Why growth still feels like recession

[CHIMO]

Last month, the National Bureau of Economic Research's official business cycle-dating committee told the country that the recession had ended in the second quarter of 2009. This was, undoubtedly, the correct call. The economy is showing positive growth, which is what defines the end of a recession.

However, the growth is so weak coming out of this downturn that it will be invisible to anyone who doesn't spend their life looking at economic data. For most people, this will be a recovery marked by continued high unemployment and near-record rates of home foreclosures. And the politicians' response is to cut people's social security benefits.

It may not be immediately obvious quite how weakly the economy is growing. First, we need a reference point. When an economy gets out of a step recession, it should be soaring, not just scraping into positive territory. In the first four quarters following the end of the 1974-75 recession, growth averaged 6.1%. In the four quarters following the end of the 1981-92 recession, growth averaged 7.8%. The growth rate averaged just 3.0% in the four quarters following the end of this recession.

But the actual picture is even worse. Most of this growth was driven by the inventory cycle as firms went from running down their inventories to rebuilding them. If inventory fluctuations are pulled out, growth in demand averaged just 1.1% over the four quarters following the end of the recession. Final demand growth was down to just 0.6% in the most recent quarter.

http://www.guardian.co.uk/commentisfree/cifamerica/2010/oct/29/us-growth-2-unemployment

[earthside]

1. In other words ...

... it feels like a recession because for 95 percent of Americans it still is a recession.

[geckosfeet]

2. Bingo. It's not a recession for the upper 10% of income 'earners'.

Read more: Why growth still feels like recession

Think the US economy's 2% growth is a good news story? Think again: it has to be 2.5% just to stop joblessness rising.

It is probably worth noting that nearly all of the fiscal scolds earn at least six-figure salaries and many earn in the seven figures. So, we have an amazing sight here. People who earn hundreds of thousands, or even millions, of dollars a year, who have the job of designing economic policy, completely failed on the job.

This can't be emphasised enough. Missing the housing bubble was an act of astounding incompetence for an economist. This is driving the school bus into oncoming traffic; it is the kitchen cook burning down the restaurant; it is the computer technician causing a complete freeze of the company's systems.

None of these highly-paid, highly-educated people got fired or even missed a promotion. Instead, they are running around telling people earning $20,000-30,000 a year that they have to tighten their belts and accept lower social security benefits.

If politics and the media in the United States were not so corrupt, this would have been topic No1 in the election. Candidates would have been pushing plans to aggressively stimulate the economy and to throw the Wall Street crowd in jail. But a candidate who said such things would not get enough money to run a serious campaign, because you need to court the Wall Street types to pay for a campaign these days. And the media would have ignored and/or ridiculed such a candidate.

Read more: Why growth still feels like recession

So, they screwed up, we get screwed.

[Skittles]

3. a jobless recovery IS NOT A RECOVERY

[fasttense]

4. RepubliCONS have money for tax cuts for the uber rich

they have money to fight 2 useless wars, they have money to shovel to corporations and banks but not one red cent for the people who do all the fighting and dieing and working in this country.

[BlancheSplanchnik]

5. helpful explanation

good article; doesn't fix it (fixing the Greedy Oligarch Propaganda party would go a long way in that direction), but it helps a layperson like me understand a little better.