Daily Archives: 31 March 2015

Economic Growth

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…over last year, the 6th under the Obama administration. Which is several years late in occurring under the Obama promises, but that’s another story. See the graph. EconomicGrowth

First, the overall GDP: disregard the shrinking in the first quarter of 2014; that appears to be an aberration compared to the nearby trend.

What’s interesting are the components of the GDP growth and of Business Fixed Investment in particular.

Imports remain in negative territory: we’re importing less and less (and possibly at an accelerating rate) over the last couple of years. There are a number of reasons for this, including the increasing competitiveness of domestically produced products on one hand and the continued doldrums of the our economy leaving too little discretionary funds in the hands of consumers and of businesses to buy imported goods on another. An implication of this, though, is that importation is tomorrow’s consumer and business spending.

Consumer spending is up (and possibly at an accelerating rate), but look for that to fall off if imports continue to decrease: many of those imports are for incorporation into business products for consumer purchase; that puts a lag into many of the imports’ impact on consumer spending.

Look at Business Fixed Investment, though. That never has gotten very high, peaking a bit over a year ago at just over a 1% year-on-year increase, and it’s been falling off since. Decreasing imports being used less and less by businesses.

This is especially telling in those BFI components. R&D may be accelerating, but it’s still at a pathetic rate. R&D is critical to business survival: it’s not just about how to market existing product better, though that’s important. It’s primarily developing new product, market research to guide that development, and so on. If a business’ products become obsolete, so does the business.

The tale is told in spades in Structures and Industrial Equipment. Businesses aren’t expanding their physical plant, especially in manufacturing. That means these guys don’t see any future growth in demand, either, and they don’t have the disposable funds in this still-stagnant economy to expand where they do see some glimmers.

It’s going to be a long two years on the domestic front.

Texas Education

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Lawmakers in Austin are now debating SB 276, a bill that would provide school choice and educational freedom to all Texas students. It would allow parents who opt out of public schools to take with them 60% of the money the state would otherwise spend on their child—about $5,200—to pay private-school tuition. The rest of the money, roughly $3,000 per student, would go back into the state treasury.

There are a couple of alternative uses for those $3,000 than just dumping them back into the general pot.

Texas’ schooling, as elsewhere, is generally paid for with personal property taxes. Several years ago, Texas decided to consolidate those taxes, though, and redistribute them state-wide, rather than leaving them in the local community whose members had paid the taxes.

Thus: rather than sending the money to the general pot, leave the money with the school whose student(s) just left. This will increase the money available to be spent on the remaining students’ education. Of course, I’m naively assuming those $3k will be spent efficiently and for the benefit of the students….

Alternatively, the money could be earmarked, in keeping with the intent of that earlier property tax consolidation move, for the poorest of our school districts, giving them an increased opportunity to teach their students. Here, too, I’m making that same naïve assumption.

There is an alternative use for those $5,200, too. Don’t limit them to private-school tuition. Let the money be used for voucher payments/tuition at any school with room that the parents might prefer: parochial, charter, better performing public schools. Let the money be used, too, to defray parents’ costs of homeschooling.

Sending the $3k to the state’s general treasury, though, ought not at all be a deal breaker for this move, neither should the proposed commitment of the $5k to private-school tuition: SB 276 still is a major move forward. There’s plenty of time to come back again in the next legislative session to improve the move and to go farther. We’ll even have two school years of data to mull over as we consider the next move.

Now, there’s a thought.