More no recovery
Robert Reich’s post (here yesterday) has gotten a lot of play in the econoblogosphere. Here’s a sampling.
First up: Felix Salmon:
This is related to Mohamed El-Erian’s “new normal” idea — while previous recessions were part of economic cycles within a certain economy, what we’re going through right now is a painful disruption from that economy to something else. I fear that the flat or declining median wages, however, might well survive the transition — at least so long as unemployment continues to remain as high as it is now. Which is one reason not to worry overmuch about inflation: if consumer spending accounts for 70% of the economy, and consumers don’t have any money, it’s really hard for prices to rise very quickly.
Followed by Mark Thoma: Don’t Expect a Quick Recovery
One of the reasons I’ve argued this recovery will be slow is that we cannot simply bounce back to where we were before the problems started as we could in some past recessions. We need to move resources out of housing, out of finance, and out of autos, and those resources need to find productive employment elsewhere in new or growing industries, and that is not very likely until things improve. Consumers need to save more and consume less, as they are starting to do, and this too will require adjustment. So does this mean we should expect a U-shaped recovery instead of a V-shaped recovery? Robert Reich says it’s neither, this is an X-recovery.
Calculated Risk isn’t quite so pessimistic, but then again not exactly upbeat.
Eventually the economy will start growing again … but I think the “recovery” will be very sluggish.
Kevin Drum: The New Economy?
For many years it’s looked as if we were getting closer and closer to an economy in which there flatly wasn’t enough unskilled work left to keep employment at normal levels. Stagnant median wages were the canary in the coal mine, with permanently higher unemployment coming in the future. But I dunno: maybe the future is now.
I’ll write more about this later so that everyone can tell me where I’m wrong. At least, I hope I’m wrong. We’ll see.
And links from Josh Marshall and John Cole.
I don’t exactly have a fair and balanced reading list. But I’m not hearing anyone jump up and shout, “Green shoots!”