Some argue that the unemployed have skills that are simply not needed. Thus, deficit spending will not get us out of this “structural” recession. But, if this were a “structural” problem, the unemployment rate for recent college grads would be relatively lower now than back in ’01; as that was a classical cyclical recession. But it’s not. Recent college grads today are relatively as bad off as they were then.
Tag Archives: Deficit spending
Stupor Committee
With barely a week before the deficit reduction panel must make its recommendations to Congress, and with little hope of success, bank on the goalposts being moved! If the Panel totally fails, expect Congress to pass a law canceling the $600 billion cuts in both defense and social programs. And, if the Panel passes something short of $1.2 trillion, expect Congress to declare victory and then delay the hard choices till ’13.
Gimmie Growth
June’s trade deficit swelled 18.8% to $49.9 billion, the highest since 10/08 and much worse than economists (what do they know) predicted. If annualized, the June deficit would be almost $600 billion. That data along with recent inventory data suggest Q2 growth will very sluggish; 1.5%-1.7%. While certainly not recession territory, we have an economy that is vulnerable to shocks and is weaker than we want to believe.