Daniel Gross, writing for Newsweek, finds that two of his favorite economic forecasters have predicted an end to the recession, starting ... now. We're growing, everybody! We're a real economy! Let's look at the evidence:
The Macroeconomic Advisers, a St. Louis consulting firm that calculates a monthly GDP, finds third quarter GDP tracking at a healthy 2.4 percent clip, up from the 0.1 percent decline throughout the second quarter. For comparison, 2.8 percent GDP growth is about where we were in 2006 -- it's not extraordinary, or even very good -- but it's not a recession. It's difficult to verify that statistic officially, because the Bureau of Economic Analysis takes months to estimate and revise quarterly GDP growth. But Gross calls for backup and finds it at the Economic Cycles Research Institute.
ECRI asks us to ignore the most talked-about economic indicators -- like consumer spending, which looks ugly, and unemployment, which looks even worse -- because they are lagging indicators of economic health. Instead, it breaks down leading indicators into long-term (credit, housing, productivity, and profits) and short-term (stocks, jobless claims) and tracks upticks that are pronounced, persistent and pervasive.
So is it only a matter of time before unemployment, the most public indicator of them all, joins the recovery party? Not so fast. The last two recessions -- in the early 90s and after 9/11 -- were shallow drops in GDP corresponding with lengthy periods of lingering unemployment. There are plenty of theories for this -- I've documented some, such as structual changes to the manufacturing industry and the failed promise of US innovation, here -- but the pull-up is that we have no idea how long unemployment will continue to grow or how fast it will subside after all other economic engines are go. As Gross concludes: "The recession is over! Let the jobless recovery begin!"
So, this is what a jobless recovery looks like...wow. It sucks. Makes me wish for the jobless recovery of the Bush administration, remember way back in the first term they called Bush's recovery a jobless one? Well, they did. Wonder if they are going to reassess that now that we see what a real jobless recovery looks like. Newsflash, morons: if people aren't going back to work, IT AIN'T A RECOVERY!
Second, it may even be a job-loss recovery, according to this blogger:
Given that the Fed's first mission is to delay, confuse, hope, and otherwise attempt to buy time while engaging in wishful thinking along the way, that Bernanke is willing to admit this may be a jobless recovery is a sign that things will likely be at least that bad. In other words, prepare for a job loss recovery.
Fundamentally Obama is doing the wrong thing when it comes to real job creation. The Administration's programs are for the most part makeshift work that will do nothing but waste taxpayer money.
The problem is that small businesses face rising taxes (an incentive not to hire) and at the same time the world is awash in overcapacity and shrinking profit margins. The latter is a huge point that neither Shelby nor Maria seemed to realize.
Rising taxes on top of rampant overcapacity is a toxic brew that points to a jobless recovery at best. It is telling that Bernanke is willing to openly admit the possibility.
Bottom line: Obama lied, the economy died. Lie after lie after lie! Countrywide! Goldman-Sachs! AIG! I demand an investigation!
