First, we got word that the crisis was officially over. GDP grew last quarter. Thanks to all the Cash for Clunkers, Cash for Bankers, Cash for Houses, Cash for Trash, and cash for every other blessed thing under heaven, the number crunchers were able to report positive economic growth for the third quarter.
Let’s not get too excited. Stocks bounce. Bonds bounce. An economy bounces. Even dead economists bounce. And if we’re following the Japanese experience, with a long, slow on-again/off-again period of depression, we can expect some quarters of growth, followed by quarters of non-growth. It’s going to be a painful adjustment to the ‘new normal,’ whatever that is...
Unemployment is headed up. The U6 figure – a more accurate picture of how many people are out of work – is up to 17%. There are 1.5 million homeless children in the US now, including 300,000 in the state of California alone. One out of 10 Americans will not bite the hand of government – for it is the hand that gives him his food stamps.
Foreign direct investment has dropped 30%. International trade is down 10%.
Do you call this a recovery? We don’t.
As David Rosenberg puts it, the man on the street is perhaps “less enthused by the fact that a lower rate of inventory de-stocking is arithmetically underpinning GDP growth at this time.”
In other words, it’s ‘growth’ that only an economist could love…and then, only an economist who was an idiot.
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