Tuesday, March 10, 2009

Double Dip Recession

I know, I know it is a little early to call the end of the recession, much less the next one. But hear me out. The government's massive monetary and fiscal stimulus must raise output, at least the way the government calculates it. With the appropriate lag, the economy will grow again. The recovery will be a weak one, however, without robust job growth. Then a bout of inflation and the Obama administration's tinkering with taxes, health care, etc. will cause uncertainty that will put the economy back into a tailspin. The only question is whether this will play out before the mid-term elections or not and how voters will respond.

For history buffs out there, I'm using the Great Depression as a model here. We may someday speak of the "Obama Recession" in the same way we mention the "Roosevelt Recession" of 1937-38 today. As most people don't remember the Roosevelt Recession, which gets lumped with the downturn of 1929-1933 and blamed on Herbert Hoover, the stock market crash, investment banks, etc., the Obama administration may not see this as a big risk. He is already setting us up for this by his repeated insistence that he "inherited this mess." It's nice to have a shrewd thinker in office for a change!


Buzz Killington said...

So what your saying is, we are in for a big cat bounce?

Robert E. Wright said...

Hey, Buzz, I haven't seen you since your last appearance on Family Guy! I would call it a big dead cat bounce. I was going to tell Congress that this Thursday but they chickened out and canceled my testimony. Bawk! Bawk! Bawk! (That's the big chicken that Peter fights sometimes.)

Buzz Killington said...

I was just going to change it but your on the ball today.