Surprise! Q1 GDP likely negative...

[Lukey]

The Obama depression slogs on:

http://www.zerohedge.com/news/2016-...er-february-trade-deficit-grows-more-expected

And with the trends that produced that GDP print still in place (profit declines, trade non-existent, incomes down) it's looking increasingly likely we ARE in recession. Anyone care to speculate what that does to the Presidential race?

 

[as seen on tv]

actually, this shouldn't come as a surprise. 1Q is "always" the weakest for GDP growth, and is sometimes negative. 1Q GDP was also negative in 2014 and 2011.

However, in 2016 we don't get to blame "unusually harsh winter weather" as a contributing factor.

 

[marvin martian]

However, in 2016 we don't get to blame "unusually harsh winter weather" as a contributing factor.

True, but they can still blame Bush!

 

[Constitutional Sheepdog]

@Arkady come out come out where ever you are.

 

[Arkady]

The Obama depression slogs on:

http://www.zerohedge.com/news/2016-...er-february-trade-deficit-grows-more-expected

And with the trends that produced that GDP print still in place (profit declines, trade non-existent, incomes down) it's looking increasingly likely we ARE in recession. Anyone care to speculate what that does to the Presidential race?

As I've mentioned before, each modern recession was preceded by weakness in the labor market:

• When the last recession started, in December 2007, it was heralded by two months of net jobs losses, and a run when job gains were less than 100,000 in nine of the prior fourteen months.
• When the prior recession started, in March 2001, there had been net job destruction in five of the ten months leading up to that.
• When the recession before that started, in July 1990, we had net job destruction that month, and job creation under 1000,000 in five of the eleven months.
• When the July 1981 recession started, job creation had been sub-100,000 four times already that year.
• When the January 1980 recession started, job creation had been sub-100,000 in four of the five months leading up to that.

So, in all recent cycles we saw a period of weak labor market performance leading up to the recession. Have we seen that this time? Certainly not. We've had job creation over 100,000 for twelve straight months, and in twenty-six of the last twenty-seven months. Over the last six months, we've averaged 246,000 jobs created per month!

Does that prove we're not in a recession? No. But it does mean that if we are in a recession it would be a type of recession unprecedented in this modern era -- a recession that showed up without the slightest hint from the job market.

Now, of course, you'll want to point out the prediction by the Atlanta Fed that first quarter GDP is down, because Tyler Durden instructed you to hype that report and you mindlessly do whatever he tells you to do. Two problems with that.

First we've been down that road before. For example, remember this nugget?

https://www.politicaljack.com/threa...-the-4-gdp-nonsense.84568/page-3#post-1402888

Tyler had instructed you to hype a cut by the Atlanta Fed of third quarter 2015 GDP forecast to 1.2%. You, predictably, obeyed. Actual third quarter GDP came in much higher, at 2.0%, but no matter.

Or how about this one:

https://www.politicaljack.com/threads/u-s-commerce-department-must-be-racist.81664/

You were busy hyping a GDPNow forecast that said second quarter 2015 would come in at 0.9% growth. I pointed out that their accuracy at that point before an official release was so bad that you'd actually have done much better than them just by blindly guessing 2.1% every time. That quarter, actual GDP growth came in at 3.9% -- meaning my blind 2.1% guess was, indeed, much closer than the GDPNow forecast of 0.9%.

Anyway, the actual advance estimate for first quarter GDP comes out April 28. So, the forecast you're hyping is 23 days before that. Their forecast error, at this stage, tends to be a little under 1.2 percentage points:

That certainly gives the forecast more value at this stage than at some other, earlier points that Tyler has instructed you to hype it. But, needless to say, if they later tune their forecast upwards, as more information comes in, you won't be back here posting about the upward adjustment. Tyler only gives you your marching orders when there's something negative to report: downward adjustments will be treated as newsworthy, while upward adjustments will be dutifully ignored.

For my part, I'm a numbers guy, so I think a GDPNow prediction at this stage has some value, based on that demonstrated past accuracy. Since the Fed is calculating 0.4% growth, then it's a decent guess we'll have growth somewhere in the -0.8% to +1.6% range. That won't be encouraging, to be sure, but neither will it indicate recession. Recall that we had -0.9% growth in first quarter 2014, but didn't go into recession, because we bounced back strongly (with 4.6% growth the next quarter). We did even worse in first quarter 2011, with 1.5% shrinkage, but also avoided recession thanks to a quick rebound. And even first quarter 2015 was bad, with only 0.6% growth, but the next quarter was strong and we didn't get a recession.

In recent years, first quarters have had a tendency to be bad. From 2009 through 2015, first quarter average 0.1% GDP shrinkage. But second quarters have averaged 2.5% GDP growth. So, even if the Fed forecast ends up being accurate, that doesn't mean we're in recession.

My second point is more interesting. Tyler says "As of this moment, the Atlanta Fed calculates Q1 GDP to be -0.7%." Follow Tyler's link, though, and what do you find:

https://www.frbatlanta.org/cqer/research/gdpnow.aspx?panel=1

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.4 percent on April 5, down from 0.7 percent on April 1
​

So, did the Fed previously project -0.7%, but later adjusted it up to +0.4%, with Tyler reporting the obsolete figure? It doesn't appear so, since their track shows it hasn't gone negative even once this cycle:

So, where did Tyler get this idea that the forecast was -0.7%. Did he simply misunderstood that it was a decline from +0.7% to +0.4%? Or did he just make it up, figuring the kind of dolt who frequents Zero Hedge wouldn't bother to check? I don't really understand the mentality of such dolts, so I'll leave it to you to figure out which it was.

 

[Arkady]

@Arkady come out come out where ever you are.

See my response to Lukey for a fuller analysis, but here's the very short version, if you're interested:

Zero Hedge has its facts wrong. They say:

As of this moment, the Atlanta Fed calculates Q1 GDP to be -0.7% (Bank of America has it at 0.6%).​

Click on their link, though, and you'll see that they're actually projecting positive GDP growth, and there's no support for the idea of a -0.7% forecast. Even if GDP went negative, though, that wouldn't mean we were in a recession. First quarter GDP has been consistently weak in recent years -- averaging -0.1% since 2009. Yet that hasn't meant we've fallen into recession. Second quarter has tended to be strong, meaning that the periods of economic weakness haven't been long enough to qualify as recession (either by the old-fashioned definition of two consecutive quarters of real GDP shrinkage, or by the more modern methods used by the NBER business cycle dating committee). If the economy shrinks, yet again, in the first quarter, the real test will be whether it bounces back strongly, yet again, in the second quarter. And given the absence of any sign of labor market weakness (which showed up in the run-ups to all the other recent recessions), I'm skeptical about the idea we're in a recession.

 

[Deleted member 21794]

The Obama depression slogs on:

http://www.zerohedge.com/news/2016-...er-february-trade-deficit-grows-more-expected

And with the trends that produced that GDP print still in place (profit declines, trade non-existent, incomes down) it's looking increasingly likely we ARE in recession. Anyone care to speculate what that does to the Presidential race?

I don't know nearly as much about economics as you. What I do know is that the people I interact with on a daily business aren't happy with the economy. I also know we are clearly in a 6-month decline in job creation:

I also know that the economy has been slowing down drastically:

I'm not sure why any rational person would be surprised to find Q1 2016 would be negative growth- especially given it is functioning under the crushing weight of "fundamental transformation".

 

[Lukey]

As I've mentioned before, each modern recession was preceded by weakness in the labor market:

• When the last recession started, in December 2007, it was heralded by two months of net jobs losses, and a run when job gains were less than 100,000 in nine of the prior fourteen months.
• When the prior recession started, in March 2001, there had been net job destruction in five of the ten months leading up to that.
• When the recession before that started, in July 1990, we had net job destruction that month, and job creation under 1000,000 in five of the eleven months.
• When the July 1981 recession started, job creation had been sub-100,000 four times already that year.
• When the January 1980 recession started, job creation had been sub-100,000 in four of the five months leading up to that.

So, in all recent cycles we saw a period of weak labor market performance leading up to the recession. Have we seen that this time? Certainly not. We've had job creation over 100,000 for twelve straight months, and in twenty-six of the last twenty-seven months. Over the last six months, we've averaged 246,000 jobs created per month!

Does that prove we're not in a recession? No. But it does mean that if we are in a recession it would be a type of recession unprecedented in this modern era -- a recession that showed up without the slightest hint from the job market.

Now, of course, you'll want to point out the prediction by the Atlanta Fed that first quarter GDP is down, because Tyler Durden instructed you to hype that report and you mindlessly do whatever he tells you to do. Two problems with that.

