No Double-Dip Recession? Terrific -- But We're Not Out Of The Woods Yet
So, let's say the U.S. escapes a double-dip recession. Good news, right? Maybe not; we been down so long that even stagnation may look like up to us.
The Economist, America-friendly but not always particularly sensitive to the worker's plight, editorializes this week in on the risks of a double-dip recession by counseling, "It will be a hard slog. But on the current evidence, don't expect America's recovery to grind to a halt."
Goldman Sachs, ahead of the curve in forecasting the recession, gives a double-dip a 25-30 percent change in its latest report and calls it "not our base case." Why? It fell to Neil Irwin in The Washington Post to say it outright about the double-dip recession prognosis:
Activity in [housing, consumer spending, employment and business investment] fell so much during the recession that they just don't have much more room to fall, even if the recovery continues to disappoint. So while sluggish growth may be with us for a while, it's unlikely that there would be a return to actual contraction in economic activity.Lurking behind this kind of commentary is the insidious idea that, if we manage to avoid a double-dip recession, then we've avoided the worst. In fact, we are experiencing the worst: a sustained period of unemployment that, absence some serious policy shifts, will be with us for some time.
The leader writer at The Economist, in particular, should have followed the tone of a chart it published further inside the magazine (click at right for a larger image) that has been burning up the econo-blogs. It shows, vividly, just how anemic job creation looks these days -- even compared to the Great Depresssion. Small wonder that Carl Weinberg at High Frequency Economics wrote over the weekend that "[t]his experience is much more akin to the Great Depression than any business cycle we have seen in our lifetimes."
The late Sen. Daniel Patrick Moynihan coined the alliterative phrase "defining deviancy down" to describe how, by the early 1990s, American society had become inured enough to high levels of crime that a new kind of normality set in. We're in serious danger of getting comfortable with the notion that, well, the good times are past and a lot people will be jobless for awhile. Thomas Hoenig, the head of the Kansas City Fed who's been banging on about the need for higher interest rates, said that there is "no short cut" past the pain involved here. That's resignation in a nutshell.
Well, we'll never know unless the Fed tries. A little stimulus from the federal government would help. And, oh yeah, the bankers got a nice "short cut" past their pain, so why shouldn't the rest of us?
Related:
- Criticism of Fed On Quantitative Easing Are Wrong: We Need More
- Fed To Maintain Its Balance Sheet - But Not Because The Economy Is Slipping
- Fighting With Itself, The Fed Does Damage to Its Credibility As Economy Suffers
- Bernanke Gives Us the Evidence For Further Action, But No Clear Endorsement Of It
- Draw Ben Bernanke Out on the D-Word: Is Deflation Near