Fourth Quarter Growth Was Incredibly Sluggish

The final revisions for 4th quarter GDP were released today, and while the numbers are slightly better than the negative growth first reported in January, they aren’t that much better either:

WASHINGTON (Reuters) – The economy expanded at a sluggish pace in the fourth quarter although a big gain in business investment and higher exports of services led the government to push up its previous estimate for growth.

Gross domestic product expanded at a 0.4 percent annual rate, the Commerce Department said on Thursday, just below the 0.5 percent gain forecast by analysts in a Reuters poll.

The growth rate was the slowest since the first quarter of 2011 and far from what is needed to fuel a faster drop in the unemployment rate. It was, however, higher than the government’s previous estimate of a 0.1 percent growth rate.

Much of the weakness came from a slowdown in inventory accumulation and a sharp drop in military spending. These factors are expected to reverse in the first quarter.

Consumer spending was more robust by comparison, although it only expanded at a 1.8 percent annual rate. That was a slower pace of growth than the government had previously estimated.

Household spending powers about 70 percent of national output, and this still-lackluster pace of growth suggests underlying momentum in the economy was quite modest as it entered the first quarter, when a series of fiscal austerity measures began.

Thursday’s report is the government’s third estimate of growth for the final three months of 2012. In the first estimate, the government shocked economists by saying the economy shrank at a 0.1 percent annual rate.

Thursday’s report showed the reasons for the meager pace of economic activity were mostly as initially estimated.

Inventories subtracted 1.52 percentage points from the GDP growth rate during the period, a bit less of a drag than in the second growth estimate, which was published on February 28. Defense spending plunged at a 22.1 percent rate, shaving 1.28 points off growth as in the previous estimate.

There were some bright spots, however. The report showed business investment rose at a 13.2 percent rate, a bigger gain than initially estimated. The extra growth was mostly from more construction spending by businesses.

Imports fell 4.2 percent during the period, adding to the overall growth rate because it was a larger drop than in the third quarter. Buying goods from foreigners bleeds money from the economy, subtracting from economic growth.

Exports of services rose more than in prior estimates also providing a boost to GDP.

Overall, the economy grew at the rate of 2.2% for all of 2012. Not as bad as the rate in the final quarter, but certainly nothing to write home about and another reason why we’re far from recovered from the recession. As I’ve noted before, though, the question is that this sluggish growth is the “new normal,” because if it is there are going to be alot of people suffering for quite some time to come.

FILED UNDER: Economics and Business, Quick Takes
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. john personna says:

    Grumpy old men will like this article:

    Middle-class folk need to stop spending like they are rich—and start saving instead

    Of course, savings is the classic personal virtue and public vice. A credit crash will result in deleveraging and reduced consumption.

    Many of us understood this in 2008. Sadly, many commentators didn’t come around until it could somehow be “Obama’s recovery” to them.

  2. C. Clavin says:

    “….the question is that this sluggish growth is the “new normal,” because if it is there are going to be alot of people suffering for quite some time to come…”

    So…the shrinking of government, and resulting austerity, that you advocate is causing pain to a lot of people.
    Yet in this quote you seem to lament that pain.
    So the obvious question is…what the f*** did you think was going to happen Poindexter?

  3. C. Clavin says:

    I would also note that growth for the entire 8 year duration of the Bush43 debacle was about 2.2%…and 43 was growing the public sector like a friggin’ mad-man…not shrinking it like is happening now. Imagine if Bush had slashed nearly 2M public sector jobs.

  4. Rob in CT says:

    @john personna:

    This is the sort of thing that scares me. Personally, I’m all about spending restraint & savings. I would preach this to just about anyone, with very little prompting. I have a gut-level feeling that our whole economy is too consumption-oriented And yet… if I actually got my wish and more folks acted like me? We’d have a depression.

    Your purchase is my sale, and so on. The only way you could make up the loss of sales would be to sell more stuff to people in other countries – exports. Which requires other countries buy more stuff. Germany & the PIIGS springs immediately to mind (granted, that whole mess is greatly exacerbated by the common currency, so Spain/Italy/Greece cannot devalue). One can certainly dream of selling more stuff to China, while Americans save more. Can we get there from here (without a shattering depression)? I don’t know. I’m not even sure it’s the right place to go.

