FacebookTwitterGoogle+RedditEmail

The Big Double-Dip

It was just as recently as a year ago that the authorities in politics, business and academe were stating boldly and confidently that the nation’s economy was on the mend, and that there was no chance of a backslide into recession again.

Take Lakshman Achuthan and Anirvan Banerji who are, respectively, co-founder and chief operating officer and co-founder and chief research officer of ECRI, the Economic Cycle Research Institute.

“The good news is that the much-feared double-dip recession is not going to happen,” they said on CNN on Oct. 28, last year. “After completing an exhaustive review of key drivers of the business cycle, ranging from credit to inventories and measures of labor market conditions, we can forecast with confidence that the economy will avoid a double dip.”

“We will not have a double-dip recession at all,” said Warren Buffett, the multi-billionaire investor called, by his fans, the Oracle of Omaha, back on September 13, 2010. “I see business coming back almost across the board,” he told an assembled group of bankers.

And of course, there was Ben Bernanke, the chairman of the Federal Reserve, who actually acts on his presumed wisdom, saying, on June 8, 2010, “”There seems to be a good bit of momentum in consumer spending and investment,” he said at the time. “My best guess is we’ll have a continued recovery [but] it won’t feel terrific.”

Even a Vistage Survey of CEOs, conducted release last Oct. 4, showed the confidence index respondents, all top executives at public companies, saying there was “no evidence” for a double dip back into recession in the nation’s economic future.

So much for expert opinion.

This week we have seen new unemployment claims top 400,000 for the eighth week in a row. Manufacturing has fallen to where it was in 2009, the respected Case-Shiller Housing Index has declared that the housing price collapse has gone into a second dip, with home prices nationwide now back down to where they were in 1999 and still falling, and consumer confidence, according to the Conference Board, is down to 60.8 (in 1988 it was 100), a serious slump in a nation where 72 percent of the economy consists normally of consumer spending.

Okay, we’re not in a second round of recession yet, but with economic “growth” slumping into to 1.8 percent for the first quarter of this year, and nothing up ahead to suggest it will get better, there’s every reason to think we could move into negative territory before long.

Also, this stuff about recession is a bit nebulous anyhow. A recession is defined as two back-to-back quarters of negative growth, but when you go from 3% growth — the bare minimum in theory to have jobs being created at a rate sufficient to employ all the new workers entering the job market — to 1% or 2%, it might as well be called a recession. Some companies may still be making profits by operating at a lower than capacity level, but unemployment will be rising, people will be getting poorer, more homes will be going into foreclosure, schools will be laying off teachers, and the general level of misery in the nation will be rising.

Incumbent politicians might try to call that a “recovery,” but that’s really stretching the English language.

So how did all these supposedly smart people get things so wrong?

Any fool can see the problem. The Americans who own their own homes have seen what they thought was their major asset shrink in value by at least a third. Don’t even talk about what meager savings they might have had. Back in July 2008, before the markets crashed, Americans had a total indebtedness of $2.5 trillion. The average American was reportedly saving less than $400 per year. We were living on credit, not saving. Those who did have some money saved and who had been investing it saw it lose 43% of its value almost overnight.

Sure, some of those people, who left their money sitting in the same equities they had been in before the crash got most of it back this year, but an awful lot of those people cashed out at the bottom, not wanting to risk losing any more. Their loses are permanent. Others cashed out because they lost their jobs and needed the money. Their losses are permanent.

This is what the too-smart economists, politicians and CEOs simply don’t get. In their world–the one that just looks at P&L statements, shares words of “wisdom” over golf tees, and profits from illegal but routine insider tips on investment opportunities the rest of us don’t learn about–things look pretty good. Companies are profitable, having laid off huge swaths of workers, bashed unions, won pay and benefit “give-backs” from employees and tax breaks from politicians, elected officials have been re-elected, thanks to friendly backing from the corporate media, and plenty of lucre from corporate PACs, and the tax breaks for the rich that were enacted under the prior Bush/Cheney administration have been extended by the Obama administration, so the well-heeled don’t even have to pay much in taxes.

In our world, though, there are higher taxes, higher gas prices, higher food prices, increased bank charges, miniscule interest or no interest at all on any savings, higher tuition and less in financial aid for our kids, no jobs, pay cuts, and if we’re laid off, there’s no more health care.

