ha ha. sorry Barry i was being sarcastic/ironic/snarky. that is hard to convey in the comments and/or email.

i know that unemployment is typically a lagging indicator, and typically the last thing to pick up in economic cycles. but in this downturn, it’s likely to stay severe. housing and personal consumption expenditures typically lead us out of recessions, but will those two things be leading indicators in this cycle?

back during the Internet bubble, we heard so much about this time it’s different, but it wasn’t during the boom. in the Great Recession, many are using typical, normal indicators, but will this time really be different? i think it will, but i’m not certain. only time will tell.

Mannwich, i knew you’re real. i’ve read this blog off and on for a long time. i just don’t think that you will hook up with Harry for drinks. as far as being a responsible saver, “sometimes, everybody takes a beating.”

BR – you’ve got this all mixed up..

Real GDP = Nominal GDP – Chain Deflator

the deflator was 0.8%… it was expected to be 1.4%

the deflator came in 60 basis points LESS than expectations. the lower the deflator, the higher real GDP is..

nominal GDP was 4.3% and after deflating (backing out the price increases) by 0.8% you get 3.5%

if the deflator had come in inline at 1.4% with the same nominal GDP of 4.5% the headline real GDP number would have been 2.9%

(it’s actually more complicated than this b/c it depends on the relative price changes of exports vs. imports but its late)

3Q2009:
10.1T in consumer expenditures = 90K per household when we know that average household income = 65K. Spending is 1.35X income

4Q1995:
5T in consumer expenditures = 50K per household when avergage household income = 45K

So if we go back to the same ratio of 1.11X of spending to income (and that is still overspending), GDP would decline by around 1.5 to 2 trillion.

And why would the subsidies for your program to stimulate your economy require much less new government debt over the next 10 years than the mentioned 25 trillion US-dollars to get sufficient economic growth with it? I don’t see this. For the last three decades private debt has had to about double every decade to get growth in the US during the expansion phases of the business cycle. The private debt load w/o financial institutions amounts to about 25 trillion US-dollars (w/ financial institutions about 41 trillion), currently. I very much doubt that the US government will be able to stimulate substantial economic growth w/o adding new debt that is in the same ball park as the private debt load, if the private sector can’t add much to its debt anymore.

rc

13% of increase from healthcare
8% of increase from financial services

19% of increase from ch. in inventories
10% of increase from residential investment

-32% from net exports (the oil that had to be imported)

19% of increase from governement spending

Our schools should teach the West Point Creed, “I will not lie, cheat or steal, or tolerate those who do.”

Or may be we need to implement the Chinese form of discipline and just hang the SOBs.

I have read however that in addition to banks being reluctant to lend, loan demand also falling because in this environment, businesses do not want to expand and consumers want to cut back.

Certainly there is demand for loans out there that is not being met. However, there also is so much surplus capacity – be it offices, CRE, houses, factories, etc., that total demand for credit is contracting. Nobody in their right mind would borrow money from a bank to build a new office building or a shopping center.

One of the solutions is to provide incentives to expand fiscally-responsible credit demand. Where can we do this? New investments is domestic energy production, emerging technologies, export industries, highway construction, essential public works projects. Use this period of time as an opportunity to develop new industries and bring our infrastructure up to modern standards. Investment of dollar and not federal program expenditures.

How do we do this? Investment tax incentives, credits and grants for the private sector and perhaps federal/local matching grants and debt financing programs for the public sector.