Alexander Rogers: America finally realises recession

After ten months in prison, Hawkeye noticed that the prison lacked one wall. Otherwise, I can’t comment on such “news”.

Alexander Rogers: America finally realises recession

The Americans recognized the beginning of a recession in their economy – “since February”. Although in fact it has been going on since the fall of 2018, and in August last year there were already three consecutive quarters of decline, which is officially considered a recession.

However, this is always the case with them. They recognized the existence of the crisis of 2007-08 after the fact, almost a year later, when the markets had already collapsed and three and a half million families became homeless.

Yes, the Great Depression also began to be called in such a way much later, when it was already over. And when the Great Depression was, then the government and economists regularly said “there is no crisis, and it will end soon”. For years, for decades. From 1926 until almost 1940. I once made a selection of statements by American politicians and economists of those years – a persistent denial of reality.

Now they are somehow even slightly more truthful in their assessments than usual. Apparently, due to inter-party hostility and the upcoming elections, analytics on the current state of the economy will be used against Trump. Although the Democrats tied to Wall Street, it is also not particularly beneficial to tell the whole truth. Therefore, it has to be caught bit by bit.

And now, the National Bureau of Economic Research (NBER) has recognized that the recession began, almost a year after it was found by Rogers, geographically distant from the United States.

But how can one not admit that if already in the first quarter of this year, when the coronavirus was raging in China (Trump said it would not concern them) and didn’t affect the American economy at all, the US quarterly GDP fell by more than 5%. And in the second quarter, the fall in GDP will be about 52.8%, according to the Fed’s estimates (all sorts of Goldman Sacks and Morgan Stanley predicted a 40% fall, the reality turned out to be even more severe).

Yes, and almost 44 million applications for unemployment benefits in three months are hard to miss (and impossible to keep quiet). Trump, however, joyfully reported that in May, employment in several states increased slightly. But in the whole country, it, at the same time, continued to fall.

Although various officials and analysts vying with each other continue to assure us (and, of course, first of all, the Americans themselves) that “this will not last long, this will end by the end of the year”.

But there are those who disagree with them. Moody’s analysts write,

“It will take years for the labor market to recover from shocks. There is reason to believe that part of the jobs will recover as the economy opens, but there are no guarantees”.

Perhaps… part of the jobs will be restored… part, not all… someday… but that’s not for sure …

Congressional Budget Office also believes that the restoration will take at least ten years.

There are several objective difficulties.

Firstly, the labor market is being seriously redrawn. Reduce engineers and high-tech workers in the automotive and aircraft industries, miners and oil workers. And they create jobs for movers, bartenders and laborers.

Not only is it a loss of skill and the need to retrain. This is also a significant decrease in their income. Because, secondly, even among the still employed population, a decrease in the average salary by about 13-15% was recorded.

All this, combined with growing unemployment, leads to a collapse of secured demand. And the lower the “consumer experience” (consumer expectations), the more incomprehensible is who will buy everything produced – and this leads to further compression of the stagnation spiral.

Buy less – produce less. Less produce – more dismissed. More fired – less bought.

And where is John Maynard Keynes when he is needed? The question is rhetorical, if that.

Again, as I always ask in such cases, what will be the growth/recovery drivers? In Russia, for example, the subsidence was relatively insignificant, and the government provided a fairly sensible and well-thought-out program for economic recovery (I will probably analyze it later). But in the USA there is nothing like this – all the “flooding with money” goes into financial bubbles on the New York Stock Exchange, practically nothing reaches the real sector of the economy.

Historically, Comrade Roosevelt pulled the United States out of a similar Great Depression. By non-market, socialist, statist methods – through a powerful state order, through labor armies, through tough state regulation, and so much hated by liberals, “manual control of the economy”.

But Trump is not close at all. Not only does Trump (and most of his supporters) fanatically believe in “private initiative will solve all the problems”, he is also bound hand and foot with numerous restrictions.

And all that remains for him is to tweet about “greytegains” and “ascension to greatness”.

Alexander Rogers, IA Journalistic Truth


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