[Cerek the Barbaric]

Originally posted by Skunk: Neither could 'giving' billions of dollars of US taxpayer's money to large Republican corporations via Iraq have anything to do with it either, eh? It's a short term boom as a result of heavy government spending and borrowing. It's a short term gain - at the expense of the long term economic health of the country.

I have to disagree with you, Skunk. Government spending doesn't improve the economy - consumer spending does. And the article mentioned the two most relevant factors that have led to an increase in consumer spending - mortgage refinances (presumably at lower interest rates) and the tax credit Bush signed into law in May. Both of these measures have put more "disposable income" in the hands of the consumers...who are turning around and spending it.

Even if they are buying foreign goods, they are purchasing them through domestic outlets. The local Wal-Marts and shopping malls are the ones taking in the cash the consumers are spending.

As a Finance Major, one of the first things we learned were to identify "leading" and "lagging" indicators regarding the economy. One of the most important leading factors is new construction. A new house or new office building is very expensive. Any increase in new construction indicates a that consumers now feel more comfortable spending that level of money....and I've noticed a lot of new construction in the small Georgia town where I work.

Incidentally, the most prominent lagging indicator regarding the economy is Congressional action. As one of my professors said, "When Congress takes action to improve the economy, it is a sure sign the economic crises was already over and had begun recovering".

The "billions" being given to corporationg through Iraq aren't benefitting the U.S. Economy, because the money is not being spent here...it is being spent in Iraq.

I'll agree the tax credit was a transparant move to buy votes by Bush, but he really can't take any credit for the economy improving. The economy runs in specific cycles and the fact is that it was long overdue to start improving anyway.

When it comes to improving (or reducing) the economy, the President has very little real power to affect it either way (regardless of party affiliation). The one man who DOES have the power to affect the economy single-handedly is Alan Greenspan, the head of the Federal REserve. He is the one who decides when to raise or lower interest rates and by how much. The increase in mortgage refinancing is a direct result of the interest rate on those loans being lowered.

[ 11-02-2003, 10:47 AM: Message edited by: Cerek the Barbaric ]