Unfortunately the market and the media would rather focus on sentiment indicators rather than facts.
How do we differ from Japan? We have had a real estate bust, little to no inflation, have hit zero bound, and growth is anemic, yet we have a Federal Reserve Board where they are obsessed about inflation. This policy of tight money and large federal deficits has produced 20 years of misery in Japan, especially for investors, who have seen property and equities values fall by 80 percent. Preserving the value of Ben Franklin in monetary formaldehyde is poison for the economy, especially after a real estate bust (loans are repaid in nominal dollars). A peevish monetary asceticism, a worship of the nominal value of the dollar to the level of fetish, is now mistaken as "conservative," even though Milton Friedman himself openly encouraged the Bank of Japan to pursue inflationary and growth policies. I say clamp down on the federal deficit, remove business regs, and run an expansionary monetary policy for several years. Can we have some boom times before we worry about inflation?
You are already proven wrong. Yesterday you were looking for upside surprise and now you are using seasonal adjustment as a excuse. There is a reason for seasonal adjustment and it's all incorporated in the analyst expectations! I am sure you wouldn't have done it if the number had been higher than expected. I wish sometimes you could have a little integrity and admit it when you are wrong. Can't wait for your year end review to see how you are going to justify your prediction of 4%+ GDP growth for this year.
We are going to need to see private payroll pick up or the 6 month annualized rate is going to drop to dangerous recession warninglevel of .6%
A Fed that is obsessed with inflation? Hardly. They have just promised 2 more years of zero interest rates! The problem I have with the 'expansionary' thesis is that IMO it has been a combination of both fiscal and monetary stimulation over the past 30 years which has brought us to the brink! How can more of it be any good? That is the Greek model.In the undisputable words of R. Paul - if debt is the problem - then how is more debt the solution?
@TradingFeds are worried about inflation, specifically worried by Deflation. There is no sign of inflation.However, QE3 is going to be a total waste of time and money. The system has too much debt, it needs to purge,another 36 to 48 months should do the trick (BTW with great harm to the population at large). Anyone that thinks the system can be kick started with looser regulation or lower wages forgets the principal problem: SMEs have excess capacity, they're not about to add to their systems until they are closer to full capacity utilization. The reason why there is no inflation.By the way Scott (assuming you read comments), I wholly agree that America is not yet in a recession, very slow growth seems to be the problem, but then an economy that depends so much on consumption is bound to be in trouble when 9% of its workforce in unemployed.
The US employment to population ratio continued its decline in August -- more at:http://wjmc.blogspot.com/2011/09/us-employment-to-population-ratio.htmlThe US employment to population ratio has been trending sharply downwards since 2000.
Frozen: the economy never depends on consumption for its strength. That is a major supply-side tenet. By far the most important thing is the "supply" side of the economy: work, investment, entrepreneurship, production. That's what drives everything. Supply creates its own demand. Globally, we can never consume more than we produce.
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