Updates
April 28, 2016: we've hit a "soft patch" again.
August 3, 2011: Signs of a double-dip recession have emerged -- Meredith Whitney, anaylst. CNBC considers her highly credible.
August 2, 2011: the "double dip" recession has begun, as reported by the president's cable news station, MSNBC.
July 29, 2011: This update is being written just as the government reported a most anemic GDP number: 1.3. But even scarier, if that's possible: 1Q11 GDP was revised to 0.4 -- almost a contraction in growth.
This is another update to the June 19, 2011, posting.
I think the June 22, 2011, update was particularly prescient, when I wrote: When government officials start using the phrase "a soft patch" on a more regular basis, one can assume that experts acknowledge there is a better than 50/50 chance that we will fall into a double-dip recession. My hunch is that if we fall back into a recession we will not know it until about six months after the fact.
I wrote, "we will not know it until about six months after the fact." Today: The Commerce Department data on Friday also showed the current lull in the economy began earlier than had been thought, with the growth losing steam late last year.
I posted then: "Brutally honest, Bernanke admitted that he had no clue what was actually causing the current fragility in the U.S. economic recovery." Today: That raised questions on the long held view by both Federal Reserve officials and independent economists that the slowdown in growth this year was mostly due to transitory factors. Same source.
Today, Peggy Noonan, perhaps the best Presidential speechwriter ever, and the best pundit bar none, writes: So he is losing a battle in which he had superior forces—the presidency, the U.S. senate. In the process he revealed that his foes have given him too much mystique. He is not a devil, an alien, a socialist. He is a loser. And this is America, where nobody loves a loser.
So, back to the original post: what the President has called a "bump in the road" appears to be the beginning of another lost decade. But this time it's different. It could have been avoided had the President studied the history of the first lost decade.
Speaking of prescient: "Now, don't blow it." Those were the words Michelle Obama told her husband following her introduction of him at the 2004 Democratic Primary Convention …when she said to him as she passed him while she was walking off stage.
By the way, my favorite company, Apple Corp, now has more cash on hand than the US government. Several sources have pointed out that the US government has $74 billion cash on hand; Apple has $76 billion. And we are nowhere closer to ending the debate on the debt ceiling. I wonder if the president has golf scheduled for the weekend.
By the way, when we fall back into a recession, everyone will refer to it as a double dip; in fact enough time has passed since the first one that this one will be entirely owned by the current administration.
June 22, 2011: The comments to this article are very interesting. Iit is very, very scary that the Fed chairman was unable to instill any confidence in the investing community. It is clear that he sees a second lost decade, and most of it revolves around lack of a sound energy policy.
Brutally honest, Bernanke admitted that he had no clue what was actually causing the current fragility in the U.S. economic recovery. While the FOMC statement assigned blame outside of the U.S., pointing at Japan along with rising food and oil prices, Bernanke was put on the spot by a reporter who noted the inconsistency behind that explanation and a lowering of long term forecasts. Bernanke took the hit, admitting only some of the factors were temporary and that he didn’t know exactly what was causing the slowdown, but that it would persist. “Growth,” said Bernanke, “will return into 2012.”June 22, 2011: I think everyone agrees that the phrase "hitting a bit of a soft patch" right now with regards to the economy is being voiced/heard more and more frequently (if any doubts, google "soft patch"). One of the most important things a government can do is keep people calm, doing what it can to prevent panic. Panic can lead to anarchy (something about which the Greeks need to be most concerned right now). To maintain calm, the government will gradually prepare its citizens for worse news yet to come, but in a gradual manner. When government officials start using the phrase "a soft patch" on a more regular basis, one can assume that experts acknowledge there is a better than 50/50 chance that we will fall into a double-dip recession. My hunch is that if we fall back into a recession we will not know it until about six months after the fact. All incumbent administrations would do their best to manage the timing of announcing the onset of a recession.
June 22, 2011: Mort Zuckerman, US News (& World Report): Unemployment situation is worse than it looks.
The Great Recession has now earned the dubious right of being compared to the Great Depression. In the face of the most stimulative fiscal and monetary policies in our history, we have experienced the loss of over 7 million jobs, wiping out every job gained since the year 2000. From the moment the Obama administration came into office, there have been no net increases in full-time jobs, only in part-time jobs. This is contrary to all previous recessions. Employers are not recalling the workers they laid off from full-time employment.And based on the administration's animosity toward oil, gas, and mining, it sounds like there is no urgency to correct the situation. Years ago, US News & World Report was the most conservative of the big three (the others: Newsweek and Time Magazine). Based on the little I have seen of Mort Zuckerman on television, he seems as liberal, or at least as somewhat left of center, as the rest of the mainstream media pundits. When the mainstream media starts calling the administration out on this issue, one car argue we are seeing the beginning of the end of this administration. Elsewhere it is being reported that 3 of 10 Americans will vote for Barack Obama in 2012.
Original Post
I have called the years 2000 - 2010 a lost decade, and have a "lost decade" tag.
I honestly thought we might turn the corner but I'm beginning to wonder. I'm not alone. From the (London) Financial Times:
The administration thinks the pace of recovery will pick up soon. Last week President Barack Obama called the pause a “bump in the road." Others think the slowdown will persist and might get worse, fears that cannot be dismissed. One alarming possibility is that the traits the US has relied on to drive growth in the past – labour market flexibility, rapid productivity growth – might have become toxic. If the US is unlucky, traits seen as distinctive strengths are now weaknesses, and a “lost decade” of stagnation, like Japan’s in the 1990s, might lie ahead.
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