First we've been down that road before. For example, remember this nugget?

https://www.politicaljack.com/threa...-the-4-gdp-nonsense.84568/page-3#post-1402888

Tyler had instructed you to hype a cut by the Atlanta Fed of third quarter 2015 GDP forecast to 1.2%. You, predictably, obeyed. Actual third quarter GDP came in much higher, at 2.0%, but no matter.

Or how about this one:

https://www.politicaljack.com/threads/u-s-commerce-department-must-be-racist.81664/

You were busy hyping a GDPNow forecast that said second quarter 2015 would come in at 0.9% growth. I pointed out that their accuracy at that point before an official release was so bad that you'd actually have done much better than them just by blindly guessing 2.1% every time. That quarter, actual GDP growth came in at 3.9% -- meaning my blind 2.1% guess was, indeed, much closer than the GDPNow forecast of 0.9%.

Anyway, the actual advance estimate for first quarter GDP comes out April 28. So, the forecast you're hyping is 23 days before that. Their forecast error, at this stage, tends to be a little under 1.2 percentage points:

That certainly gives the forecast more value at this stage than at some other, earlier points that Tyler has instructed you to hype it. But, needless to say, if they later tune their forecast upwards, as more information comes in, you won't be back here posting about the upward adjustment. Tyler only gives you your marching orders when there's something negative to report: downward adjustments will be treated as newsworthy, while upward adjustments will be dutifully ignored.

For my part, I'm a numbers guy, so I think a GDPNow prediction at this stage has some value, based on that demonstrated past accuracy. Since the Fed is calculating 0.4% growth, then it's a decent guess we'll have growth somewhere in the -0.8% to +1.6% range. That won't be encouraging, to be sure, but neither will it indicate recession. Recall that we had -0.9% growth in first quarter 2014, but didn't go into recession, because we bounced back strongly (with 4.6% growth the next quarter). We did even worse in first quarter 2011, with 1.5% shrinkage, but also avoided recession thanks to a quick rebound. And even first quarter 2015 was bad, with only 0.6% growth, but the next quarter was strong and we didn't get a recession.

In recent years, first quarters have had a tendency to be bad. From 2009 through 2015, first quarter average 0.1% GDP shrinkage. But second quarters have averaged 2.5% GDP growth. So, even if the Fed forecast ends up being accurate, that doesn't mean we're in recession.

My second point is more interesting. Tyler says "As of this moment, the Atlanta Fed calculates Q1 GDP to be -0.7%." Follow Tyler's link, though, and what do you find:

https://www.frbatlanta.org/cqer/research/gdpnow.aspx?panel=1

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.4 percent on April 5, down from 0.7 percent on April 1
​

So, did the Fed previously project -0.7%, but later adjusted it up to +0.4%, with Tyler reporting the obsolete figure? It doesn't appear so, since their track shows it hasn't gone negative even once this cycle:

So, where did Tyler get this idea that the forecast was -0.7%. Did he simply misunderstood that it was a decline from +0.7% to +0.4%? Or did he just make it up, figuring the kind of dolt who frequents Zero Hedge wouldn't bother to check? I don't really understand the mentality of such dolts, so I'll leave it to you to figure out which it was.

And the resounding over arching fact is that, even according to the "official" stats, the economy has consistently under-performed for the entire post recession period (save for the nascent snap back in early 2009 before the Obama anti-capitalist agenda put a stop to it).


Another fact is that the US government spending has been tracking at virtually unprecedented levels of GDP:


So essentially all you are measuring here as "positive" GDP is federal borrowing and spending, which, if it is backed out, would leave (organic, private sector) GDP "growth" negative almost throughout the post recession (Obamunism) years.

