Inquiring minds want to know – and Mish links to an answer:
…Our suspicions have been confirmed — the recession never ended. Macroeconomic Advisers produces a monthly U.S. real GDP series and it shows that the peak was in April, as we expected, with both May and June down 0.4% in the worst back-to-back performance since the economy was crying Uncle! back in the depths of despair in September-October 2008.
The quarterly data show that Q2 stands at a +1.1% annual rate (so look for a steep downward revision for last quarter) and the “build in” for Q3 is -1.5% at an annual rate. Depending on the data flow through the July-September period, it looks like we could see a -0.5% to -1% annualized pace for the current quarter…
I’m also one of those convinced the recession never ended – that when all the data is added up, it will be shown that the private economy continued to contract all through 2009 and 2010. The stimulus didn’t work – not even for a minute. It is always good to keep in mind that the data you get on economics, when it first comes out, amounts to no better than an educated guess…with the “educated” believing that Keynesian economic theory is valid, thus their presumption that there simply must have been growth because we spent all that (borrowed and printed) money. This is why we see, month after month, downward revisions of previously positive economic data – and, very often, upward revisions of the bad news.
There is too much debt, boys and girls – federal debt, State debt, local debt, personal debt. This debt is piled on an economy which has shipped its factories to China, its farms to Mexico and its mines to Chile. We simply don’t have the base of wealth necessary to provide the rapid consumption necessary to keep GDP genuinely positive – only a resumption of American domestic production of actual goods (not services and not silly froth like “green jobs”) will allow us to climb out of this…and even then, it will additionally require a balanced budget. No more debt!
Debt is our enemy – it is the enemy of prosperity, it is the enemy of American national security, it is the enemy of freedom. We should, honestly, amend the Constitution to forbid any government entity from contracting any debt whatsoever. We won’t do that, but that is how serious the problem is – and if we don’t face up to what we need to do, we’ll just bury ourselves deeper.
I’m not a doomsayer about the United States – the TEA Party has shown that the true American spirit lives…we will overcome this. But we need a complete change of government policy – a night and day sort of paradigm shift – in order to make it happen.
UPDATE: Seems that the Federal Reserve governors are divided on what do to. Bottom line – some want to insanely do what they’ve already done, others want to change course.
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