  5. Rob in CT says:

    That article basically pushed all my buttons, btw.

    Something to add to it: much as our government was engaging in pro-cyclical policy in the aughts, households that should have been saving were not. This goosed GDP, but made the crash worse. Overleveraged households scrambled to deleverage at a time when it was hard to do so. Now, to the extent we get more consumer spending, it’s coming at the expense of savings, slowing the deleveraging (which, IMO, needs to continue).

    To me, this spells 1 of 2 things (take your pick): a return to overconsumption fueled by credit, followed by another financial crisis; or a long period of muddling through with ~2% GDP growth (“lost decade”).

    Tell me I’m wrong. I’d love to be.

  6. stonetools says:

    @C. Clavin:

    I’m always amazed at the way Doug bellyaches about way the economic growth is so sluggish but never goes on to ask the question, “Why is economic growth is sluggish” . I suspect its because he doesn’t like the answer , since it contradicts the Freedom-Works economics answer he likes-which is that austerity is the way to growth. That was shown to be dead wrong during Great depression One, and has been proven wrong again during GD2.

  7. john personna says:

    @stonetools:

    I am pretty sure Doug blames Obama for doing cuts, even as Doug would prefer more cuts.

    Cognitive dissonance at twelve o’clock high.

  8. john personna says:

    @Rob in CT:

    I really liked the line that luxury items were created [for the rich] and then sold more broadly than expected. See “iPhone.”

    We probably don’t have to worry about spending falling too much and too generally. Marketers are too good at pushing our buttons.

  9. stonetools says:

    @john personna:

    The problem, John, is that economic policy isn’t moralistic. It just ain’t-which is a problem for those trying to set economic policy. “Eat your peas and save your pennies” is a good rule of thumb for the average consumer , but government should set economic policy on what works, not on what makes for pithy proverbs.
    Keynesian economics tells us that the initial stimulus, while helpful, was too small (Krugman was dead right about this, then and since) and that a second round of stimulus would have a good thing at almost any time since. Since then, we have been pursuing austerity. Not surprisingly, the economy has been sluggish. Even then, we are doing better than the EC, which has been going full austerity.
    China, which is run by non-Protestant engineers who are just interested in what works, rather than what sounds moralistic, had a big stimulus back in 2009, and recovered quickly. Ditto South Korea. If you look around the world, as a general rule, the countries that had stimulative policies growth and the countries that practiced austerity did worse.
    What we have to do to grow faster is obvious-so obvious that there is overwhelming consensus about this by economists. Unfortunately, we aren’t doing this because politicians-and the public-thinks we should run a modern economy according to Poor Richard’s Almanac.

  10. john personna says:

    Tyler Cowen recently made this linkage:

    A Profession With an Egalitarian Core

    If I understand you, you think his perspective is not enough, and that a morality built around individual freedom and utility-seeking isn’t’ really enough to produce a balanced and complete human society.

    I agree. And certainly we do have concrete examples of where government investment for public goods did pay off in a good way.

    (he said, on the internets)

  11. PD Shaw says:

    @Rob in CT: I think there are at least two limitations to the paradox of thrift that need to be counted.

    One is personal; my savings permits me to consume with less borrowing. If I have to borrow to buy a car, I’ll consume less car than I would had I adequate savings. To put it another way, I don’t think these are the same or can be valued the same: I spend $30,000 to either buy Car A that is worth $30,000, or Car B that is worth $22,500, plus $7,500 in financing costs.

    The second is broader — personal and business savings ideally are channeled by the banking system in the form of investments back into the economy, unless the banks are zombies that simply sit on the cash. Aside from the caveat, I don’t think you can assume savings are taken out of the economy unless you know what’s happening with them.

  12. john personna says:

    @PD Shaw:

    While that is true, it as not as hard and fast as it was in the days of the gold standard and Bretton Woods. People and governments borrow and save in nominal dollars, rather than in hard wealth. Who is to say what borrowing costs (or dollars) would be in a high savings economy?

