My latest Marketplace commentary returns to a topic I touched on earlier this week: the fact that when economists talk about a “recovery” being underway they are talking about something completely different than when Joe Public says he’s waiting for the “recovery” to begin.
In putting the piece together, I found a nice quote from Christina Romer. Romer is an interesting player, both because she chairs Obama’s Council of Economic Advisors, and because she was previously a member of the NBER’s Business Cycle Dating Committee, the semi-official arbiter of when recessions end and recoveries begin. So she combines economic savvy with a need to also connect with the general public. I thought she gave the perfect answer a few weeks back on “Meet the Press,” when asked whether the recession had ended:
You know, there’s the official definition, and that talks about just when do you turn the corner, when do you go from plummeting to, to finally starting to go back up? And I think we have, at least in terms of GDP, reached that point. But I think the president’s always said, and what I firmly believe, you’re not recovered until all those people that want to work are back to work.
Her distinction, between a “recovery” (which we may well be in), and the economy having “recovered,” is an important one. These two terms have become too easily confused in the current policy debate. Inflation and deficit hawks have argued for less expansionary policy because a recovery may be underway. I’m not sure I grant the premise — I’m yet to be entirely persuaded that the recovery has begun. If it has, it is certainly somewhat faltering. More importantly, policy should be focused not on whether a “recovery” has begun, but on whether the economy either has “recovered,” or is expected to do so in a timely fashion. On this score, it’s clear: we are years and years away from an economy that has recovered from the Great Recession.
You can listen to my full commentary here.
and 
. You can also watch it on 
It is interesting to compare recessions after the 30′s with recessions before that.
For example, take a look at the 1920 depression and how fast it recovered from a severe unemployment spike: http://en.wikipedia.org/wiki/1921_recession
Recovery potato? How about recession banana?
To quote the New York Times of May 8, 1993:
“When Alfred Kahn, Jimmy Carter’s anti-inflation czar, was told by his political superiors never to use the word recession, he agreed to substitute the word banana ; he was soon heard muttering about ‘the worst banana you ever saw.’ ”
The 50 Best Health Blogs
it’s always take time but and who know when? so i think that we have to stay unite in order to pass the worse time on matter what the worse is…?
… *ALL* those people that want to work are back to work.
Really?
If the recession continues until there is 100% employment amongst those who want to work — wouldn’t that be about five minutes before the next wage-inflation-induced recession begins? It would certainly appear that, by that measure, most developed countries have been in recession for as long as I’ve been alive….
Because millions of Americans are jobless, with no relief in sight …
And because those millions of jobless Americans have no weekly paychecks …
And because those millions of jobless Americans without weekly paychecks no longer have “buying power” …
And because those millions of jobless Americans without “buying power” are no longer demanding goods from overseas manufacturers …
And because overseas manufacturers are no longer requiring container ships to deliver goods to jobless Americans without “buying power” …
And because hundreds and hundreds of those foreign-owned container ships are no longer in operation and are laid up in overseas anchorages … never to sail again …
Naturally, therefore, there are no goods to be purchased by jobless Americans who are without “buying power”.
Could manufacturing jobs be created in this country so that jobless Americans can be employed? Forget about it.
Anything we can come up with can be produced at a much lower cost by overseas manufacturers.
Therefore, without manufacturing capabilities … without factories … Americans will remain jobless and our economy will continue its relentless tailspin.
The future is dark indeed.
But … is it possible to invent something that provides exclusive manufacturing rights to American manufacturers? That would do it.
It would have to be a “big ticket” item, though. An item, let’s say, that would require a work force of 40 million or so.
An item, for example, that would have an enormous “multiplier effect”. (Guns and bullets, for example, do not have a “multiplier effect”).
Let’s say, an American citizen could invent and acquire worldwide patents on a new type of container ship. Let’s say that this new design is so efficient and so profitable that it would “revolutionize the world’s economy” … (in the words of one of the maritime industry’s leading commentators) …
And let’s say that someone advised President Obama of the three Emergency Shipbuilding Programs put into effect by FDR in the 1930s that effectively:
1. … produced more than 11,000 vessels;
2. … ended the Great Depression; and then
3. …dealt with and brought World War II to a successful conclusion.
And let’s say that President Obama then repeated FDR’s steps by:
1. … revitalizing our nation’s shipyards,
2. … ordering several thousand of these new container ships, and
3. … putting some 40 or 50 million people to work in those shipyards.
That’s what FDR did to end the Great Depression. President Obama MUST take the same steps. It’s the only way to create the millions of jobs this nation needs.
With millions of Americans back to work …
And millions of paychecks now restoring the “buying power” of the American shopper …
And overseas manufacturers now requiring efficient container ships to deliver goods to demanding Americans …
And with American “Jones Act” ships (these newly built container ships being turned out by American shipyards, owned by Americans, and crewed by Americans) being the only vessels allowed to transport the demanded goods across the oceans …
We’d have every base covered, wouldn’t we?
And the “Great Recession”? Forget about it. It would be history.
Oh yes. That exclusively patented container ship design is not just fantasy. It already belongs to Americans.
U.S. Patent Numbers 5,860,783 and 6,077,011 tell the whole story.
Would someone please tell this whole story to President Obama?
… before it’s too late!
CMDRFid
Krugman has been writing about this for the last year …
P.S. Commenter #13: You can’t have a wage-inflation cycle unless wages actually go up, which they haven’t in ages.
To say just because we have “recovered” by a technical measure which is essentially arbitrary, doesn’t mean you tighten monetary policy. It’s still amazing to me that so-called “inflation hawks” have completely forgotten that unemployment figures are actually relevant in the monetary policy calculations …