Incomes are down:


Manufacturing is in recession:



Productivity growth is way down:


The S&P 500 earnings are screaming recession:


And US exports are declining:


The only thing that is keeping GDP from being negative is, as I pointed out (above) is government spending, particularly that associated with Obamacare:



Which is, as the chart points out, highly correlated with recessionary conditions. So what we have here is you measuring the growth of government and claiming that it is "growth" in the economy, which only makes sense in the effed up minds of the Keynesian economic "geniuses" who are currently grinding the economy into little pieces (the real economy, the part that will have to foot the bill for all this big government you suggest is "growth"). And this is why despite all your crowing and preening about the "strength" of the economic recovery, the American people remain unconvinced:

http://thehill.com/blogs/blog-brief...oll-americans-pick-economy-as-gravest-problem

http://www.foxnews.com/politics/201...y-economy-hasnt-recovered-from-recession.html

http://www.gallup.com/poll/110824/gallup-daily-us-economic-outlook.aspx

So you can tout all the "official" stats you want to your little Marxist heart's content, but where the data meets the road, those with the best understanding of economics (and no agenda to push) know that the economy is not as has been portrayed by the "official" stats:

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

Which, of course, conflicts mightily with your cheery positive spin on the ongoing economic debacle known as "Obamanomics" - but all the "growth" you are touting is the result of two things 1) growth of government (and government mandated consumer spending on health care) and 2) a sham deflator that obscures the true inflation rate as being experienced by every American as they go about their daily lives.

So maybe you should start paying less attention that Paul ("we need an invasion from Mars") Krugman, and a little more to the people like those posting at ZeroHedge that actually understand how an economy functions.

 

[Lukey]

I don't know nearly as much about economics as you. What I do know is that the people I interact with on a daily business aren't happy with the economy. I also know we are clearly in a 6-month decline in job creation:

I also know that the economy has been slowing down drastically:

I'm not sure why any rational person would be surprised to find Q1 2015 would be negative growth- especially given it is functioning under the crushing weight of "fundamental transformation".

Yes, this is because you operate in the real world, rather than the progressive alternate reality where a trudging economy bogged down by big government is the true measure of economic "success."

 

[Arkady]

And the resounding over arching fact is that, even according to the "official" stats, the economy has consistently under-performed for the entire post recession period (save for the nascent snap back in early 2009 before the Obama anti-capitalist agenda put a stop to it).

Yes, just as Keynesian theory told us, the economy underperformed in the face of an unprecedented austerity kick, after that brief period of fiscal stimulus was ended. Wouldn't it have been nice if the right-wing economists had known what they were talking about? Imagine what things would look like today if their ideas had been right! We've experienced possibly the longest period of government spending decline (in real per capita terms) in American history. It would be so nice if right-wingers had been right and that kind of austerity had kicked off a big economic surge. But the truth is everyone who understood economics knew that wasn't going to happen. It only came as a surprise to people who'd spent years convincing themselves the Keynesians were wrong.

 

[Lukey]

Yes, just as Keynesian theory told us, the economy underperformed in the face of an unprecedented austerity kick, after that brief period of fiscal stimulus was ended. Wouldn't it have been nice if the right-wing economists had known what they were talking about? Imagine what things would look like today if their ideas had been right! We've experienced possibly the longest period of government spending decline (in real per capita terms) in American history. It would be so nice if right-wingers had been right and that kind of austerity had kicked off a big economic surge. But the truth is everyone who understood economics knew that wasn't going to happen. It only came as a surprise to people who'd spent years convincing themselves the Keynesians were wrong.

That only makes sense on Mars, where I understand Paul Krugman has been spending a lot of time trying to gin up an attack on earth, in order to finally prove his Keynesian views have value.

One last time - logic (I know that's something foreign to you progressives but it's actually a pretty big deal out here in the real world) would suggest that, if that were the case, it would have merely slowed the recovery, not prevented it. Unless you are attempting to make the silly argument that economies are simply incapable of generating higher GDP absent constant increases in real government spending per capita, which anyone with even the marginal intelligence to look back at the post WWII economy would immediately recognize as progressive propaganda. And once more, logic would suggest that, in the current non-recovery "recovery," rather than taking the absurd position (at least at this point five years after the so-called "stimulus" spending ended) that the steps taken were "inadequate," the stronger case is that what has been done acted more as a prevention of the recovery, rather than simply an "inadequate" support. You can keep on arguing this silly notion of yours but don't expect anyone who isn't a completely moronic student of economics to accept it. It is simply not rational to continue to suggest that the current ongoing non-recovery is due to an inadequate Keynesian "stimulus" that ended half a decade ago.