    Overall I find the notion of American debt in a global savings [glut] very interesting and non-intuitive.

  13. john personna says:

    For more on the craziness of the times:

    The Treasury auctioned 10-year inflation-indexed notes at a negative yield for an eighth consecutive time as investors remain skeptical that Federal Reserve measures won’t lead to a resurgence in consumer prices.

  14. stonetools says:

    @john personna:

    My point is a little different. It is that Keynesian economics, like many scientific theories, is both counter-intuitive and amoral. Its not good or bad-it just works. In that way, its like the theory of evolution. You can’t really build moral lessons out of an ostensibly unplanned process of descent with modification, from a common ancestor.
    In the same way, Keynesian economics is amoral, if not anti-moral. The central principle-that government should tighten up in good times and spend lavishly “to prime the pump” in bad times-is exactly opposite to how we have been taught to live. This makes it easy for conservative politicians to discredit with demagoguery. We’re told repeatedly that “the government needs to tighten its belt during tough times”, “the government needs to stop spending like a drunken sailor” and “the government needs to balance its budget, like the average householder sitting around the dinner table.” A near infinity of such nonsense is spewed out daily over the airwaves and the Internet. It s also taken up by right wing politicians because they know the public is primed to believe this stuff.
    It means that politicians who want to pursue Keynesian remedies are constantly at a disadvantage, since conservative pols condemn such remedies as “reckless spending” . The Republican surge in 2010 was largely fueled by such rhetoric. The Obama Administration could have countered such rhetoric by explaining Keynesian economics, but since its so counter-intuitive, explaining it is tough.Its like the biologist trying to explain that we are descended from fish-tough to do, since we don’t look like fish(at least on the outside). It was exacerbated by the Administration’s too timid exercise of Keynesian economics back in 2009, which failed to turn back rising unemployment-which crested at the worst time-fall 2010, just before elections. if there was an original sin of the Obama Administration, it was that it didn’t press for a big enough stimulus back in early 2009. It blew up in their face in 2010, and we are still paying for that mistake in 2013 in form of a sluggish economy.

  15. john personna says:

    @stonetools:

    If I were to thumbnail my position for spring 2013, it is that we shouldn’t do generic spending or stimulus arguments at this point. I’m with those who think the short run is over and that we should lay down plans for the next 10 years. Within that transition there would be many programs I endorse and many that I despise. Yes to food stamps, no to farm subsidies. Etc.

    Will that lead to net deficit spending? Absolutely, in the short term. In the longer term, I hope we can moderate.

  16. Ben Wolf says:

    @Rob in CT:

    Your purchase is my sale, and so on. The only way you could make up the loss of sales would be to sell more stuff to people in other countries – exports. Which requires other countries buy more stuff.

    Capitalist economies suffer from chronic lack of demand and employment for that very reason, because of the incentive to spnd less than one’s income. Government should run a negative balance sufficient to meet the non-government sector’s desire to run positive balances (save).

    It simply isn’t possible for the U.S. to run trade surpluses and remain the world’s reserve currency, not when no one else wanta the job.

  17. stonetools says:

    @john personna:

    Spoken like a comfortably well off man. There are millions out there who are in need of a job, who are facing down foreclosure notices, or who are otherwise at the end of their economic tether. In effect, you are telling them, “Sucks to be you, but we have to think long term”.I’m more empathetic than that.
    Sure we have to address deficits in the long run. But in the long run we are all dead, and the short run a lot of people are still facing penury and homelessness. What about them?
    Once unemployment falls to say, 5 %, we can start thinking long term. Until then, jobs should be the focus. Ben Bernanke, who is certainly no liberal firebrand, has been urging new stimulus., albeit softly. If even Bernanke feels that way, then that’s how we should go. And, btw, its not far-fetched to think we are one failed bailout in Europe from a double dip recession.

  18. john personna says:

    @Ben Wolf:

    Does one “spend less than income” over total life cycle?

