on.

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  40. Drew says:

    I could be wrong, but I suspect I’m the only commentor here who actually is a small businessman with a significant span: currently an owner in 6 businesses, but a total of 18 over the last 12 years.  Further, because of what I do for a living, I probably speak directly to 50 small business owners a year, and get input, through investment bankers who represent small business owners, another couple hundred.  That’s a pretty decent sample.  And by the way, they are ALL manufacturing businesses. 
     
    So I laugh, scoff actually, at the nonsense I’ve seen here from the likes of mantis and tano, etc, who obviously have no clue.  But there have been a number of interesting observations and exchanges:
     
    1.  I’d like to lead off with JP, who I frequently cross swords with.  He observes, and links to, the notion that manufacturing in the US is actually alive and well.  This is absolutely true.  Is it 1950?  No.  But we actually have a tremendous manufacturing base that needs to be nurtured and grown.  My firm acquires nothing but manufacturing businesses, and we obviously aim to grow them.  In the vast majority of cases, we have significantly increased sales and profit, and employment, under our ownership.  It CAN be done.  This Administration is no friend of that effort.  And ask the vast majority of small business owners what they think.  mantis’, tano’s and anjin-san’s drivel notwithstanding. 
     
    2.    Steve Verdon correctly pointed out that businesses are sitting on cash, rather than reinvesting, due to uncertainty.  Absolutely true.  Businessmen, including this one, will tell you so.  I cringed at sam’s retort – because sam is a good guy – that corporate profits are only up so cash is obviously being reinvested.  That’s not true, sam.  But I don’t want to turn this into a corporate finance/financial statement analysis lesson.
     
    3. Gerry W is apparently on suicide watch as he worries about the imminent and inevitable demise of the last manufacturer in America.  Gerry – there are people out here like me and my partners trying as best we can to invigorate US manufacturing, but its a strong headwind.  The Dodd-Frank bill may put people such as us out of business.  But more generally, you can’t have a full frontal assault on manufacturing businesses vis-a-vis leftist energy policy, regulatory policy, labor policy etc……………and then turn around with a child-like look in your eyes and ask, “what happened to the manufacturing jobs?”  Its irrational.
     
    4.  Its a banner day.  JP and I are on the same wavelength twice.  High speed rail????  Please tell me you guys are kidding.  In Latin:  moneyus downus toiletus.  
     
         

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  41. Gerry W. says:

    I am for anything that works. I can tell you what I see. I see 4 to 8 million jobs lost and I don’t know how you replace that. I see factories of 100, 500, and 1000 employees shut down and not coming back. And along with that is small business that cannot survive without that traffic of employed people. I also see big box stores over powering small businesses. Now, I don’t know if the Dodd-Frank bill effects my town. What effects my town is “free trade” policies and 2 billion cheap laborers. It is also antitrust laws put forth by Reagan.
    Who Broke America’s Jobs Machine? | NewAmerica.net
     
    I also have to question Veroniqu De Rugy, economist for George Mason Univ., who said on C span as she answered a call on jobs that it was okay for our jobs to leave the country and that we had Wal Mart jobs to go to.
    I question, William Cohen former Defense Secretary, who said India can be a consumer of American goods and that employers should talk to their employees about outsourcing. Well, I don’t know what employees exist to talk to about outsourcing.
    I question, Carlos Gutierrez former Commerce Secretary, that “dynamics” have not changed. I guess 2 billion cheap laborers don’t mean anything.
    And I question, Laurance Seidman, Univ of Delaware econ. professor, who said temporary tax cuts would put money in the hands of consumers. Well, we had the tax cuts, so if they didn’t work or if we are losing more jobs then what we can make, then tax cuts don’t make much sense. And half the products are foreign made, so I don’t understand the ideology.
    But as I sit in town and look at a sparkplug plant that once employeed 1300 people and is down to the last 100. As I look at a crankshaft plant that had 500 people. As I look at a heat lamp plant that had 150 people. As I look at a printing plant that had 100 people. As I look at small stores that cannot survive without those plants. As I look at small stores that cannot compete with Wal Mart in a town 15 miles away. As I see 7/11 close up. Kentucky Fried Chicken close up. The last jewelry store close up. The dry cleaners close up. I have to wonder then what tax cuts and laissez-faire will do for my town. And I can tell you, we will be ignored like usual. Of course, from the right, you will get the following: It is our fault, you are on your own. You need no help or policy out of Washington. 2 billion cheap laborers? Not important. Now get a job.
     

