Updates
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.
June 20, 2011:
Missouri River flooding near Omaha. My hunch: bigger economic loss than Katrina. My hunch: less media interest in the flooding than with Katrina. I guess there's no one to blame for the flooding; we had someone to blame for Katrina. Common denominator: US Army Corps of Engineers. My hunch: all this flooding upstream to prevent flooding of New Orleans.
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 stalling of the US recovery raises big, scary questions. After a recession, this economy usually gets people back to work quickly. Not this time. Progress is so slow, the issue is not so much when America will return to full employment but what “full employment” will mean by the time it does.
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.