    (Estate tax is important to plug the small leak, but most spend most savings before the end.)

  19. john personna says:

    @stonetools:

    I am walking to the market now like a frugal retiree, longer response later, but I think it is less lack of sympathy than skepticism about generic spending. I certainly support a good safety net, but am more confident in organic jobs growth.

  20. de stijl says:

    @stonetools:

    It was exacerbated by the Administration’s too timid exercise of Keynesian economics back in 2009, which failed to turn back rising unemployment-which crested at the worst time-fall 2010, just before elections. if there was an original sin of the Obama Administration, it was that it didn’t press for a big enough stimulus back in early 2009. It blew up in their face in 2010, and we are still paying for that mistake in 2013 in form of a sluggish economy.

    Explain how the administration could have pulled a bigger stimulus from the congress in 2009 or after. Believe me, I’m totally with you (and Krugman) – the stimulus was too small and a one-off instead of a longer term process, but the political reality is that we got the stimulus we could expect and no more. In fact, I’m surprised we got stimulus at all let alone the size of it. The ARRA should have been ~$2.5T, but we got all the Keynesianism we could politically get.

  21. Ben Wolf says:

    @john personna: That depends on a number of factors. If the private sector receives insufficient income to save (as it did during the Bush and Clinton Administrations), then it dis-saves. Over the last five years its income has been in surplus thanks to government deficits and savings have increased year-over-year.

    An individual saving for retirement is by definition spending less than her income, which lowers the income of someone else. Even if the saver spends that money after retirement it will not make up for the reduction in aggregate demand due to decades of inflation and the loss of the saver’s primary income upon retirement. There won’t be a burst of spending and employment generated as the retiree now lives on a fixed income.

    While saving is a virtuous activity it also has significant negative effects such as reducing future productive capacity.

  22. stonetools says:

    @Ben Wolf:

    government should run a negative balance sufficient to meet the non-government sector’s desire to run positive balances (save).

    Southern Senator:

    “Ah don’t go in fer them newfangled liberal economics. Our founding fathers told us, ‘Neither a borrower nor a lender be’. If that was good enough fer Ben Franklin, its good enough fer me. The dadgum gumint needs to live within its means, like our grandparents used to to. And think of burdening our grandkids with all thet debt”.

    An answer such as this is what drove the overwhelming Republican sweep in 2010. Until you can come up with a response to this, such an answer is going to continue to win elections. In plain English , Ben, what’s your response?

  23. de stijl says:

    @C. Clavin:

    So…the shrinking of government, and resulting austerity, that you advocate is causing pain to a lot of people.
    Yet in this quote you seem to lament that pain.
    So the obvious question is…what the f*** did you think was going to happen Poindexter?

    George Mason University School of Law doesn’t just mint lawyers, but libertarian lawyers. It’s Regent Law School with a slightly shinier rep and a Chicago School spin.

  24. john personna says:

    @Ben Wolf:

    US treasuries can “enjoy” negative return, in part, because they are not limited by US savings.

    I feel the global perspective is dropped when convenient.

  25. stonetools says:

    @de stijl:

    One thing they should have done is not bend over backwards trying to be bi-partisan. The Administration watered down their program to attract Republicans-who voted against it anyway, almost to a person.
    Christine Romer, the President’s adviser , recommended at $1.2T stimulus. They cut off hundreds of millions to get what-Olympia Snowe’s vote? And it cost them the House in 2010.
    They should rammed through the stimulus on a party-line vote. Sure, they could have trouble keeping Nelson on board, but they could have kept him with a few juicy concessions to Nebraska. In short, they should have played hard ball politics, and not f@%ked around trying to act like partisan politics ended with the 2008 election. Obama’s problem was that:

    A. He believed his high-flown rhetoric
    B. He didn’t understand economics
    C. He didn’t understand that his NO. 1 job in his first term was not ending the Iraq War, or passing health care reform, or abolishing politics as we know it. It was to turn the economy around. He didn’t do that and the Dems got hammered in 2010.

