I
have been a fraction off in keeping my readers informed on the nature
of the economy. I have been living in San
Francisco where business was steady in late '08 and started growing in
'09 for the entire year. I called the rise in the stock market
correctly in February '09 and the turn around of the economy at the
same time.
One of my errors was looking at the GDP in current
dollars. The economic peak was August of '08 and the
bottom was February '09. The drop was no greater than 3%. Insignificant
by historic standards.
Trouble is, when we adjust for inflation,
the downturn began in June '08 and lasted to the same February '09.
The drop, inflation adjusted was 4%, still not much.
I came
across
these chart in Forbes which calls to my attention what we all
know, that employment fell off more than in the past and has risen much
slower than in past recessions. Particularly slow for younger people,
those with only high school educations, men and blacks.
That tells me what I have been saying for some
time. We are now reaping the rewards of astounding increases in
productivity that occurred in the past 15 years, which is why people
with fewer skills are the ones who were laid off first and are being
replaced last.
The Forbes chart on fixed capital investment says two
things: the major productivity gains occurred in the past 15 years, there aren't
many fresh new ones immediately available.
And, most importantly, the Federal
stimulus package, which passed in mid-February 2009, passed after the
bottom of the recession had happened.... certainly the economy used Federal dollars
to compete with private dollars. In short and in plain English, which
we don't hear from the current liars in Washington, the stimulus
package made the economy worse and the labor market much worse.
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