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When we think of economic downturns, we generally think of them as flat up or down. We are all familiar with terms like recession. That is what we are now very slowly getting out of. We know, from our parents and grandparents, what the utter devastation of a depression is. We know, from our most recent experience, the Great Recession, what that feels like. Some months back, a term was added to the economic conversation: secular stagnation. Though the concept isn’t a new one, it has recently been reintroduced. Continue reading Defining Secular Stagnation | Economics→
Paul K’s agrees with me on the core aspects of my post yesterday regarding our persistent trade deficits as a barrier to full employment, but disagrees the dollars status as a reserve currency has much to do with it.
For much of the past five years readers of the political and economic news were left in little doubt that budget deficits and rising debt were the most important issue facing America. Serious people constantly issued dire warnings that the United States risked turning into another Greece any day now. President Obama appointed a special, bipartisan commission to propose solutions to the alleged fiscal crisis, and spent much of his first term trying to negotiate a Grand Bargain on the budget with Republicans.
That bargain never happened, because Republicans refused to consider any deal that raised taxes. Nonetheless, debt and deficits have faded from the news. And there’s a good reason for that disappearing act: The whole thing turns out to have been a false alarm.
Yes, you read those headlines right: real GDP contracted at a 2.9% rate according to revised data released this AM. That’s contracted, as in went down.
Nope. That was a truly lousy quarter but it’s highly unlikely to be repeated any time soon. The particularly bad winter weather played a role; both residential and commercial building were negative. Heavy inventory buildups in earlier quarters were reversed, which usually implies a positive bounce-back in coming quarters. Exports were revised down and imports up, so the trade deficit subtracted a large 1.5 points from the bottom line; that drag will likely diminish in coming quarters. Continue reading Jared Bernstein: Whoa! Whassup With That Big Negative Q1 GDP Revision?→
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