Is the US actually in recession? - Democratic Underground

redqueen

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Fri May-05-06 01:09 PM
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Is the US actually in recession?

CSI: Trade Deficit
http://economistsview.typepad.com/economistsview/2006/04/paul_krugman_cs.html

Forensics are in. If you turn on the TV during prime time, you're likely to find yourself watching people sorting through clues from a crime scene, trying to figure out what really happened.

That's more or less what's going on right now among international finance experts. The crime in question is the U.S. trade deficit, which ... reached an amazing $805 billion last year. The mystery is how we've been able to run huge deficits ... with so few visible adverse consequences. And the future of the U.S. economy depends on which of two proposed solutions to the mystery is right.

Here's the puzzle: the trade deficit means that America is ... spending far more than it earns. ... To pay for the excess of imports over exports, the United States has ... borrowed more than $3 trillion just since 1999.

Experts warn of crisis as two U.S. deficits collide
http://www.kansascity.com/mld/kansascity/news/opinion/14434445.htm

The best case, according to public-policy experts speaking April 24 in Kansas City, is that the nation’s ballooning debt will be manageable — if we quadruple taxes, slash Social Security and Medicare spending beyond the bone, or find some combination of the two before a meltdown starts.

And the worst case?

“Over the long run, I believe the republic is at risk. It’s that serious,” David Walker, the U.S. comptroller general, said at a business breakfast Monday.

'Good economy' remains an illusion
http://www.charleston.net/stories/?newsID=84520§ion=commentary

The same monkeyshines are employed by the government in reporting the GDP, the CPI (Consumer Price Index), and unemployment. After World War II, the government measured GDP with consumption as 70 percent of the measure. At the time, all we consumed we produced. But today, half of the goods that we consume are produced abroad, and the reported GDP is flawed. For example, the official government GDP figure for the fourth quarter of last year is 1.7 percent. But according to John Williams, a respected conservative Republican economist, the figure "should be close to 2 percent contraction." Alan Greenspan and the Boskin Commission appointed by Congress jimmied the CPI to lessen Social Security payments. Rather than about 3.4 percent, Williams reports that "real CPI right now is running at about 8 percent."

The Clinton administration jimmied employment figures by reducing the number of people surveyed in the inner cities. Now with proper labor force growth, Charles McMillion, a noted Washington economist, reports an unemployment rate at 7.6 percent instead of 4.7 percent.

In the last five years we have lost 2.9 million manufacturing jobs. To keep us going, the government has cut taxes and goosed the economy with $2.5 trillion in "hot" checks to create jobs. Paul Craig Roberts, Ronald Reagan's economist, states: "No sane economist can possibly maintain that a deplorable record of merely 1,054,000 net new private sector jobs over five years is an indication of a healthy economy."