Question of the Day

If it was so obvious that this recovery would be slow, then the Administration’s forecasts should have reflected it. Were they saying at the time, “normally, the economy bounces back quickly after deep recessions, but it’s destined to be slow this time, because recoveries from housing “bubbles” and financial crises are always slow?”

That is John Cochrane. His answer by the way is: “No, as it turns out.” The whole post is worth reading.

4 responses to “Question of the Day

  1. The economy probably would have “bounced” back faster if they had not implemented policies that impeded its recovery. (obamacare and dodd-frank, just to drop a couple of names) Just these two examples were/are significant economic burdens and added extreme uncertainty into the economy, which doesn’t seem to be a really great idea in the middle of major recession.

  2. cmlaw, you fall into the “policy uncertainty is the culprit” trap. It´s monetary policy that determines the size and intensity of the bouce back. It´s also MP that determines the size and intensity of the initial drop. This time around MP managed a post 1930s record braking spending drop and is quite content in keeping spending growth constrained despite the very low level it reached.
    http://thefaintofheart.wordpress.com/2012/08/16/why-the-economy-is-still-depressed/

    • Thanks Marcus for the comment and link. I didn’t really “fall” into the “trap”. If anything I waded off into it voluntarily. I don’t have the faith in monetary policy (or The Fed) that I once had. I’m going to stick with the uncertainty and the plethora of new regs of the past few years as the primary problem.

      Cmlaw

      Sent from my iPhone

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