Saturday, August 6, 2011

The Pot Hole is a Rut Becoming an Abyss

This graph shows how the 2008 Little Depression has taken a bite out of America's private consumption and it hasn't let go. Normally after 3 or 4 years the post-recession growth is fast enough to put the US back onto the trend growth path. But not this time:

Click to Enlarge

Notice that (a) the gap hasn't closed and (b) the current growth rate is slower than trend so it won't close any time soon. This is the "lost decade" syndrome. There is little or no healing from the financial panic so the recession/depression grinds on until some external stimulus changes the situation.

But of course the Republicans don't believe in "stimulus". They believe in God, so we are all left waiting for Godot.

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