Wall St. Journal : The Case for Optimism on the Economy (Job Creation Only a Few Months Away)

Wall Street Journal ^ | 12/16/2009 | Alan Blinder

[SeekAndFind]

The U.S. economy is digging itself out of a deep hole. You have probably heard a lot of doom and gloom lately, including talk of a jobless recovery, an L-shaped recovery (which means no recovery at all), or even a W—the feared double-dip recession. The Scrooges have a point: There are serious dangers to the nascent recovery. But you've heard all that many times. Let me offer instead, in deliberately one-sided fashion, the case for optimism. It is, after all, the holiday season.

The case begins with the "slingshot effect" I wrote about on this page last summer ("The Economy Has Hit Bottom," July 24, 2009). When the growth rate of any component of GDP rises, it gives overall GDP growth a boost. And going from sharply negative growth to zero is a notable rise. In July, the slingshot scenario was hypothetical—though likely. In today's economy, it's a real phenomenon.

During the first half of this year, the investment component of GDP declined at a stunning 38% annual rate. Since the investment share of GDP was then about 14%, this implosion accounted for minus 5.4 percentage points of GDP growth. But since overall GDP declined "only" 3.6% in those two quarters, the rest of GDP (the 86%) actually rose. It was a small but real reason for optimism in a stormy sea.

Then came the third quarter. Like a woozy prizefighter lifting himself off the canvas, the battered investment component of GDP managed to rise (at an 11% annual rate), which added 1.3 points to GDP growth rather than subtracting 5.4 points. That 6.7 point swing was the start of the slingshot effect, which is not yet over.

Investment has three components: business investment, inventory stocking, and homebuilding.

[LibLieSlayer]

I own three businesses... have dozens of friends that also own businesses... I know what I see at the wholesale level and while you may actually believe the spin you repeat... those of us on the front lines KNOW the TRUTH. There will be no turn around in the economy at all... and no jobs means no prosperity.

LLS

[Campion]

She said that Obama is a black cloud hanging over small business yet he blames the banks for not lending in such a unstable environment.

Obama doesn't get it! He thinks he can use the bully pulpit to make business grow!

Put an economic nincompoop in the White House and they always think they can cajole, threaten, or cheerlead the economy into changing. Remember "WIN" buttons?

Drop cap gains to 5%, get rid of corporate income taxes altogether, and make the Bush cuts permanent and you'll see growth. Serious growth. Quickly.

[WOSG]

Saying “depression” and “no turnaround” are two distinct things. It appears we are in an “L” shaped economy, with weak recovery off a low base, but multiple data points show higher activity in Q3/Q4 than Q2, so ‘the bottom is in’ and to call this a ‘depression’ is overstating things. Your own experience/ points do not contradict that view and even if you see things weaker than others that does not mean other parts of economy aren’t past the bottom. In other words, your own anecdotes are not determinitive of whole USA.

[LibLieSlayer]

Give it six months and we shall see... I hope that I am wrong but 36 years experience tells me otherwise.

LLS

[Son House]

And Blinder has said how bad, 'horrendous';

Transcript of Pelosi, House Democratic Leaders, and Economists’ Press Conference Following Economic Forum

http://www.realestaterama.com/2009/10/22/transcript-of-pelosi-house-democratic-leaders-and-economists%C3%A2%E2%82%AC%E2%84%A2-press-conference-following-economic-forum-ID06137.html

Former Federal Reserve Vice Chairman Alan Blinder

“So for that reason, despite the fact that we’re looking at an absolutely horrendous long-term fiscal outlook,

I, like Mark, and I think most of us around the table, believe that at least a modest, now this is where people will disagree[All Democrats], but at least a modest increase in the deficit is targeted very strongly on job creation.”

[PSYCHO-FREEP]

What an idiot.

The entire reason that stocks did well in the 3rd quarter was because the Dollar was going down like the Titanic. GDP went up because foreign buyers were taking advantage of the real bargains and the weak Dollar.

Wait till the old tax cuts expire and new taxes kick in. Watch for massive layoffs, government EPA regulations more like Gestapo doctrine and hyper inflation starting n 2010.

These are the same economic geniuses who did not have a clue that the crash last 2008 was even remotely going to happen.

[mo]

65000 jobs/d.....aren’t returning next week..next month...or next year...until Cap Gains tax zeroed out....until mortgage interest paid has been applied to principle...until the K St federal regulatory lobby is as unemployed as the rest of America....

[LibLieSlayer]

There will be no job growth for all of 2010... oh they may play numbers games and lie to us that there are... but those of us that have been around long enough to know the difference between academic economics and real world economics can see the truth.

LLS

[LibLieSlayer]

Remove the Federal money give away from your figures and there was no growth at all... we are in a depression... if not now we soon will be... and my three businesses and everyone that I know that owns their own businesses here, thinks we are in a depression also. Real world reality is a b!tch!

LLS

[LibLieSlayer]

I shall revisit this with you after a few more months of this hell. Happy New Year... at least happy in the things that really count... because there will be no economic happiness. Crap and traitors, amnesty, health care socialism, Bush tax cuts expiring, all financial activities being taxed... increased income taxes at the State and Federal level, increasing deficits that can never be repaid, new users fees at the State and local levels and fines and mandatory insurance... yep... there is so much going on in 2010 to heal a dying economy. I saw Santa Claus too!

LLS

[WashingtonSource]

Now we have terror to worry about — no doubt fewer peple will fly.