So where do the happy-talk forecasters of “recovery” get the idea that we ordinary Americans are going to get out there and spend? Where do they get the idea that the great consumer “engine” that powered the economy for the last three or four decades is going to rev up again?

These idiots should go walk around a few shopping malls. What a dismal experience that is!

They should go stand in an unemployment office application line and talk to a few of the newly laid-off. Of better yet, volunteer at a food bank and talk to the people coming in for food assistance (at least that way these parasites would be doing something useful while they did their research).

If they did a little of that real research, they might not be so quick to make jackasses of themselves again, predicting confidently that there’s no double-dip recession in the cards for the US economy.

I’m not holding my breath, but whether they take my advice or not, I’m ready to offer them a challenge: let’s check back this time next year, and see who was right, them or me.

DAVE LINDORFF is a founding member of ThisCantBeHappening!, the new independent, collectively-owned, journalist-run, reader-supported online alternative newspaper, about to celebrate its first full year of operation on June 6.

?

 

 

More articles by:

Dave Lindorff is a founding member of ThisCantBeHappening!, an online newspaper collective, and is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).

Weekend Edition
May 25, 2018
Friday - Sunday
Melvin Goodman
A Major Win for Trump’s War Cabinet
Andrew Levine
Could Anything Cause the GOP to Dump Trump?
Pete Tucker
Is the Washington Post Soft on Amazon?
Conn Hallinan
Iran: Sanctions & War
Jeffrey St. Clair
Out of Space: John McCain, Telescopes and the Desecration of Mount Graham
John Laforge
Senate Puts CIA Back on Torture Track
David Rosen
Santa Fe High School Shooting: an Incel Killing?
Gary Leupp
Pompeo’s Iran Speech and the 21 Demands
Jonathan Power
Bang, Bang to Trump
Robert Fisk
You Can’t Commit Genocide Without the Help of Local People
Brian Cloughley
Washington’s Provocations in the South China Sea
Louis Proyect
Requiem for a Mountain Lion
Robert Fantina
The U.S. and Israel: a Match Made in Hell
Kevin Martin
The Libya Model: It’s Not Always All About Trump
Susie Day
Trump, the NYPD and the People We Call “Animals”
Pepe Escobar
How Iran Will Respond to Trump
Sarah Anderson
When CEO’s Earn 5,000 Times as Much as a Company’s Workers
Ralph Nader
Audit the Outlaw Military Budget Draining America’s Necessities
Chris Wright
The Significance of Karl Marx
David Schultz
Indict or Not: the Choice Mueller May Have to Make and Which is Worse for Trump
George Payne
The NFL Moves to Silence Voices of Dissent
Razan Azzarkani
America’s Treatment of Palestinians Has Grown Horrendously Cruel
Katalina Khoury
The Need to Evaluate the Human Constructs Enabling Palestinian Genocide
George Ochenski
Tillerson, the Truth and Ryan Zinke’s Interior Department
Jill Richardson
Our Immigration Debate Needs a Lot More Humanity
Martha Rosenberg
Once Again a Slaughterhouse Raid Turns Up Abuses
Judith Deutsch
Pension Systems and the Deadly Hand of the Market
Shamus Cooke
Oregon’s Poor People’s Campaign and DSA Partner Against State Democrats
Thomas Barker
Only a Mass Struggle From Below Can End the Bloodshed in Palestine
Binoy Kampmark
Australia’s China Syndrome
Missy Comley Beattie
Say “I Love You”
Ron Jacobs
A Photographic Revenge
Saurav Sarkar
War and Moral Injury
Clark T. Scott
The Shell Game and “The Bank Dick”
Seth Sandronsky
The State of Worker Safety in America
Thomas Knapp
Making Gridlock Great Again
Manuel E. Yepe
The US Will Have to Ask for Forgiveness
Laura Finley
Stop Blaming Women and Girls for Men’s Violence Against Them
Rob Okun
Raising Boys to Love and Care, Not to Kill
Christopher Brauchli
What Conflicts of Interest?
Winslow Myers
Real Security
George Wuerthner
Happy Talk About Weeds
Abel Cohen
Give the People What They Want: Shame
David Yearsley
King Arthur in Berlin
Douglas Valentine
Memorial Day
FacebookTwitterGoogle+RedditEmail