The fear of a double-dip recession is getting more than the lion’s share of the news spotlight these days. Survey enough economists and you can find any forecast you desire. Don’t want to believe a double-dip will occur? Simply buy in to the White House sales pitch that the economy is rebounding, albeit too slowly. I can’t see why anyone would give these forecasts much credence as whatever administration is the current occupant will have a vested interest in rosy predictions.
Some may believe an economist like Paul Krugman more readily. After all, he doesn’t work for the administration. He is an unabashed liberal, however, and he very much supports Keynesian style stimulus programs so he tends to downplay his forecasts with a democrat in office in an attempt to move them in this direction. At least until real growth occurs, then he will fall in line as a supporter and be a cheerleader.
So,we get economists on the right predicting doom as it supports their partisan position. We also have economists on the left predicting doom, only a more mild version of it. Just enough to keep the discussion going supporting further stimulus. The blame game is where they totally differ. Of course, everyone on the left still blames Bush. The right will point out that we’ve had a democrat led Congress since 2006, so any excess spending is on their watch.
The problem I see is that we aren’t viewing the Bureau of Labor Statistics numbers relating to GDP growth in the right context. The NEBR, or National Bureau of Economic Research, reported that the recession officially began in December of 2007 and that it officially ended in June of 2009. However, they are simply using any positive number to count as growth without weighting those numbers. For example, we had a trade gap of -$449 billion last quarter. That represents a 3.5% decline in GDP, the largest number ever recorded since 1947. Unemployment has a similar effect. The nearly 10% unemployment rate requires a substantial amount of GDP growth merely to keep pace.
Here are the GDP results for the last three years. The number on the left is nominal and the right side is real GDP.
It is estimated that we need at least a 3.0% growth rate in the GDP each quarter just to keep pace with our nations population growth. Factor in the high unemployment and other factors such as the trade deficit, and you can see that we haven’t had a single quarter of growth in the last three years. Even the nearly 5% growth rate in the last quarter of 2009 was a net loser when you factor in these other anchors on the real rate.
We haven’t had a solid year of growth since 1999. Other than a quarter here and there, it’s been subpar for a decade. Look it up yourself. The numbers tell the story. All of this discussion is just so much hooey. Unfortunately, much rides on these numbers and the position statements put out by Fed chief Bernanke. Elections hang in the balance. Our policies towards business growth have been poor for a long time and we see the results. This ‘reading between the lines’ just needs to be part of the research we do as voters prior to each election.