Tuesday, July 17, 2012
Off to Vacation!
This is true... this blog has been on an auto-pilot of sorts for most of a year now as I have taken a healthy rest from daily blogging, mostly updating the data-only posts and forgoing the more creative ones.
Possibly an extended vacation will work to break me out of this bout of "blogger-burnout" but who knows... I almost got back at it a few days ago after listening to that nincompoop Paul Krugman talk about his new book on NPRs On Point... my hackles were UP!!... yet I still couldn't muster the creative energy to post a retort.
Oh well... so I'm off to France for an extended stay and hopefully, given the extra leisure time, I'll be able to collect my thoughts (mostly for my benefit) on the state of the "recovery" and the outlook going forward.
One thing does occur to me though... while Krugman's prescription of even more government spending seems completely ludicrous from any but the most left-leaning Keynesian vantage point, his assessment of the weakness of the "recovery" is, in in my estimation, very accurate.
The "recovery" has been weak and the "jobless recovery" function more pronounced than ever before begging the question... what will the landscape look like when (the inevitable) next recession comes?
Should the job market and other major macro indicators not heal sufficiently, the next turn down will likely come with an exceedingly depressive force.
For most of the post-WWII era, each expansion propelled the U.S. economy from the depths of a recession beyond the the level (of activity, job creation, participation rate, production, etc.) set at height of the prior expansion.
In this way, economic indicators depicted the economy to be on an constantly cyclical path that always was leading generally uphill... a geometric quirk I know... but there is something very pure in that pattern.
No matter how bad a recession you were in, eventually, in the near future, you could count on the economy to meet and exceed its past best performance.
It hasn't been that way for a long time now...
Since 2000, when telltale signs of erosion (or simply of fundamental change) of this pattern first became visible in the participation rate, the breakdown of this true recovery function seems to have become more prominent.
If the current "recovery" does NOT succeed in truly besting its last best performance (of 2006), I think it will be very hard to sweep under the rug... in fact, it will likely be unmistakable.
So in that respect I suppose Krugman is right... things may be more dire than we would like to accept... yet turning to even more government spending to prop things up or stoke some sort of fictional Keynesian macro-economy starter seems foolish in the least.