WaPo: Recession over? Not unless we make a major shift

[marmar]

Recession over? Not unless we make a major shift.

By Steven Pearlstein
Wednesday, January 6, 2010


First column. New year. Time to take stock of where we are economically and where we're headed.

At the moment, it looks to many like the recession is over. Most of the job cutting has been completed, businesses are profitable once again, banks have repaired their balance sheets, consumer and business confidence is on the upswing, and a new bull market has begun on Wall Street, all of it suggesting that a full-blown recovery is underway.

Unfortunately, folks, it's not gonna be that easy.

My best guess is that the current upswings in economic output, confidence and financial asset prices are largely a reflection of the extraordinary fiscal and monetary juice provided by Treasury and the Federal Reserve, along with the natural rebound that occurs after a collapse in consumer and business spending like that which occurred in the first half of 2009. The surprising strength of the bounce-back testifies to the wisdom of the underlying strengths of the U.S. economy and the success of the policies, but is likely to peter out as the stimulus begins to wear off and the inventory correction is completed. Economist Paul Krugman probably has it about right when he says there is a one-in-three chance that the economy will dip back into recession, with the "optimistic" scenario that the economy will neither shrink nor grow but bounce along the bottom.

Let's review, briefly, the four potential sources of economic growth. ............(more)

The complete piece is at: http://www.washingtonpost.com/wp-dyn/content/article/2010/01/05/AR2010010503809.html

[xchrom]

1. Recommend

[madrchsod]

2. when the cement plant reopens in my town i`ll know the recession is over