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  42. Drew says:

    Gerry -
     
    With all due respect, you need to sharpen your game.  That was just a pathetic emotion dump.

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  43. sam says:

    ” I cringed at sam’s retort – because sam is a good guy – that corporate profits are only up so cash is obviously being reinvested. That’s not true, sam. But I don’t want to turn this into a corporate finance/financial statement analysis lesson.”
     
    Well, then educate me –if only briefly. I only asked, somewhat elliptically, how the corporations could be making all that money if they weren’t spending some money. They’re not conjuring those profits out of thin air, are they? I understand they’re not investing in new hires and such, but they’re not just sitting on all that cash, right? They’re doing something with it.
     
    And BTW, how do small businessfolk like yourself feel about megacorps making megaprofits while you guys wander around in the wilderness living on hips and haws? Me, I be kinda pissed.

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  44. Gerry W. says:

    Well Drew, let’s ignore the problems. We just don’t have to do anything.

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  45. Drew says:

    sam -
    This is almost embarrasing to have to go through.  The goal of most established businesses is to be cash flow positive.  (Young, rapidly growing, businesses may be cash flow negative due to working capital and capex reinvestent needs for that rapid growth.)
    So it is very natural for these businesses to pile up cash on the balance sheet as they profitably conduct their affairs, but do not plow that balance sheet cash back into the business for growth.  And that was Steve Verdon’s point.  Now don’t go JP on me and start bobbing and weaving with “some” money.  That could be one dollar.  You understand Steve’s point.  
     

    “Well Drew, let’s ignore the problems. We just don’t have to do anything.”
     
    There you go, Gerry.  Sniff, you can’t make the case so you are going to take your toys and go home.

     
     

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  46. sam says:

    Well, I’m not embarrassed to be educated, nor should you be as the instrument. And you should be pissed, you know…the boys over at the Wall Street branch of MegaCorp are spending some of that money, only on, well:
     

    [W]hen it comes to personal indulgences, there are signs that the wallets are beginning to open up. Traders and executives say that jobs seem much more secure. Businesses whose fortunes ebb and flow with the financial markets are thriving again.“Wall Street is back spending as much if not more than before,” said the New York dermatologic surgeon Dr. Francesca J. Fusco, whose business is booming again after a difficult few years.Christie’s auction house says investors from the financial world who fell out of the bidding market during the 2008 credit crisis are  ”pouring” back in.Expensive restaurants report a pickup in bookings. At the Porter House restaurant in the Time Warner Center across from Central Park, the head chef, Michael Lomonaco, says business is up about 10 percent over a year ago and “people are starting to shake off what happened.” The restaurant is a favorite of A-list Wall Street executives, including Goldman Sachs’s chief executive, Lloyd C. Blankfein.Real estate agents say Wall Street executives have already begun lining up rentals in the Hamptons for next summer. Dolly Lenz of Prudential Douglas Elliman said the bidding this year was “hotter and heavier” than previous years. “There is a passion now in the market I haven’t seen in a while,” she said. http://dealbook.nytimes.com/2010/11/23/signs-of-swagger-wallets-out-wall-st-dares-to-celebrate/

     

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  47. john personna says:

    I don’t bob and weave, Drew.  I point out where your contention is disproved by fact.  At that point you start calling me names.  Rinse, repeat.

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  48. john personna says:

    The government was never constrained in borrowing … “except Clinton”
    The government was never constrained by inflation … “except Ford”
     
    Don’t bob and weave JP, just accept whatever bullshit proposition you are given.

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