Tuesday, April 10, 2007

Current recovery great for profits, poor by most other measures

some nice arguments for not making the tax cuts permanent.

gute gründe die zur diskussion stehenden steuererleichterungen nicht zu verlängern.


Recent data regarding fourth quarter (2006) growth in U.S. gross domestic product (GDP) allows us to examine how the current recovery, now entering its fifth year, stacks up against the other recoveries since World War II that lasted as long. This assessment can shed light on the effectiveness of macroeconomic policies enacted in the name of improving economic growth.

This much is clear: the current recovery substantially lags the historical average in GDP growth, employment growth, investment in equipment and software, and, with the deflating housing market, even in residential investment..

> i have to question the residential investment data. the 3.5% doesn´t make any sense to me. here is a better chart from pimco that is closer to 6%. maybe epi just mixes up the two.

> bei den wohnungsbauinvestitionen ist epi sicher ein dreher unterlaufen. die zahlen von pimco reichen an die 6% heran und sind sicher richtig.

In short, the current recovery looks weak on all measures except profit growth. As a policy lesson, the large tax cuts of 2001 and 2003, which have had ample time to affect the economy by now, have failed to deliver economic performance that even matches up to the past average.

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