The National Bureau of Economic Research (NBER) has declared the “Great Recession” to be a matter of history.
“The Recession is dead, long live the Recovery!”
Ooops, not so fast. This recovery is not your father’s recovery as it is more like a dead-cat bounce.
With housing starts lagging & unemployment rates remaining high, there is little to really cheer about. And much of the good news looks less cheery.
For example, the Obama administration trumpets rising US exports. But these came on the back of the steady erosion of the international value of the dollar over the past 2 years.
Since this implies a weak-dollar policy, the US is open to accusations of being a “currency manipulator” on par with China.
In fact, this is more evidence of incoherent analysis & policy prescriptions from the White House economic advisers.
In trumpeting the presumed dangers of deflation, they provided an excuse to expand expand government spending, every politicians dream.
This is odd since consumers are helped, not harmed by lower prices of commodities.
And concern about declines in some asset prices is overblown since this is a natural, inevitable & beneficial outcome of the bursting of “bubbles”.
Removing the impression that deflation is the biggest problem removes the primary excuse for pointless, nay, counter-productive “stimulus” spending.
Now, back to the sluggish recovery. Many observers gave reassuring arguments about the resilience of the US economy. Indeed, this was true as long as the market & the private sector of the US economy had enough breathing room.
This time the needed oxygen has been sucked out of the system with debilitating regulation & excessive public-sector borrowing.
While much of the deficit spending supported public-sector pensions & sustained jobs for bureaucrats, private-sector workers lost jobs & pensions.
Talk about unfair! The problem with the economy is not large bonuses to executives or an unregulated financial sector. The biggest problem is spending commitments that benefits public-sector employees at the expense of taxpayers.