{"id":150227,"date":"2010-01-07T12:25:49","date_gmt":"2010-01-07T17:25:49","guid":{"rendered":"tag:business.theatlantic.com,2010:\/\/3.33131"},"modified":"2010-01-07T12:38:57","modified_gmt":"2010-01-07T17:38:57","slug":"what-the-2010-recovery-needs-right-now","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/150227","title":{"rendered":"What the 2010 Recovery Needs Right Now"},"content":{"rendered":"

This is a very reasonable economic forecast<\/a> for 2010 from AEI’s John Makin (via Jon Chait’s great new blog<\/a>.) Chait focuses on the part that says the stimulus boosted GDP by 4%, and wonders whether Republican senators will bother to read that part. Fair enough. I want to focus on the part about consumer demand, and why it’s not sustainable without more government stimulus.<\/p>\n

When we reported that GDP growth between July and September was 3.5%
\n(it’s been revised down to 2.2%), I pointed out that families’
\ndiscretionary income actually
\nfell<\/a> between July and September even as consumption on durable goods
\nskyrocketed. The difference was government stimulus, like the housing credit and Cash for Clunkers. Makin makes the same point:<\/p>\n

During the three months ending in October, real consumer spending rose
\nat a 2.6 percent annual rate while real disposable income rose at a 0.6
\npercent annual rate. Whether spending can continue to grow
\nsubstantially in excess of income growth, and therefore draw down
\nsavings, remains one of the major uncertainties overhanging the U.S.
\neconomy as we move into 2010.\n<\/p><\/blockquote>\n

This provides a chicken-egg conundrum. Employers won’t grow the
\ncompensation pie unless they see sustainable demand for their goods or
\nservices. They won’t see sustainable demand for their goods and
\nservices unless Americans keep spending money. Americans won’t keep
\nspending more money than they’re getting from employers. It seems to me
\nthat the only way to complete the circle is to continue to rely heavily
\non government stimulus, in the form of tax credits for employers to
\nhire or employees to spend.<\/p>\n

If we’re going to see a robust recovery next year, the most likely
\ndriver is still exports. The American consumer still needs crutches to
\nstand, but the Asian consumer is on a tear. The ’00s boom was fueled by
\nAmerican demand, but in the recovery it’s America that will be leaning
\non China and India to buy our stuff and bring us back to full
\nemployment.


\n

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\n\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

This is a very reasonable economic forecast for 2010 from AEI’s John Makin (via Jon Chait’s great new blog.) Chait focuses on the part that says the stimulus boosted GDP by 4%, and wonders whether Republican senators will bother to read that part. Fair enough. I want to focus on the part about consumer demand, […]<\/p>\n","protected":false},"author":1534,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-150227","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/150227","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=150227"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/150227\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=150227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=150227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=150227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}