Business News Update

Decrease in Federal Budget Deficit

34% – decrease in federal budget deficit – FY 2006 – FY 2007
49% – decrease in federal budget deficit – FY 2005 – FY 2007
60% – decrease in federal budget deficit – FY 2004 – FY 2007

The sharply-reduced budget deficit is a function of three things: (1) the general business/economic cycle, (2) restrained non-military spending by the 2005-2006 Republican Congress, (3) multiple tax cuts enacted by GOP Congresses from 2001-2006. As a percentage of GDP the current budget deficit is much lower than the prevailing deficits of the 1980’s and those which occurred throughout most of the 1990’s.

Some of you might instantly recognize the significance and the irony of that 60% drop in the deficit since 2004. Shortly after the Prez’s re-election the Bush administration predicted the budget deficit could be halved by 2009 with a combination of further tax cuts and spending restraints. Not only liberal Democrats but various conservative malcontents responded with jeers and catcalls. As it turned out, however, the deficit fell by more than half and in far less time. Go figure.

For obvious reasons the chances of the media highlighting those items for the general public fell somewhere between zero and no f’n chance in hell.

Decrease in Medicaid Enrollment

Speaking of underreported items:

The first drop in Medicaid enrollment in nearly a decade led to the second smallest increase in Medicaid spending during that period — 2.9 percent.

Medicaid directors attributed the 0.5 percent enrollment decline to a solid economy and to new documentation checks that require beneficiaries to prove their citizenship or that they are qualified legal immigrants.

Retail Sales

Retail sales in September grew 0.6%, substantially above expectations and twice the growth rate posted in August. Consumer spending accounts roughly for 70% of all economic activity.

Speaking of the economy:

Unemployment Rates

Sept. 1997 – blacks – 9.6
Sept. 2007 – blacks – 8.1

Sept. 1997 – Latinos – 7.6
Sept. 2007 – Latinos – 5.7

Sept. 1997 – whites – 4.3
Sept. 2007 – whites – 4.2

Sept. 1997 – women – 4.4
Sept. 2007 – women – 4.0

Sept. 1997 – men – 4.1
Sept. 2007 – men – 4.2

Sept. 1997 – overall – 4.9
Sept. 2007 – overall – 4.7

Jobless Claims

Despite total employment having grown by 16 million net jobs, fewer people today are being laid off in the workplace when compared to the same period 10 years ago:

310,000 – 4-week avg. of initial claims for jobless benefits, October 6, 2007
315,000 – 4-week avg. of initial claims for jobless benefits, October 4, 1997

Stock Markets

Stocks were volatile this week.

Speaking of which, back in early-2003 you could have purchased KB Home for around $25 a share (split adjusted). That was a period in which the liberal media was depressed even moreso than today. Stocks were selling off in a panic. In July 2005, however, KB Home peaked at over $80. Investors at that stage were giddy about the housing markets. Yesterday, however, KB closed at $29.60. Now investors and the media alike are depressed about the housing markets. In other respects the stock markets are happy. The media in the aggregate is quite angry.

$ 25 – 2003 – stock markets depressed; media also depressed (GOP won in 2002)
$ 80 – 2005 – stock markets giddy; media apathetic (not an election year)
$ 30 – 2007 – media angry (Bush still in office); stock markets manic-depressive

Morals of the story:

– Buy low. Sell high. Not vice-versa.
– Being a market/media Lemming is no way to achieve one’s financial goals.

An Inconvenient Truth: The Nobel Peace Prize Can't Be Taken Seriously Any More
Wizbang Weekend Caption Contest™