Bad jobs report.
Disappointing housing report.
Lower GDP growth from the end of last year to the beginning of this year.
Tanking value of the Euro.
Slowing consumer spending.
Stories abound in the financial press this morning because of the disappointing data, asking the question: Are We Headed For A Double Dip Recession?
Barry at Big Picture thinks the following:
This is, historically speaking, normal. ECRI’s Lakshman Achuthan told Newsweek: “You always have a spurt in growth out of recession and then you throttle back. But we’d need to see a pronounced, pervasive, and persistent decline in the level of the leading indicators to start talking about recession risk.”
That “pronounced, pervasive, and persistent decline” is simply not present. Indeed, double dip recessions are actually rather rare. As Yale Professor Robert Shiller pointed out in a recent Sunday NYT article, “When inflation-adjusted G.D.P. has come out of a decline and posted three or four quarters of gains, it has never immediately begun to fall again — at least not since quarterly numbers began to be issued in 1947.”
And that is what we have had — a year of improving GDP. Following the initial surge in data off of the lows, we have entered a slowing phase of the recovery.
The key factor regarding all of this slowing data is that it is suggestive of an economy that will continue to expand, albeit at a slower pace. None of this data is highly aberrational, and none of it is consistent with past double dip recessions.
He says the calls for double dip recession are coming from the same economists who missed the mess the first time around and are now calling for fiscal austerity measures like cuts in government jobs and spending.
Barry also says doing that right now at a time when the economy is STILL vulnerable could actually send it into recession again. The time for balanced budgets and fiscal prudence is during an economic expansion, not the post recession period where the economy is just coming out a downturn.
Unfortunately the deficit hawks are winning the argument on policy.
That's why the teacher bill in the Senate that would have provided billions to keep teachers from being laid off so far has not passed.
Once again, the idiots who caused the financial mess in the first place are creating more problems and hurting middle and working class people in the process.
RBE don't be surprised if the bill "miraculously" passes later in the summer.
ReplyDeleteBy then teachers will already have been laid off, so there would be no obligation for school districts to hire back those that gave them trouble.
Instead, they can save money and weaken unions by hiring "two years and out" Teach for America people.
Many people thought that the Depression was "over" in 1931, with the economy having partially recovered from the initial effects of the '29 crash. But then there were a series of sovereign debt crises, starting with bank failures in Austria, which accelerated a steeper decline, and wiped out the recoveries made by the stock markets. it was at that point that the Dow went into a free fall that resulted in it losing 90% of its 1929 valuation.
ReplyDeleteSome folks on blogs such as Naked Capitalism have suggested that's what we're seeing now with the crisis in Greece, Spain Portugal, Hungary, etc. If so, then there'll be that much more crisis for Obama/Duncan/Bloomberg, etc to take advantage of, on the backs of you-know-who.
Let's pray this is not the case, but it could be. Minimally, this is The Mother of All Recessions if this is a recession at all.
ReplyDeleteI have a book that details what our government officials said to the public during the first few years of The Depression, and they were in the business of soothing the public. They constantly lied to the public. I don't think our current "leaders" are any different. In fact, if you trace back Paulsen's and Bernake's comments every time before a major bust in the economy, you'll find that the opposite usually happens.