After all the "doom and gloom" scenarios on the economy, it is refreshing to read an economist outlining several good reasons to be optimistic about America's economic future, and here is a link to the PDF of his study explaining why:
http://www.milkeninstitute.org/pdf/From_recession_to_recovery.pdf
"The sun will come out tomorrow!"
Comments
Unfortunately, the projections are based on a flawed assumption. The assumption that the economy is structured in the same manner it was when the models were first historically applied It isn't.
We've moved from industrial capitalism to financial capitalism. The data isn't applicable except in a very broad and limited sense. It would apply to countries such as China..
Back to the drawing board.
Financial capitalism assumes a nation's prosperity is based on how much money it can make...rather than in the production of things the money represents..It's the foundation of the Chicago School of Economics which the U.S. has embraced as national policy..Thus on-going outsourcing even as the nation struggles with unemployment...It fits the ideology of neo-liberalism. shared by both political parties.
Retired Monk - "Ideology is a disease"
However, with no previous model with which to compare, assumptions in economics (and ALL economic projections are based on assumptions) from past history. There is nothing that says the optimistic projections contained in this study are any more or any less likely than the "slash our wrists or jump off buildings" prognostications of the more pessimistic economists. If enough people believe something will fail, they are more likely to take ameliorative actions that, when implemented collectively, can precipitate the very failure they feared, like massive sell-offs of stock, for instance.
Promoting the "gloom and doom" scenario does sell a lot of gold coins! Ask Glenn Beck.
In referring to the buying/selling of financial paper...collective actions based on fear tend to collapse the paper.
However, one can't spend hope at Walmart. They want money. That takes an income. For most, that means a job....or at least one without falling hours and income.
Nationally, wages aren't sufficient to buy production/services. That's just the way it is. We've used credit in place of wages to sustain the economy. That couldn't be maintained forever without raising wages.. Credit maxes out just as static incomes do.
"Faced by failure of credit they have proposed only the lending of more money" - FDR
We've been here before. What's the solution.being offered? Give the banks more liquidity so they can lend more money. Problem is the same as before. People can't borrow more. They can't pay it back. This time around, there isn't much to stimulate. The productive economy has been outsourced in favor of a financial economy. One based on credit and the exchange of financial paper..
It isn't real. It's illusory bubbles.
If we used the same data to figure unemployment as was used in the Great Depression...U.S. unemployment rates would be nearly 20%. Depression levels. Changing the data used to compile the figure doesn't change what is actually so..
Perhaps if the economics of the Great Depression hadn't been re-written to fit current ideologies....and in particular the Chicago School of Economics......we'd be operating on economic history rather than the re-write.....and fix things..
Retired Monk - "Ideology is a disease"
I'm optimistic.
Way to Obama administration! Funny Slab, I thought you said (about 100x on this board, that Obama was bad for "bidness").
[quote]Orders for nondefense capital goods and manufacturing output have increased by 19.9 percent and 7.9 percent, respectively, over the past 12 months.
Slow private-sector job growth is expected in the early stage of recovery, but the U.S. economy will add 1.8 million jobs in 2010, 3.1 million in 2011, and 2.6 million in 2012.
Our econometric model forecasts that multiple factors—including a strong recovery in business investment in equipment, more robust exports, a more upbeat consumer, and low interest rates—
will combine to fuel real GDP growth of 3.5 percent in 2010, 3.7 percent in 2011, and 3.8 percent in 2012. It shows growth returning to trend at slightly less than 3 percent from 2013 to 2015.
Eight quarters into this recovery (3Q 2011), the model shows real GDP exceeding its prior peak by 4.5 percent. Since this represents the lowest recovery level in the postwar period, this is not an overly aggressive projection.