 

[Arkady]

That only makes sense on Mars

No, as a reminder, it's right here on Earth -- in the United States, in particular-- where the austerity occurred. The change in real per capita government spending was net-negative for what might well be the longest stretch of time in American history. Keynesians correctly predicted what such austerity would do. Right-wing rhetoric, by comparison, would have had you imagining that such uncommon restraint from government would be good for the economy. I'd like to say "now we know better," but the truth of the matter is that those of us with a decent understanding of the economy already knew better, while those whose economics are a form of right-wing religion will NEVER know better, because they don't register real-world events.

 

[Days]

That only makes sense on Mars, where I understand Paul Krugman has been spending a lot of time trying to gin up an attack on earth, in order to finally prove his Keynesian views have value.

One last time - logic (I know that's something foreign to you progressives but it's actually a pretty big deal out here in the real world) would suggest that, if that were the case, it would have merely slowed the recovery, not prevented it. Unless you are attempting to make the silly argument that economies are simply incapable of generating higher GDP absent constant increases in real government spending per capita, which anyone with even the marginal intelligence to look back at the post WWII economy would immediately recognize as progressive propaganda. And once more, logic would suggest that, in the current non-recovery "recovery," rather than taking the absurd position (at least at this point five years after the so-called "stimulus" spending ended) that the steps taken were "inadequate," the stronger case is that what has been done acted more as a prevention of the recovery, rather than simply an "inadequate" support. You can keep on arguing this silly notion of yours but don't expect anyone who isn't a completely moronic student of economics to accept it. It is simply not rational to continue to suggest that the current ongoing non-recovery is due to an inadequate Keynesian "stimulus" that ended half a decade ago.

We lost 100,000 manufacturing jobs monthly during the housing boom. So what was happening there? The globalists closed all our old factories down as soon as they got their new factories online over in western Pacific Rim. At the end of those years, the housing bubble burst and the underlying infrastructure had a gaping hole in it. So what happened, the entire frickin financial world, dependent upon America's economy, crashed. The overall stock market crash was the direct result of a much larger financial nuclear meltdown, Citibank stock went as low as $1 per share... totally insane.

So what does a nation do? Zero manufacturing jobs returned to American shores. We stopped losing manufacturing jobs because all the old factories were shut down already, and people have to eat, so the great "service economy" began. Flipping burgers for the masses and the heavy spending government. College graduates - with bachelors in hand - could not find a job. But the FED printed up $7.7 Trillion for the banks and charged them not a dime of interest, and while the banks had no one to lend to in the "recovery" that wasn't recovering any of our manufacturing base, they could always sink the money into the stock market. Corporations received billions of capital for having their doors open, they didn't need to perform, just be on the exchange. So they paid for high end analysts and management, still not giving jobs to the kids with bachelors degrees, but pumping the equivalent of five of those jobs out to doctorates in high end mgmt... so while main street had no growth at all, and no job growth to speak of, people went back to work in the service industry, college grads waited tables, and their customers picked up because the middle upper class was getting all the money and they like to dine out. So the overall economy was getting an infusion of cash, but the middle and lower classes were being starved at the same time.

When the FED raised interest rates last November, it was party over. Stock market started to rattle and shake and was about to collapse all over again, so Yellen comes out and says, "okay, okay, we won't keep raising rates, everyone calm down, we won't pop it yet" (not a direct quote but that's exactly what she said). So the quarter should come out slightly negative or even steven, because that stock market bubble is all we have right now, the infrastructure has not filled in any manufacturing jobs, we are still on the flipping burgers economy for the middle class, which is to say, the middle class joined the lower class and stayed there.

playing with numbers is easy. Lies, damned Lies, and statistics, right?

We are in a housing depression. But all the news from Realtors sounds so positive... maybe because they are salespeople and are trying to get people to buy houses? What happened to those 20 million foreclosures over the past decade? The banks hold them off the market. So the only numbers you get from the industry ignore the entire foreclosure tsunami. What kind of "recovery" is it when 20 million homes went into foreclosure?

 

[Lukey]

No, as a reminder, it's right here on Earth -- in the United States, in particular-- where the austerity occurred. The change in real per capita government spending was net-negative for what might well be the longest stretch of time in American history. Keynesians correctly predicted what such austerity would do. Right-wing rhetoric, by comparison, would have had you imagining that such uncommon restraint from government would be good for the economy. I'd like to say "now we know better," but the truth of the matter is that those of us with a decent understanding of the economy already knew better, while those whose economics are a form of right-wing religion will NEVER know better, because they don't register real-world events.