  26. de stijl says:

    @stonetools:

    Southern Senator:

    “Ah don’t go in fer them newfangled liberal economics. Our founding fathers told us, ‘Neither a borrower nor a lender be’. If that was good enough fer Ben Franklin, its good enough fer me. The dadgum gumint needs to live within its means, like our grandparents used to to. And think of burdening our grandkids with all thet debt”.

    I just had a Mr. Show Senator Tankerbell flashback.

    Bob Odenkirk was and is a genius – see Breaking Bad.

  27. Ben Wolf says:

    @stonetools:

    An answer such as this is what drove the overwhelming Republican sweep in 2010. Until you can come up with a response to this, such an answer is going to continue to win elections. In plain English , Ben, what’s your response?

    Forget about the common man/woman. They simply do not have an interest in learning about such matters, nor do most elites to be honest. These are people who think we borrow all our money from China, without even a minute’s thought to the absurdity implicit in such a transaction. The only way to make change is to expose the young to alternatives and wait until the Baby Boomers die off.

    Younger people “get” it much more easily than older people, because they haven’t spent their entire lives being indoctrinated by neo-liberal conservative theology. Their minds don’t automatically reject a new idea or new information when it conflicts with a pre-existing concept of how things work.

    I am amazed at how smart people become stupid as they age and assume they already know what they need to know. It happens across socio-economic, cultural and racial boundaries without fail unless someone makes a practice of challenging themselves and their own thinking on a continual basis.

  28. PD Shaw says:

    @john personna:

    While that is true, it as not as hard and fast as it was in the days of the gold standard and Bretton Woods.

    And particularly with low to zero to negative interest rates. My answer to the car question is that I bought my last car with a zero percent interest loan. I thought I had to be making money on such a deal, but how? It doesn’t pay to save right now.

  29. john personna says:

    @stonetools:

    Spoken like a comfortably well off man. There are millions out there who are in need of a job, who are facing down foreclosure notices, or who are otherwise at the end of their economic tether. In effect, you are telling them, “Sucks to be you, but we have to think long term”.I’m more empathetic than that.

    Wow, that looks even worse on the big screen. Let’s review what I actually said:

    If I were to thumbnail my position for spring 2013, it is that we shouldn’t do generic spending or stimulus arguments at this point. I’m with those who think the short run is over and that we should lay down plans for the next 10 years. Within that transition there would be many programs I endorse and many that I despise. Yes to food stamps, no to farm subsidies. Etc.

    Will that lead to net deficit spending? Absolutely, in the short term. In the longer term, I hope we can moderate.

    There I endorsed three things. First short term stimulus (as short term deficit spending), second aid for the unfortunate (with the food stamp example), and finally I looked for savings in benefits to the rich (with farm aid as mu example).

    It looks very much like you want to cast people who disagree with your economics as moral villains.

    Not at all a good way to go.

  30. john personna says:

    @PD Shaw:

    That’s what Ben wants us to think, yes 😉

  31. stonetools says:

    @de stijl:

    Well, the point is that the Democrats need to able to respond effectively to that kind of Cornpope Bob rhetoric in plain English, and nobody did so during Obama’s first term (and apparently no one can here either). Banging on about “negative non-governmental balances” isn’t going to cut it.
    A big problem was that the Administration did a terrible job of explaining the stimulus to the public. For a Great Communicator, Obama (and frankly, his Administration) is not great at talking to the ordinary American about complex topics.

  32. john personna says:

    @Ben Wolf:

    One does not have to love global imbalances to recognize them as part of the dollar valuation and treasury rate dynamic. The imbalances exist, have had huge impact (possibly including driving the whole housing crash), and cannot be unwound on demand.

    To unwind them we need a net shift in onshore manufacturing more than we need bullet trains.

  33. stonetools says:

    @john personna:

    Ok, I may have overdone that . I apologize.

    Still, I do think that you seem a little cavalier in saying that “OK, unemployment is 7.8 per cent. We can live with that. Short term stabilization job done. Let’s start thinking long term.” If you have been unemployed two years, and just gotten your third foreclosure notice, well then you think, “Job not effing done. What about me?” There’s no “long term” for that guy, and “food stamps” ain’t gonne cut in.

