lost decade

Attack of the Economic Zombies

ICangles Investment Post…

Last Friday’s government report on the economy, detailing Q3 GDP growth of only 2.0 percent, confirmed that the U.S. remains mired in a low growth, high unemployment paradigm. In a viewpoint I wrote for EE Times in February 2009 I predicted as much noting that the government’s economic stimulus package was more likely to make things worse than better and that strong sustainable economic growth requires a powerful technology innovation, like the internal combustion engine or microprocessor, being in its growth stage. I argued since 2000 there has been little real sustainable growth. I focused that short viewpoint on the impact of technology on the future growth potential of the economy. But with poor economic performance now confirmed it is worth spending some time on how government intervention can actually make things worse by among other things fostering economic zombies.

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Great Recession Over?

ICangles Investment Post…

Earlier this week the National Bureau of Economic Research, the official arbiter of the economy, declared that the so-called Great Recession ended in June 2009. Having started in December 2007 and lasting for 18 months, it represented the longest recession since the end of the Great Depression. The NBER found that a mix of economic indicators it tracks began a period of sustained growth starting last June, driving the economy as measured by gross domestic product (GDP) higher. But whether you consider the recession over depends a lot on your definition of a recession.

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The Three Bears Economy

ICangles Investment Post…

In hindsight it’s ironic that the economy of the nineties was described as the Goldilocks economy—not too hot, not too cold, but just right for high employment and strong growth. Ironic, because the real moral of the story people should have heeded is that there is no free lunch. And, like in the Goldilocks’ fairy tale, three unfriendly bears emerged. If the nineties was the Goldilocks economy then the period we now find ourselves in of both weak growth and employment might best be described as the three bears economy. Since 2000 there was the baby bear of the dotcom bubble, the mamma bear of the residential real estate bubble and the daddy bear of the government debt bubble—corporate, consumer and now government-led bubbles of unproductive and hence unsustainable spending.

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