Re: Paul Krugman on GDP surge - additional comment

[Jurriaan Bendien <bendien@xxxxxxxxxxxx>]

Thanks.

> An odd feature of the U.S. housing boom is that the rental index
> hasn't gone up all that much - $46b gain between 2000 and 2001
> (latest available). The annual GDP tables have data on imputations -
> specifically 8.21, at
>
<http://www.bea.gov/bea/dn/nipaweb/TableViewFixed.asp?SelectedTable=185&Firs
tYear=1996&LastYear=2001&Freq=Year>.

The UNSNA calculation is a bit different from the BEA calculation. But
anyhow the majority of the large quarterly real GDP increase of over 7
percent seems to be due to purchases goods, namely offices and office
equipment, purchases of newly built houses, purchases of motor vehicles and
motor vehicle repairs, increased food consumption, and increased expenditure
on medical supplies. Many inventory levels actually dropped because of the
existing underutilisation of a quarter of installed productive capacity.
See BEA Table 8.2 at:

http://www.bea.gov/bea/dn/nipaweb/TableViewFixed.asp?SelectedTable=165&First
Year=2002&LastYear=2003&Freq=Qtr

You can sort of imagine Bush saying, "now look at this, wouldn't you like
Iraq to have all this wonderful wealth as well - and they could have it,
with American help". But before we get too impressed with this, we ought to
establish exactly who is partaking of all this this wonderful new wealth
within the USA, and that is the analytical challenge for socialists.

What would be the average figures ? An average American worker would earn
about US$ 54,000 gross, pay about $9700 tax, providing a take-home pay of
$44,000.  The total net value of family household assets would be about
$42,000. According to some sources though, the real disposable income (net
pay plus other sources of personal income such as investments) of the
average American worker would now be as high as $50,000, suggesting about
$6,000 personal non-wage income. His average total debt service ratio at the
moment would be 18 percent, if he owned a home it would be 14 percent and if
he rented an apartment it would be 29 percent. So he would be paying off an
average of just under $8000 in debts per year, and if he he owned a home it
would be just over $6000 and if he was renting it would be just under
$13,000. About three quarters of white workers own a home and about half of
Asian, Hispanic and black workers don't own a home. The average personal
savings rate would be 3.2 percent so the average worker would save
$1400-$1600 per year. Of the average worker's consumer expenditure, under 60
percent would be non-retail, and over 40 percent retail. Out of total
household consumption per person, the basic structure is as follows: the big
items are transportation bills (about 20 percent), rent or mortgage (about
18 percent), food and beverages purchases (about 17 percent), gas,
electricity and water bills (8 percent) health care (6 percent), clothes
purchases (6 percent), entertainment purchases (5 percent), furnishings and
equipment purchases (4 percent).

Okay, but now consider this. 1 in 5 American workers lost a job during the
last three years. Two thirds of Americans say their biggest worry today is
whether or not they will have a job tomorrow. Two-thirds of laid-off workers
received less than 2 weeks notice and no severance pay. Three-fourths of
American workers did not maintain any health benefits. A third of these
workers are now underemployed. Approximately 1 out of every 100 mortgages in
America is currently in foreclosure, and 1 in every 5 American mortgages is
more than 30 days late. 3.3 million jobs are expected to be outsourced to
India and China over the next few years. . The poverty rate was about 12.1
percent in 2002. The number of poor is 35 million, one in eight Americans is
officially defined as poor.

Jurriaan