  34. stonetools says:

    @Ben Wolf:

    Forget about the common man/woman.

    You do realize that there are lot of common men/women out there, right? And they vote?

    Therein lies liberal Democrat failure. I’m right , but I can’t be bothered to explain why I am right to the public in plain English. They’ve just got to take it on faith that I’m right and not listen to the Republican over there explaining his wrong theories in plain English. I’m right, that’s all that counts”.
    How’s that working out for the Democrats?

  35. john personna says:

    @stonetools:

    Thank you, but unemployment is not static at 7.8% is it? We are suffering a slow recovery.

    While I am down with Keynes and counter-cyclical spending, I don’t believe he ever went so far as to say that you can get more good healthy growth whenever you want, even in (slow) expansion.

    From my understanding that sort of extreme Keynesian view is bound to an extreme liberal view that government always can and should shape economies.

    One day a moderate such as I may face that liberal economics, and another day we may face a Ryan budget that wants to slash actual safety net spending “to generate growth.”

    I’m actually pretty confident in the middle ground.

  36. Tsar Nicholas says:

    0.4% growth is pretty f’n grim, especially when you take into account the Fed mortgaged our future to obtain that sort of “recovery.”

    When inflation hits and interest rates spike the shit will doth hit the fan.

    Probably the greatest irony here is that with the stroke a few pens we could grow the economy and create large numbers of high-paying, sustainable jobs. More oil leases on federal lands. ANWR. Keystone. Offshore drilling. New refineries. New LPG and LNG plants. Nuclear power. More fracking. Shale oil. We’re sitting on a treasure trove of energy prosperity. Leftists would rather people starve, while they sit there counting their trust fund monies and reviewing their hedge fund statements. It’s a mental disorder.

    Roll back emissions to early-1990’s standards and give tax breaks to new coal-powered utilities plants and that alone would create vast sums of high-paying jobs. Leftists would rather poor racial minorities, in places like Memphis, Pittsburgh and Cincinnati, struggle to make ends meet and to keep on the lights and the heat.

    Enact a Texas-style national tort reform law and that alone would create large numbers of jobs. Leftists would rather the working poor not be able to afford medical devices and Rx drugs.

    Repeal Obamacare and that alone would create vast numbers of jobs. Leftists would rather Gen. Y live at home with their parents until age 30 or beyond. We also should roll back the NLRA, Title VII, the FLSA, the ADEA, the FMLA, the ADA and the OWPBA. But leftists would rather we turn into a banana republic. Sad but true.

    Ultimately the denoument is preordained: Europe West with far higher crime rates.

  37. john personna says:

    Oh, the reason I think governments cannot permanently shape economic growth is that cronyism will always lead to economic inefficiency, and economic inefficiency genuinely does retard growth.

    As an example, the 1st gen wind turbines rotting in California deserts never produced positive energy or financial return. They were a net loss (to everyone but “deal packagers” who took their percent off the top).

  38. stonetools says:

    @john personna:

    I’m actually pretty confident in the middle ground.

    Ok…. but when you are to the right of Ben Bernanke on the issue of whether fiscal stimulus is needed, you may not actually BE “in the middle” Just sayin’.

    And like I point out, a long term unemployed guy facing foreclosure, maybe with kids, needs more than just food stamps-although to your credit, you would at least extend food stamps. The conservatives and libertarians would begrudge the guy even that.

  39. john personna says:

    @stonetools:

    How direct an endorsement can you find from him, for more than the kind of moderate short-term deficit spending I support? (Easing to lower deficits.)

    For that matter, what kind of dollar figure are we talking for your new stimulus?

    Remember, the status quo is something like a $900B deficit for 2013. That is nigh on a trillion in stimulus right there.

  40. gVOR08 says:

    I agree with many above that Keynesian econ is counter-intuitive and therefore difficult to explain. However, I note that this did not seem to be a problem until 2009.