And again, this is now a FULL SEVEN YEARS after the recession and real per capita spending is again on the increase:



Along the same trajectory it was on before the recession and "stimulus" surge (which I will remind our readers did nothing to move the GDP growth needle while it was occurring), and on a slope quite steeper that that of previous periods of robust economic growth (I might add). Yet you cling to this inane theory that it is somehow a lack of government spending that is to blame for the failure of the economy to recover. This isn't rocket science, and it points to your abject inability to address reality in our discussions on the economy. You have seriously gone around the bend on this silly defense of the failed Keynesian policies that have not been in any way "inadequate" - certainly not almost an entire decade after the recession ended (which quite frankly should render all consideration of the need for additional "stimulus" moot). Your desperate clinging to this oft-refuted (and, indeed ridiculous) contention that there was some sort of "austerity" imposed by the (planned) ending of the "stimulus" spending, is completely exposed as a sham by the above chart. Get a new excuse dude, this one just makes you look even more foolish than you normally do.

 

[Lukey]

We lost 100,000 manufacturing jobs monthly during the housing boom. So what was happening there? The globalists closed all our old factories down as soon as they got their new factories online over in western Pacific Rim. At the end of those years, the housing bubble burst and the underlying infrastructure had a gaping hole in it. So what happened, the entire frickin financial world, dependent upon America's economy, crashed. The overall stock market crash was the direct result of a much larger financial nuclear meltdown, Citibank stock went as low as $1 per share... totally insane.

So what does a nation do? Zero manufacturing jobs returned to American shores. We stopped losing manufacturing jobs because all the old factories were shut down already, and people have to eat, so the great "service economy" began. Flipping burgers for the masses and the heavy spending government. College graduates - with bachelors in hand - could not find a job. But the FED printed up $7.7 Trillion for the banks and charged them not a dime of interest, and while the banks had no one to lend to in the "recovery" that wasn't recovering any of our manufacturing base, they could always sink the money into the stock market. Corporations received billions of capital for having their doors open, they didn't need to perform, just be on the exchange. So they paid for high end analysts and management, still not giving jobs to the kids with bachelors degrees, but pumping the equivalent of five of those jobs out to doctorates in high end mgmt... so while main street had no growth at all, and no job growth to speak of, people went back to work in the service industry, college grads waited tables, and their customers picked up because the middle upper class was getting all the money and they like to dine out. So the overall economy was getting an infusion of cash, but the middle and lower classes were being starved at the same time.

When the FED raised interest rates last November, it was party over. Stock market started to rattle and shake and was about to collapse all over again, so Yellen comes out and says, "okay, okay, we won't keep raising rates, everyone calm down, we won't pop it yet" (not a direct quote but that's exactly what she said). So the quarter should come out slightly negative or even steven, because that stock market bubble is all we have right now, the infrastructure has not filled in any manufacturing jobs, we are still on the flipping burgers economy for the middle class, which is to say, the middle class joined the lower class and stayed there.

playing with numbers is easy. Lies, damned Lies, and statistics, right?

We are in a housing depression. But all the news from Realtors sounds so positive... maybe because they are salespeople and are trying to get people to buy houses? What happened to those 20 million foreclosures over the past decade? The banks hold them off the market. So the only numbers you get from the industry ignore the entire foreclosure tsunami. What kind of "recovery" is it when 20 million homes went into foreclosure?

Well I certainly won't argue that our economic issues pre-date the Obama Administration. And the focus on manufacturing is a good one. Yes, a nation cannot build a strong economy on services and building trades. It has to have manufacturing (and product development).

The reason the banks were rendered (technically) insolvent, is because all the bids for commercial paper (all CP, not just CMOs) dried up because of the uncertainty caused by the Bush Administration deciding to bail out Bear Stearns and then turning around and denying a bail out to Lehman Bros. Nobody knew whose paper was good and whose was going to be rendered worthless so no bids came forth. It was the mother of all credit market uncertainty. If they'd just let them both go under (along with AIG and a big hit to Goldman Sachs) deep pockets with cash would have started buying CP. Who is going to buy CP when they don't know if it's worth 20 cents on the dollar or 100 because the government was going to step in and cover it? The market didn't "fail" - it reacted rationally to an irrational government policy set.

