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Mon Feb 25, 2013, 04:45 PM

Analysis: Morning in America? U.S. Economy Poised To Accelerate

WASHINGTON | Mon Feb 25, 2013 3:25pm EST
(Reuters) - Famed U.S. economist Milton Friedman once observed that a recovery from recession is like plucking a guitar string: The harder the economy is pushed down, the faster it snaps back.

That didn't happen when America began to exit a deep downturn in 2009. Now, though, after years of paltry growth and despite a government austerity drive that could batter the economy for months, signs are emerging that a more robust recovery is around the bend.

The main reason is an improvement in household finances, which by some measures are looking more solid than they have in decades. This is allowing consumers to ramp up purchases of homes and cars, the sort of spending that usually leads an economic rebound but that until recently had been held back by heavy debts and tight credit.

"We finally are getting something that looks more like a normal recovery," said Nigel Gault, an economist at IHS Global Insight in Lexington, Massachusetts.



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Reply Analysis: Morning in America? U.S. Economy Poised To Accelerate (Original post)
Purveyor Feb 2013 OP
Dawson Leery Feb 2013 #1
Jackpine Radical Feb 2013 #2
AnotherMcIntosh Feb 2013 #3
On the Road Feb 2013 #4

Response to Purveyor (Original post)

Mon Feb 25, 2013, 04:56 PM

2. Nuts.

Any opinion piece that starts out with homage to "famed economist Milton Friedman" is suspect from the first paragraph. This is hype trying to squeeze some more consumer spending out of the economy. It's about as trustworthy as Jim Cramer touting stuff he shorted on.

The 99% are still hurting. Sure, a few are buying new cars etc. because they've delayed the purchase as long as possible, the family junker is no longer drivable, used cars are ridiculously expensive, and the banks will give you a better interest rate on a new purchase than on an inflated "pre-owned" trashmobile.

The sequester will be to the economy what the torpedo was to the Lusitania. Bank on it.

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Response to Purveyor (Original post)

Mon Feb 25, 2013, 05:57 PM

3. Experience has shown that Milton Friedman and his Chicago school of economics was wrong. Even the


famed Judge Posner has acknowledged that.

As otherwise noted in another IHS Global Insight report,
"The congressional super committee tasked with cutting $1.2 trillion off the budget deficit over the next 10 years has failed, making budget sequester possible. Budget sequester would mean that in 2013, mandatory and automatic spending cuts of $1.2 trillion would begin to take effect. This would come in the form of $110 billion of budget authority per year. In the first year, $55 billion in spending cuts would be eliminated from discretionary defense spending. Government spending has already been declining recently, and IHS expects this to continue through 2016 at the federal, state, and local levels. Such spending reductions put a drag on GDP; in 2012 federal, state, and local spending will decline by 2.5%, which will decrease GDP growth by 0.5 percentage points. IHS expects the cuts to include wages and salaries, which will in turn dampen job growth and spending."


John Maynard Keynes and New Deal Democrats were right. Milton Friedman and his I've-got-mine-crowd were and are wrong.

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Response to Purveyor (Original post)

Mon Feb 25, 2013, 06:51 PM

4. In Addition to Household Finances

corporations are sitting on a ton of cash. That cash will surge back into the economy at some point. Looks it will be fairly soon.

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