The Lackluster Recovery

by Marilou Moursund on April 23, 2014

in Credit Crisis,deficit spending,Employment,Fiscal Policy,politics,taxes

Ed Yardeni points out an interesting article in the WSJ from a couple of days ago that I didn’t see, titled “Sluggish Economic Recovery Proves Resilient”. From the linked article: The recovery from the recession has been nasty, brutish and long. It also is shaping up as one of the most enduring. The National Bureau of Economic Research, the semiofficial arbiter of business cycles, judges that the U.S. economy began expanding again in June 2009, just over 58 months ago. That means the current stretch of growth, in terms of duration, is poised to drift past the average for post-World War II recoveries. Yet after almost five years, the recovery is proving to be one of the most lackluster in modern times. The nation’s 6.7% jobless rate is the highest on record at this stage of recent expansions. Gross domestic product has grown 1.8% a year on average since the recession, half the pace of the previous three expansions. From Yardeni Research Morning Briefing today discussing the article: So why is the recovery so slow? The article notes that Republicans blame Democrats

for burdening the economy with taxes, debt, and regulations. Democrats blame Republicans for not agreeing to more fiscal spending

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and for playing a game of chicken with the debt ceiling. Economists are also a disagreeable lot, with some saying that the financial crisis of 2008 is still weighing on the economy. Others see “secular stagnation.” Not mentioned in the article was income inequality, which has recently become one of the main explanations of progressive economists. Debbie and I tend to side with the conservatives. We’ve frequently marveled at the resilience of the US economy notwithstanding the meddling of the federal government. We also believe that powerful deflationary forces have been unleashed by the proliferation of globalization and technological innovations. They are keeping a lid on inflation, which lowers the likelihood of a recession caused by tight money conditions.

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