 

[Arkady]

And again, this is now a FULL SEVEN YEARS after the recession and real per capita spending is again on the increase

You posted federal spending. As a reminder, we were discussing government spending, generally, not a sub-set of that spending. Even with federal spending, of course, the figure is still down substantially relative to where it was seven years ago, which may be the first time in American history when that could be said. But, for obvious reasons, total government spending is the relevant figure.

 

[Lukey]

You posted federal spending. As a reminder, we were discussing government spending, generally, not a sub-set of that spending. Even with federal spending, of course, the figure is still down substantially relative to where it was seven years ago, which may be the first time in American history when that could be said. But, for obvious reasons, total government spending is the relevant figure.

You simply cannot let go of this discredited meme, which unfortunately renders you unserious on the subject. You don't even bother to cite the data, you just throw up another airball and hope it goes in.

It's not the "first time in history that can be said." It was an even steeper drop post WWII, and the economy took it just fine. So your contention here is not only false, it is absurd...

 

[Arkady]

You simply cannot let go of this discredited meme, which unfortunately renders you unserious on the subject.

You grow frustrated with my insistence on looking at reality, but your whining isn't going to stop it. The numbers are what they are and you can confirm them for yourself. You can wish all day that we hadn't experienced a period of austerity --or that the period of austerity had been good for the economy-- but until you confront the facts, you're just left regurgitating right-wing talking points.

It's not the "first time in history that can be said." It was an even steeper drop post WWII, and the economy took it just fine. So your contention here is not only false, it is absurd...

What makes you think that, specifically? Your chart, obviously, just shows federal spending not total government spending, so maybe the data is different if we look at the big picture. But with federal spending, there doesn't appear to have been as big a dip after WWII as since 2009, based on your chart.

 

[Days]

You grow frustrated with my insistence on looking at reality, but your whining isn't going to stop it. The numbers are what they are and you can confirm them for yourself. You can wish all day that we hadn't experienced a period of austerity --or that the period of austerity had been good for the economy-- but until you confront the facts, you're just left regurgitating right-wing talking points.



What makes you think that, specifically? Your chart, obviously, just shows federal spending not total government spending, so maybe the data is different if we look at the big picture. But with federal spending, there doesn't appear to have been as big a dip after WWII as since 2009, based on your chart.

Arkady, the only drop in govt spending was relative to the ridiculous pace it was on, there was never any time in Obama's two terms that the Federal Govt didn't post enormous deficits. The largest deficit in history prior to Obama was $560 Billion at the end of Bush's 2nd term... he was already dealing with the stock market crash. Obama's deficits ran any where from $450 Billion to $1.2 Trillion. It was seven years of heavy, heavy, heavy spending and the national debt bloody doubled as a result. For you to be arguing that spending by this admin was anything less than the record volumes it was really and truly at, is absurd. totally absurd.

The debt was at $8 Trillion when Obama took office, what is it today? I think we are over $18Trillion. Obama's two terms was the ultimate Litmus test for Keynesian economics and because the infrastructure was not rebuilt by all that spending, it was a total fail. To be fair, it never had a chance, there's more to a healthy infrastructure than spending, when the globalists are colonizing the other side of the planet they are not going to rebuild our infrastructure to compete with their other investmensts, so Obama did all he could with the hand he was dealt.

 

[Lukey]

You grow frustrated with my insistence on looking at reality, but your whining isn't going to stop it. The numbers are what they are and you can confirm them for yourself. You can wish all day that we hadn't experienced a period of austerity --or that the period of austerity had been good for the economy-- but until you confront the facts, you're just left regurgitating right-wing talking points.



What makes you think that, specifically? Your chart, obviously, just shows federal spending not total government spending, so maybe the data is different if we look at the big picture. But with federal spending, there doesn't appear to have been as big a dip after WWII as since 2009, based on your chart.

I'm not frustrated - I'm irritated that you keep claiming something that the government didn't do six years ago is the reason for the continued failed economic recovery, when that is patently absurd. Who's "whining?" I have made you look like an economic imbecile with your dogged chewing of this tired old "failed stimulus" meme. Like I said, it was a case you could make five years ago...maybe even four. But by now what the government did or didn't do back then is irrelevant to today (except when it comes to all the regulatory and tax interference Obama has ladled on the economy - which IS a big part of why we can't recover). And your silly implication that the private economy is incapable of recovering absent ever increasing government spending is laughable. That is quite frankly a childish position to hold. No serious economist would ever make such an obviously foolish claim!