The weekly unemployment claims have risen to 424,000.
The revised first quarter 2011 GDP is the same as the original estimate: 1.8%.
Durable goods orders fell 3.6%, the largest drop in six months.
Commercial real estate prices have reached a new post-bubble low.
New home sales tied a record low for April.
Is this the recovery that will put 8 million unemployed (twice that many when you add the underemployed) back to work?
While we’re on the subject let’s engage in a thought experiment. Let’s say, arguendo, that you expect GDP to grow at 2% indefinitely. Does it make sense to time-shift future growth, i.e. to reduce future growth below that 2% level, to produce more growth now?
Similarly, let’s say that you don’t know what would cause GDP to grow at a level greater than 2% a year. Same question.
We have done very much the same things that Japan did (rescue banks without restoring health to the financial system, very low interest rates, fiscal stimulus, quantitative easing). The results are very much the same as they were in Japan. Should we be surprised?
It will be interesting to see. The last “slow spot” we hit felt more to me like a possible “double dip” than this one … but we’ll see. My gut says this will be another long slog and poor recovery.
(GDP growth and inflation are too close to separate.)
Anecdotes:
Apple’s App Store just logged it’s 500,000th app. That’s not the number of apps sold, that’s the number of apps created — not counting Android.
We’re moving so we’re purging. My son just reduced 50 boxes of physical stuff to 8. The difference being that everything that matters to him now is digital, so he has terabytes of data and very little physical.
Because we’re both writers we have a house filled with books — most of them (in terms of bulk) our “author copies” in various languages. It just occurred to me yesterday that it’s no longer important for me to keep numerous copies — they’re all digital. The Salvation Army is coming to haul away our bookshelves and we won’t be replacing them.
The place we’re moving to is 1000 square feet smaller than our current home and all that “stuff” we don’t want anymore makes it easy. That’s less AC or heat, less power consumption over-all, fewer decorative items, rugs, furniture, etc… And of course we don’t need offices at all.
A few years ago I spent a week in Paris doing research on a book project I never sold. Probably cost me ten grand. Now I would do the same research on Google Earth and Tumblr blogs at zero cost.
I think digital is finally having a huge impact. I think it will contribute to a devaluation of office space, less travel, smaller homes, eventually to drastically cheaper education, and despite Dave’s pessimism I think it will reduce health care costs. This is a rolling revolution of epic proportion, a paradigm shift to use that overused phrase. I think it’s probably a waste of time hoping that housing will recover. I don’t think it will recover any more than the livery stable business recovered after Ford.
“Because we’re both writers we have a house filled with books — most of them (in terms of bulk) our “author copies†in various languages. It just occurred to me yesterday that it’s no longer important for me to keep numerous copies — they’re all digital. The Salvation Army is coming to haul away our bookshelves and we won’t be replacing them.
”
Ouch. With all due respect you might want to reconsider that. My office is lined with the obligatory “tombstones” and “bluebooks,” which contain all the legal documentation from deals I’ve done. Its your body of work. You have quite an admirable body of work, Michael. Do you want to reduce it to bits and bytes? That’s sort of 1950’s sci-fi cold….
What Recovery?
We are trading sideways now. Pity the unemployed.
Drew:
That’s kind of you to say. And actually we had a close call on that. When Scholastic decided to relaunch An!morphs they discovered they had dumped all their digital copies. They had exactly one library copy of each of 63 books. They went on e-Bay to buy books to copy.
But in the current environment digital propagates so quickly it’s essentially indestructible. If Amazon, Barnes and Noble and their various foreign counterparts all lost their versions, I could always grab a pirated torrent version.
Michael –
You don’t take my faux venom seriously, do you? This is political sport.
You know, I can’t help but recall how both Drew and I pointed this out….mmm what was it Drew, two years ago or just 1? I was against TARP, against how it was implemented, and against things like the bailouts for Chrysler and GM.
People castigated me: the costs would be enormous.
But lets see….0.5% off of a 14 trillion dollar economy for the next 10 years….compounded is how much of a loss? Why what a great deal to bailout the big banks. To ensure the people on Wall Street and DC that got us in this mess get to retain their power and wealth and prestige.
I believe (subject to correction) people like you, Steve, and Drew, also told us we’d never be repaid. Or that we’d have to keep pumping in more and more money.
And it’s hard to see how letting the major banks collapse would have somehow ensured more growth over the last 2 years. Over the long term? Who knows. But from the TARP to today? Would we have full employment and a roaring economy?
We haven’t. If we’ve shifted growth down for the next 10 years the lost GDP value is about 50% of our current economy, a bit more. Opportunity cost and all that.
It wouldn’t have. But it would have broken the cycle. Now that I think about it the cycle isn’t like addiction it is like abuse where the abused keeps submitting to the abuser and believing the lies it will never happen again.
1. The problems we had pre-recession still remain.
2. Growth is going to be sluggish for the foreseeable future, so the true cost is not just the TARP price tag.
3. We have made it that much more likely we’ll have a similar problem again….and again and again.
John Personna has a handy link to bailouts and one thing of note….they’ve been getting bigger over time. coincidence? Maybe, but I don’t think so.
Which opportunity cost? The British are experiencing another sort aren’t they? As they discover that hard-brakes on spending in the aftermath of a credit crash leads to a cycle (dare I say spiral) of contraction?
Perhaps you had an alternate stimulus, rather than austerity in mind?
This is a good graphic on bailout size. Actually, without the 1989 flier we were doing pretty good.
2008 was unprecedented.