Posts Tagged Economy of the United States
Zero jobs for August reported in Friday’s monthly jobs report has economists concerned that the U.S. economy may be entering into a second recession. The economy grew at a rate of 0.7 percent in the first half of 2011, marking the lowest rate of growth since the “Old Recession” ended in June 2009.
The Obama administration estimated Thursday that unemployment will average about 9 percent through next year. This compares to a rate of 7.8 percent when Obama took office. Lagging job growth has prompted some economists to believe the economy is headed into a “New recession”.
Hank Paulson, former Secretary of the Treasury under George W. Bush, spoke with Dreadmonger reporters today. “We just don’t think there is a new recession brewing, and, if there is, we don’t believe it will compare to what we went through in 2008 during the Great Recession.”
Yale economist and consultant to Dreadmonger, Dr. Paul Grunder indicated that he believed “This ‘New Recession’ as we have termed it, will exceed the depths seen in the so-called “Great Recession’ of 2008. We firmly believe that we have already entered a recessionary period and that it will be deep and protracted.”
In response, Secretary Paulson said, “There are some who, in trying to be ahead of some ill-conceived ‘curve’ of economic opinion, will say that we have entered into a recessionary environment. In reality, we are far from the state of affairs we saw in 2008 that precipitated what all will agree to be the most difficult economic challenge this country has faced since the ‘Great Depression‘. And that is precisely why we have dubbed this period the “Great Recession’.”
Dr. Grunder replied, “The self-aggrandizement evident in the characterization and handling of the 2008 downturn spawned a media circus and unnecessary fear-mongering that did nothing but prolong this period of weakness in the U.S. economy.”
“‘Period of weakness?'” Paulson replied, “That’s the most ridiculous understatement I have ever heard. The economy was teetering on the edge of oblivion and we pulled it back. Through herculean efforts, I might add.”
“These so-called ‘herculean efforts’ that some have cited,” said Dr. Grunder, “were merely exaggerated fluff for media consumption, no doubt prompted by some of the principal’s literary agents.”
“See this…” said Mr. Paulson, making a rude gesture, “this is where this Yale professor can stick his ‘exaggerated fluff’.”
Dr. Grunder responded, “Well, I guess that demeanor is good for ex-Wall Street execs attempting to sell books but, I don’t believe it adds much to the real and substantive discussion that is being undertaken by serious economists in this tenuous environment.”
Dreadmonger is unable to print Mr. Paulson’s response in this family friendly publication.
- Double Dip Recession Or Year 5 Of 2007 Recession? (ritholtz.com)
- Recession? No. We’re In The Second Great Contraction (businessinsider.com)
- Questions and answers about the August jobs report (sfgate.com)
In an AP Fact Check released this past week-end, the Associated Press reported that, contrary to popular arguments put forward by the Republican party, the problem with the lagging US economy is not spending but is, in fact, related to the lagging US economy.
In their concisely worded AP Fact Check release, the AP noted:
“This disparity between what comes in and what goes out .. reflects the mathematical reality that during recessions, tax revenues go down sharply because people and companies make less money and so pay less in taxes. Federal spending goes up… with an increasing demand for government help from food stamps and unemployment compensation and other safety-net programs. At the same time, the negative economic growth associated with recessions lowers the GDP number on the bottom of the equation, further boosting the ratio of spending to GDP.”
In other words, revenue goes down because less revenue comes in and government spending goes up because the government spends more. As a direct result, spending to GDP ratios look bad.
Noted Dreadmonger consulting economist, Dr. Paul Grunder commented on the report, saying, “We see this pattern repeating historically in each cycle. Not to get too technical but, as capital inflows decrease, we see less money coming in. Similarly, as more capital is spent, we see a corresponding increase in spending. This is often difficult for the layperson to grasp as it may be somewhat counterintuitive to those not schooled in economic theory.”
The AP Fact Check went on to quote noted Democratic strategist Mark Mellman, “If the economy starts to get better, then everything gets better.”
Trust Dreadmonger to provide in-depth economic reporting and analysis.
- Report: U.S. Debt Is Caused By Weak Economy, Not Government Spending (mediaite.com)
- FACT CHECK: Recession is culprit in high US debt (seattletimes.nwsource.com)