You've noticed, I'm sure. People are celebrating all over the country. If they work for Government, that is.
Invictus, a guestie at Ritholtz' site, found interesting stuff. (I use 'interesting' rather than 'depressing' for the obvious reason.)
...I presented a chart showing Final Sales of Domestic Product (indexed at that time to economic peaks). The chart showed that Final Sales (FINSAL at FRED) were experiencing their slowest recovery on record. I have updated the chart — below — to reflect indexing at economic troughs and also include the latest data available. What has not changed is that this is the slowest recovery on record for Final Sales.
What is interesting is that the second slowest FINSAL recovery on record was from the Q42001 trough, and the third slowest was from the Q11991 trough. In other words, FINSAL has been getting progressively weaker coming out of the last three recessions. Coincidence? I think not.Invictus then goes to the demographics, specifically the Baby Boomers, and demonstrates that they are 'out of gas.' Worse, they're short of "Hope" and even spare "Change."
I'd add that the cost of Government has also played a role.
A new study by W. Mark Crain and Joseph M. Johnson shows that U.S. manufacturers spent $2.2 million per firm, or about $1,700 per employee, to comply with federal workplace regulations in 2000. This figure represents a regulatory cost 75% higher than previous studies, indicating that workplace regulations cost the entire manufacturing sector about $32 billion in 2000.
...A second study released by the Congressional Budget Office (CBO) shows that taxes as a percentage of GDP were at a post WWII high, until cut by President Bush\'s tax relief legislation last year. Taxes in America remain well above the historical average, at almost 2 percentage points of GDP above their long-term average of 8.3 percent. Furthermore, had there been no tax cut last year, income taxes would have remained above 10 percent of GDP indefinitely. Even with the tax cut, income taxes will remain well above 9 percent of GDP for the entire forecast period -- considerably higher than their historical average...
Of the two--tax/reg and demographics--the far more potent is demographics in the long run. In the short run, it's tax/reg costs.
The reality is that the US economy has been staggering for about 10 years. The tech and housing bubbles emerged and appeared to make the economy healthy--largely through Greenspan's 'see-no-bubble/hear-no-bubble/speak-no-bubble' policies and his blatant whore-like accomodation of political fairy-tales and foofoodust--but the vavoom is gone.
No kids. Regulations adding costs. Taxes.
Next, the national debt, which is a REAL bubble.