Jun 22 2011
Harvard’s Martin Feldstein (Wall Street Journal, 6/8/11) asserts that “the economy is worse than you think.”
Growth during the coming year will be subpar at best, leaving high or rising levels of unemployment and underemployment.
Feldstein’s scrutiny of the numbers reveals that, because most of the anemic 1.8% first quarter growth for 2011 went into business inventories, “the actual quarterly increase was just 0.15%.” And the Obama administration’s “stimulus” package created a “bigger deficit without economic growth.” The situation will continue,
until someone enacts a plan to bring deficits under control without raising taxes.
Allan Meltzer of Carnegie Mellon emphasizes the generational implications of low growth.
After one generation, a one percentage point difference in growth rate becomes a 25% difference in per-capita income.
In contrast to the booming global ecnomy, Federal Reserve officials today (WSJ, 6/23/11) admitted that…
The U.S. economy is settling into a disappointingly weak recovery this year and next, and … they have done all they are prepared to do to spur growth for now.
Plus, the Congressional Budget Office today added to concerns about sinking home prices, falling comsumer confidence, and a “misery idex” at a 28-year high, by warning that if growth in the $ 14.2 T national debt is left unchecked, the U.S. could face a European-style “sudden fiscal crisis.”
Despite deepening concerns about our imperiled recovery, there is a growing recognition from diverse sources that rapid economic growth in the U.S. is possible just around the corner.
Prominent examples include:
1) Standard Chartered Bank documents that we’ve entered a new growth “super-cycle” of the type that culminated in the 1960s Boom associated with President John F. Kennedy,
2) Stanford economist John B. Taylor recently indicated that a 5% national economic growth goal is not some “pie-in-thesky number” and makes a “great deal of sense”,
3) William Halal, president of TechCast — an online think tank of 100 global experts — forecasts a “new economic boom in 2015“.
TechCast data show emerging technology frontiers are likely to lead the world out of global recession. Green Business, Climate Control, Alternative Energy, E-Commerce, and other sectors are likely to start the next economic upcycle about 2015.
Plus, based on long-term GDP growth trends since the 19th century, 21stCenturyWaves.com recently projected that a major, JFK-style economic boom — featuring 5% annual growth — is likely by 2015.
How will this transition occur?
It appears the U.S. is reliving key elements of its economic history of one century ago. The financial Panic of 1893 triggered the great 1890s recession, which featured 10+% unemployment and a double-dip. It’s reminiscent of our current trajectory — minus the double-dip, at least for now — since 2008.
The deep 1890s contraction soon resulted in a political realignment that ignited a major JFK-style boom. This spectacular 5% expansion surged through the first decade of the 20th century and triggered the stunning Peary/Panama/T. Roosevelt Maslow Window.
The importance of a growing, healthy economy will become the defining issue of 2012. As happened a century ago, the party that can best model prosperity will win.