Monday, May 7, 2012

Recovering Better Than We Think?

With the news that the nation's economy only generated 115,000 new jobs in the month of April and that unemployment only declined .1% to 8.1%  is the economy stalled, stalling or headed for disaster?

Daniel Gross, columnist for Newsweek and The Daily Beast, says that if you see the glass half-empty, you're probably buying into the wrong narrative. There is, according to Gross, an innovation taking place that is causing a recovery that is different, leaner, but a recovery nonetheless...

"Given the magnitude of the economic fall, it’s no surprise that declinism quickly emerged as the time’s chic intellectual pose. Left and right, highbrow and lowbrow, ideological and pragmatic, historians and futurists—all came to an agreement: the U.S. had a very slim hope of recovering from its self-inflicted blows. The lion was now a lamb, shorn of aggression and vitality, unable to compete with rivals like China. Much like Japan, which has endured two decades of stagnation and misery since its real-estate bubble popped in the late 1980s, the U.S. had fallen and couldn’t get up."

"As is frequently the case, however, the conventional wisdom is wrong. The U.S. economy suffered a wipeout in the Great Recession of 2008–09, much like 1970s icon Steve Austin. Austin, played by Lee Majors, was an astronaut who crashed to Earth and then was rebuilt with typical American optimism. “We can rebuild him,” the voice-over for the opening of The Six Million Dollar Manintoned. “Better than he was before. Better, stronger, faster.” Like the world’s first bionic man, the U.S. economy has come back—better, stronger, and faster than most analysts expected, and than most of its peers."
"In fact, the lows of March 2009 marked the beginning of an unexpected recovery—not the beginning of an era of irreversible stagnation. The U.S. economy went from shrinking at a 6.7 percent annual rate in the first quarter of 2009 to expanding at a 3.8 percent annual rate in the fourth quarter of that year—a turnaround unprecedented in modern history. The stock market has doubled since March 2009, while corporate profits and exports have surged to records. The U.S. economy has regained its 2007 peak, and is now growing at a 3 percent annual clip—a more rapid pace than any other developed economy. The crucible of the recession forged an economic structure that is more resistant to shocks than the brittle vessel that shattered in 2008. Meanwhile, Europe continues to grapple with insoluble banking and sovereign debt crises, and developing-economy juggernauts like China and Brazil are showing signs of cracking."

It's been clear to many, that economic recovery - true economic recovery - calls for playing longball and not the quick fixes of the old ideology that got us into trouble in the first place. The real question is do we have the patience - and the imagination - for a different kind of economy.

Time, and this year's election, will tell...

Read the rest of the article here...

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