Is Stagnation the New Normal?

by Dave Schuler on January 31, 2013

I disagree with David Harsanyi’s observation that under President Obama stagnation is the new normal. However, I do think that if you view every economic transaction as exploitation, stagnation is the best case scenario.

{ 18 comments… read them below or add one }

Icepick January 31, 2013 at 8:59 am

How would you characterize the economy under Obama? “Poised for growth”?

Icepick January 31, 2013 at 9:00 am

Under Obama the economy is always “poised” for breakout growth. This must be how Lincoln felt about McClellan, who was always “poised” to beat the Army of Northern Virginia.

Dave Schuler January 31, 2013 at 9:01 am

I think I’d characterize it either as “wishful thinking” or as I would characterize just about everything else under his administration: “doubling down”. Nothing worked so poorly that it couldn’t be improved by doing more of it.

Icepick January 31, 2013 at 9:17 am

That may characterize the policy choices, but it doesn’t characterize the resulting economy. I think “stagnant” is arguably fair, and that’s with six trillion dollars in stimulus. (Krugman theoretically wanted 12 trillion, but whatever.)

Drew January 31, 2013 at 3:21 pm

As much as I view Obama as the worst president of my lifetime, I think the word “stagnation” is overwrought. We aren’t stagnant, we are just woefully underperforming. And its not because the economy is just a feather in the wind. Policy matters.

Get used to it. I see absolutely nothing that is going to change, or get better. Doubling down indeed. The country voted this man back in, fair and square. Careful what you wish for. Wall Street is laughing all the way to the, er, bank. The unions are giddy. Solar companies are plotting bogus “investment opportunities.” And so it goes.

Meanwhile, Main Street is screwed. They bought it hook, line and sinker. I guess a smile and vapid comments go along way. I feel sorry for them, but as I said, be careful what you wish for. I feel especially sorry for someone like ice, who gets it and knows Obama is no good for the economy, but is swept up in the tide.

Drew January 31, 2013 at 3:23 pm

PS -

Did anyone else watch the abortion of an interview that Steve Kroft did with Obama and Hillary? That’s how these peoiple get away with it. Media sycophants. Did Kroft spit or swallow?

jan January 31, 2013 at 5:01 pm

“Did anyone else watch the abortion of an interview that Steve Kroft did with Obama and Hillary?”

Oh, did you mean the one that made my skin crawl with their group-hug type of interview standards, which was completely devoid of any substance or content?

Drew January 31, 2013 at 6:16 pm

jan

Uh, yeah, that one. You, as always, are more diplomatic than me…….you can take the boy out of the steel mill, but not the steel mill out of the boy……

steve January 31, 2013 at 6:40 pm

“How would you characterize the economy under Obama? ”

Deleveraging and paying down debt.

Steve

Dave Schuler January 31, 2013 at 6:50 pm

Deleveraging

Clearly, you’re not looking at the charts to which I’m linking. We’ve stopped deleveraging.

steve February 1, 2013 at 7:29 am

He has been president for 4 years. During that time, we did deleverage some. If the numbers are to be believed, we also built up some capital in the financial system. The housing inventory is being worked down. Same with commercial real estate, but we still have a ways to go. Not really sure an economy is supposed to grow well when relatively few people have the money to invest or buy.

Steve

Dave Schuler February 1, 2013 at 7:52 am

How much deleveraging is necessary before the economy returns to financial health? Not a rhetorical question.

Grading for effort is fine for primary school. Otherwise evaluation should be based on fulfilling the requirements. Based on the rate of deleveraging of the last year or so if deleveraging is the issue the economy will never return to health. Based on the rate before the last year or so it will be years.

Icepick February 1, 2013 at 8:25 am

The housing inventory is being worked down. Same with commercial real estate, but we still have a ways to go.

That’s funny. In the last 18 months three of the houses adjacent to my property have been foreclosed up and now sit empty. The shopping district closest to my house have more empty space in them than they did two years ago, or four years ago. Where is the inventory being worked down, North Dakota?

And Drew, median income keeps falling. That’s going backwards, not sideways.

jan February 1, 2013 at 10:48 am

“Not really sure an economy is supposed to grow well when relatively few people have the money to invest or buy.”

Why is that? Could it be the low level of confidence people have in their present-day government? Or, is it because people aren’t paying enough taxes to grow the economy giving people more to invest? Speaking of taxes….. Why is it that the democrats rail so at other people not paying their fair share of taxes, when it is so often a democrat who is the one skipping out on or avoiding paying their fair share of taxes? A very recent example would be Dr. Salomon Melgen, Senator Bob Menendez’s Dominican Republic traveling companion.

Melgen also owes the federal government more than $11 million in back taxes, and the Miami Herald has reported that he may be under investigation for Medicare fraud.

Doesn’t the company you keep somewhat reflect who you personally are?

steve February 1, 2013 at 11:29 am

“That’s funny. In the last 18 months three of the houses adjacent to my property have been foreclosed up and now sit empty.”

The plural of anecdote is data? The numbers are easy to find. Go to Calculated Risk if you have trouble finding them.

@jan- You got me there. I dont remember any Republican donor ever breaking any laws or not paying any taxes.

Steve

jan February 1, 2013 at 11:47 am

Steve,

Ah, a good tongue-in-cheek reply!

The big difference, though, is when republicans break the law or try to hide an embarrassing move — and they do — it’s on the front page of the NYTs as well as a leading, breaking story on the MSM news. However, when dems do it, somehow such skullduggery is lodged on the back page of major newspapers, and often doesn’t even warrant a burp on network or left-leaning cable news stations.

TastyBits February 1, 2013 at 12:55 pm

@Dave Schuler

How much deleveraging is necessary before the economy returns to financial health? Not a rhetorical question.

The answer depends upon how the economy should grow.

If the US is going to return to 2008 levels, credit creation needs to accelerate. Student loans are a poor substitute for a mortgage, a credit card(s), and a line-of-credit. These (mortgages …) will help increase consumer spending, but you have pointed out the major problem with this. This will benefit the financial and housing sectors.

I would like to see a return to at least 2002 levels of personal debt to income. I would also like to see the economy restructured towards manufacturing goods and exporting those goods. In manufactured goods, I include refined products and manufacturing machinery.

Icepick February 1, 2013 at 6:00 pm

The plural of anecdote is data? The numbers are easy to find. Go to Calculated Risk if you have trouble finding them.

I keep hearing about how the housing market is booming here in Central Florida. I’m not seeing it, except at the high end, which is recovering nicely.

And yes, I’m providing anecdotes. But when I’m told that the local housing economy is booming and every week I see more houses sitting empty, I tend to think the books are being cooked, or that what is happening has some other component. Locally a lot of homes are being bought up by “investors”, foreign and domestic, who expect housing prices to surge in the coming two years, back to where they were. An 80% bounce is likely? Not buying it. Meanwhile, what happened to the people that used to live in these empty houses? How well are they doing in your housing recovery?

And I’ve quit reading Calculated Risk since Bill McBride turned into another shill for Obama and the Democrats. There’s not one pioece of economic news that he won’t claim is just brilliant and an example of the GOD-LIKE POWERS of BARACK HUSEIN OBAMA. I couldn’t take another one of his posts talking about how fucking outstanding the employment market was. Fucking hypocritical partisan shill. No wonder you like him so much.

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