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Recoverless Recovery (with Obamacare)

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PostPosted: Sun Jan 31, 2016 11:09 am    Post subject: Recoverless Recovery (with Obamacare) Reply with quote


If it was a normal recovery, the output gap would’ve closed in 2010 or 2011 and then normal growth could’ve been sustained. It seems, we added anti-growth policies to pro-growth policies, similar to putting one foot on the brake and the other foot on the accelerator, resulting in an expensive “recovery.”

UCLA Anderson Forecast: U.S. economy falls short of true recovery
June 05, 2013

“U.S. real GDP is now 15.4 percent below the normal 3 percent trend. To get back to that 3 percent trend, we would need 4 percent growth for 15 years, 5 percent growth for eight years, or 6 percent growth for five years, not the disappointing twos and threes we have been racking up recently, which are moving us farther from trend, not closer to it. It’s not a recovery. It’s not even normal growth. It’s bad.”


Normally, a severe recession is followed by a strong recovery. And, normally, a mild recession doesn’t need a strong recovery to get back on track. I guess, you believe a weak “recovery” after a severe recession is normal.

A long-term chart of per capita real GDP growth:


In the Great Depression, monetary policy was constrained by the gold standard and fiscal policy was less developed, including “automatic stabilizers.” In the 1970s, a depression was avoided by creating inflationary growth. Monetary and fiscal policies had a positive impact on this recovery.

I cited some of the many factors before that weighed on this recovery. To a large extent, this is a policy-induced depression, not a long-wave bust, like the 1930s, 1970s, and when the last of the Baby-Boomers reach 65 in 2029.


It hasn’t been a normal “recovery.”

We had a sharp, sudden, and sustained downshift in economic growth, even with quantitative easings and deficit spending.

The economy is still on life support, while we continue to live beyond our means, adding trillions of dollars in federal debt.

What is the cumulative loss of the output gap? It’s a lot of lost income and tax revenue.

And, we’re in a weak position to deal with the next recession.


Actually, there are two events – The deep recession and the shallow recovery.

It would be cheaper to remove and reduce anti-growth policies (rather than adding more) than adding more pro-growth policies, to spur economic growth.


Hillary may have to out do Sanders:

“Sanders is resonating among angry voters by focusing on income inequality, and promising to deliver universal health care and free college education.

Meghan Metier, 22, of Iowa City said the Affordable Care Act – President Barack Obama’s signature healthcare reform – has allowed some of her friends to access Medicaid. But to keep it, she added, they have to be certain their income doesn’t exceed the poverty level, so they stay barely employed.”


America's angry voters divvied up by Trump and Sanders: poll
Sat Jan 30, 2016

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