June 8, 2011

The Economy Is Worse Than You Think

Martin Feldstein, Wall Street Journal


wqpp

The policies of the Obama administration have led to the weak condition of the American economy. Growth during the coming year will be subpar at best, leaving high or rising levels of unemployment and underemployment.

The drop in GDP growth to just 1.8% in the first quarter of 2011, from 3.1% in the final quarter of last year, understates the extent of the decline. Two-thirds of that 1.8% went into business inventories rather than sales to consumers or other final buyers. This means that final sales growth was at an annual rate of just 0.6% and the actual quarterly increase was just 0.15%—dangerously close to no rise at all. A sustained expansion cannot be built on inventory investment. It takes final sales to induce businesses to hire and to invest.

Read Full Article ››

Related Topics: economy

RECOMMENDED ARTICLES

May 14, 2012
Lethargic Dragon: China No Model for U.S.
Reihan Salam, National Review

Americans have always looked abroad for inspiration. Alexander Hamilton drew on the experience of Britain and France to shape the economic institutions of the early republic. In the early 19th century, Henry Clay championed... more ››

May 14, 2012
The Boom on the Farm
Robert Samuelson, Washington Post

MARION, Iowa -- Sitting in the cab of a $350,000 John Deere tractor pulling a $150,000 Deere corn planter, Greg Carson embodies modern American agriculture. It's capital-intensive, high-tech, efficient -- and now immensely... more ››

May 14, 2012
Why We Regulate
Paul Krugman, New York Times

One of the characters in the classic 1939 film “Stagecoach” is a banker named Gatewood who lectures his captive audience on the evils of big government, especially bank regulation — “As if we bankers... more ››

May 15, 2012
How Wall Street Killed Financial Reform
Matt Taibbi, Rolling Stone

Two years ago, when he signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, President Barack Obama bragged that he'd dealt a crushing blow to the extravagant financial corruption that had caused the global... more ››

May 15, 2012
Bigger & Bigger Banks Threaten Financial System
David Rohde, Atlantic

The reports are startlingly familiar. Late Thursday, JPMorgan CEO Jamie Dimon announced a surprise $2 billion trading loss and stocks swooned. Dimon insisted, though, that there was no need for a Volcker Rule that would ban big... more ››