For the last five years Larry Summers has called it secular stagnation. It’s the right general idea as far as the result, if totally wrong as to its cause. Alvin Hansen, who first coined the term and thought up the thesis in the thirties, was thoroughly disproved by the fifties. Some, perhaps many Economists today believe it was WWII which [...]
We have to acknowledge that economic statistics are imperfect even under the best conditions. But that doesn’t mean we shouldn’t try to measure comparative circumstances where conditions are less than ideal or conventional. In terms of a business cycle, we think of recession as negative GDP; to the point that conventional “wisdom” actually believes two consecutive quarters defines one. Not [...]
In some contrast to spending or even “demand”, the economic problem is and has always been the lack of income growth. The difference in economy between income and spending is debt. As noted earlier, it was clear that the asset bubbles, based on debt via eurudollar expansion, created a boost in overall “demand” as represented in GDP’s Real Final Sales [...]
The final revision to Q1 GDP changed very little, at least in its natural format given that there are benchmark revisions coming in less than a month that could significantly alter all of this. Even with “residual seasonality” there is every reason to suspect that the economy is weak even as compared only to the past few years. That seems [...]
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