Monday, September 20, 2010

Growth Recession

Bloomberg details:

The possibility of a sub-par expansion poses a dilemma for the central bank’s policy-making Federal Open Market Committee when it meets tomorrow. While the economy isn’t so weak that it’s clearly in need of more monetary stimulus, it may not be strong enough to keep unemployment from increasing.
In other words... we are in a "growth recession":
The late Solomon Fabricant, a professor of economics at New York University, coined the term growth recession to describe an economy that isn’t expanding fast enough to keep unemployment from rising. The minutes of the Fed’s last meeting, on August 10, suggested the central-bank staff didn’t see that happening next year.
The chart below shows this "growth recession". Specifically, it shows how many years of employment growth have been given up, defined as the number of years since the level of employment first hit the current level (i.e. August household employment was 139.25 million people; the first time we saw employment above that level was July 2004 or a bit more than 6 years ago).

Thus, even though we have recently been adding jobs, we are not "catching up" and have actually been losing ground the last few months.

Source: BLS


  1. In truth we are in a debt saturation era where the consumer is toast. No amount of FED Speak will change this fact. No amount of fiscal or monetary stimulus will change this fact. The Z1 Report of last week clearly shows the consumer running at full throttle until said consumer runs into a brick wall. Look no further than how much consumers have delevered against what the banks have written off. It proves that there is no delevering by consumers. Consumers will and are spending until they face what amounts to forced bankruptcy when the bank pulls all their remaining available credit.

    The 4th Turning is always a real BE-ATCH.

  2. Solomon Fabricant, a professor of economics at New York University, said truly definition of this situation. I think so, the current global market is very stagnant what it´s huge impact to american economy. On the other hand, the unemployment sees next big danger. The number 139,25 million people is big problem for new starting of american market. The right investment and control of public expenses will be the best solution, don´t you think ?