    Prior to that, Keynesian Stim was pretty much bipartisan and a standard response to recession. IIRC Nixon, Reagan, and both Bushes did stimulus. Nixon is misquoted as saying “we’re all Keynsians now”, but what he did say comes out the same. Uncle Milty Friedman agreed. There was a solid elite consensus that Keynes was right and stimulus was a standard tool.

    It’s not necessary for Joe Sixpack to understand Keynes. It’s necessary that the Republican Party cease pushing stupid for partisan gain.

  41. michael reynolds says:

    @Ben Wolf:

    I am amazed at how smart people become stupid as they age

    Not stupid, scared. Age is an accretion of fears. Little fear barnacles attach to you every year you’re alive. At some point the rising fear line intersects the declining confidence line as your abilities wane. Then you join the Tea Party.

  42. Tony W says:

    @michael reynolds: That is interesting to hear, I have had the opposite experience, as I age and accomplish more and more, I fear less.

  43. Ben Wolf says:

    @stonetools: It can’t be explained in simple language. There are maybe a few thousand people world-wide who have a grasp of things like sectoral balances, central bank operations, national accounting, etc.

    The moment I begin explaining basics like the difference between liabilities and debt, or trade in terms of real and financial benefits/costs, their eyes glaze over and they tune out. It’s the nature of the beast. Republicans don’t have that problem because they can trumpet an extraordinarily primitive message easily digested by the average conservative (and I’m sorry to say many Democrats fall into this came).

    @John Personna

    I and most Post-Keynesians/neo-Chartalists favor the use of much stronger automatic stabilizers as they operate independently and aren’t subject to typical pork appropriations. The Jobs Guarantee in particular would be a powerful counter-cyclical policy and also improve labor conditions across the economy.

    Just because I favor government action does not mean I favor government growth, or “shaping” as you say. There are, I believe, very different ways of spending which do not increase government control. Establishing a health care savings account for every American with perhaps $5000 annually, the remainder going into that citizen’s checking account at the end of the year, would enable market forces to bring discipline against health care costs. Increasing Social Security payouts for retirees would be stimulative and also highly efficient as seniors are typically on fixed incomes.

    The point is to supply sufficient net financial assets (dollars) to satisfy the private sector’s savings desires and provide full employment without unnecessarily distorting markets or growing the public sector’s interference in our lives.

  44. john personna says:

    @Ben Wolf:

    Fair enough. I’m not saying I’m all on board, but that is a much more interesting discussion than pet projects as stimulus, or worse, indescriminate “whatevers” as stimulus.

  45. Ben Wolf says:

    @john personna: I don’t support what Bill Mitchell (nor does he) termed “generalized expansion”, where government just goes in and buys up resources to get the economy moving. That’s wasteful, distortive and also environmentally unsustainable, and I hate it when Democratas and liberals trot out the “Build lots of infrastructure!” line, whether we need it or not.

    If we spend to stimulate the bulk should be put directly into consumer hands rather than filtering down through cronies and corporate parasites.

  46. wr says:

    @Tsar Nicholas: “When inflation hits and interest rates spike the shit will doth hit the fan”

    I realize there’s no point in trying to educate you about economics or the law or history or literature or reality, but at least let me take a stab at helping you with your grammar.

    For some reason you love to use the pseudo-Elizabethan “doth” in your ludicrous predictions. I don’t know, maybe you think it gives a Shakespearian edge to your prose.

    But do you have any idea what “doth” means? What part of speech it is?

    “Doth” is an archaic version of the third person singular present indicative of the verb “to do.”

    In other words, “doth” means “do.”

    So you are saying “the shit will do hit the fan.” Which is, of course, illiterate gibberish.

  47. al-Ameda says:

    Well, the employment figures would be better if all levels of government were not shedding jobs. Again, anyone who did not think that the financial collapse of 2008 would not result in years of anemic economic growth was being delusional. The collapse of the housing market alone vaporized over $8 trillion in wealth, and diminished the tax revenues that support schools, cities, states and other public agencies – and that is not coming back anytime soon.

  48. 重庆办证 says:

    “In part, his success comes from his willingness to engage with readers.”