Saturday, November 5, 2011

Keynesian Economists Begin to Admit There Will Be No Double-Dip Recession

LaTi has the latest Keynesian thinking:

The good news for the U.S. economy is that a double-dip recession looks increasingly remote...

Fears of another recession swelled this summer after economic growth slowed to a crawl in the first half of the year and the government reported that employers' payrolls did not grow in August.

Growth picked up again in the third quarter, however, and the government Friday raised its estimate of the number of jobs added in August and September by a combined 102,000, after a previous upward revision.

"I don't think there's any signs of recession in this report," said Ryan Sweet, senior economist at Moody's Analytics. "The labor market isn't booming, but I don't think there's any signs that we're going to take a sizable step back."...

The household survey — a separate questionnaire that asks households, rather than employers, about jobs — showed there were 277,000 more people employed in October than September, the third month of strong growth.

Since Keynesians don't have a business cycle theory other than to look at "consumer demand" moving up and down, which is nothing but tracking a trend already moving, they don't see a trend until it is already in place.

Further, it is pretty well understood that the unemployment rate is a lagging indicator, so the obsession with watching this number is hard to understand if you are trying to get a sense for future the direction of the economy.

More important is the jobless claims number. It is a leading indicator, though this still does nothing but track a trend already in progress.

And this number continues positive, fewer applications for unemployment benefits were filed last week, again.

Jobless claims fell by 9,000 to 397,000 in the week ended Oct. 29, according to the BLS.. The median forecast of 49 Keynesian economists in a Bloomberg News survey called for a drop to 400,000. The total number of people on unemployment benefit rolls decreased to a six-month low.

Though they are starting to recognize the (manipulated) upturn,now, the Keynesian obsession is with "sluggish" economic growth. This is because they only see the slow turn in unemployment without looking at the huge Bernanke money printing going on (15% plus for M2), which is beginning to manipulate the stock market and economy much higher.

I guess it is one step at a time for the confused Keynesians, they are at least getting the nutty idea that we are heading into a double-dip recession out of their minds.


  1. This is a really bizarre "I-told-you-so" post. So what you're claiming is that *you* were certain that money pumping would prevent a double-dip recession? 100% certain? or just 90% certain?

    Your claim just seems overly simplistic. Will money pumping always result in a short-term artificial economic bounce? Will the next wave be successful? How many waves until the inflationary strategy fails?

    It seems like you're saying that all Austrians have the same answers to these questions which is just silly

  2. The reason why I'm crossing everything we don't head into a double dip is that the Government have finally decided to embrace stimulus and job creation policies and abandoned the self-defeating and imposed austerity that is leading Europe down the road to wreck and ruin. This is actually a victory for the Keynesians.

    Back in the UK which is persuing a fully tea-party endorssed strategy of government spending immolation, a rather different, bleaker picture is emerging...