I listened to VP Joe Biden today talking abut the Obama stimulus package, aka, the American Recovery and Reinvestment Act. A few thoughts:
Pimco’s Bill Gross paints a dreary future is his monthly letter:
We are heading into what we call the New Normal, which is a period of time in which economies grow very slowly as opposed to growing like weeds, the way children do; in which profits are relatively static; in which the government plays a significant role in terms of deficits and reregulation and control of the economy; in which the consumer stops shopping until he drops and begins, as they do in Japan (to be a little ghoulish), starts saving to the grave.
Fellow Reuters columnist Agnes Crane see trouble ahead:
Turn the calendar to September and markets are fixated about potential problems at the banks again. The obsession with September being a bad month for stocks and for the world in general has nothing to do with it, I’m sure.
Fellow Reuters columnist Rolfe Winkler has it. Exactly. Right:
What Cash 4 Clunkers did for cars, the first time home buyer credit is doing for housing — pulling future demand into the present. Count on home sales to head back down after this tax credit disappears.
Allan Meltzer (WSJ) pleads for people to stop comparing this downturn to the Great Depression. It is more like the 1973-75 period, he argues. He also opines that it has been in the Obama administration’s self interest to overstate the severity of the recession so it could hype its own achievements in “saving” the US economy.
Economist Robert Brusca thinks he knows:
Right now the job losses in this cycle number 6.9mln, a drop of 5.9% from the peak. It has taken 19 months to get these losses in place. The metrics above suggest that the forecast of how long it will take to get them back should be about 19 months as well (we’ll use 20 months since jobs are still falling). And while that is a long time – nearly two years- it is not so long to restore 6.9mln jobs. If we get them back in 20 months it will take job gains averaging 345,000 per month. Right now that seems like an amazing number. Yet, that is what history says happens. So we’ll see.
The bullish Brian Wesbury and Bob Stein of First Trust find today’s GDP report (2Q was down an unrevised 1.0 percent) to be, well bullish:
Change a few assumptions and those government budget forecasts start to look scary. The Concord Coalition makes a few tweaks to the Congressional Budget Office model:
That is the analysis of my pal Rich Karlgaard over at Forbes. (Insert joke about Obama and fahrvergnügen here.) Some sectors of the economy will boom as others muddle through or stay on the mat. Warren Buffett put it best: “When the tide goes out, you discover who’s been swimming naked.” Here’s a bit from the piece: