http://online.wsj.com/article/SB10001424052702303918204577444222179044362.html?mod=WSJ_Opinion_LEADTop
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"Don't ever be too impressed with goal setting. Be impressed with goal getting." (John C. Maxwell)
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Robert Barro has articulated in today's wsj.com what many of us feel: there is no economic recovery. His numbers key on the growth rate of "real gross domestic product."
Barro points out that the average annual growth rate of U.S. GDP since 1948 has been 3.1% while, in 12/07 to 6/09 recession, GDP fell by 5%: "But this decline is 10% relative to trend - that is, after factoring in normal growth. To make up for this shortfall, the subsequent recovery has to attain growth rates averaging above 3% for several years."
Yet, Barro points out, in the current "recovery," growth has averaged only 2.4% per year and 1.8% in the first quarter of 2012. And, here is his point: "This low growth means that the U.S. economy has actually been falling further and further behind the normal trend. Therefore, it is not a recovery at all."
Unfortunately, professor Barro's ending points out that Keynesian-style demand stimulus has not worked for the past three years so we need to do something different like "... individual incentives to work, produce and invest." What Barro misses is that we didn't do enough infrastructure spending which would have created more jobs and more tax receipts for government.
That's OK. He's defined the problem - he just has the wrong "solution."
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The biggest oversight here is the huge loss of jobs in the public sector since Bush left office.
ReplyDeleteLink here: Jobs (Click Me)
As you can see, public sector jobs are just cratering, while the private sector losses are about 0 at this point in Obama's Presidency. This is a perfect example of how what we've been doing the last 3 years is not Keynesian, in fact, it's the opposite. Firing millions of workers and then wondering why our recession isn't getting better is simply moronic at best.