Thursday, January 17, 2019

What happened on the way to economic recovery? Was it Obama?   This is the link to the summary, and you can open the text with a click.

Shortly before the 2016 election there was the Federal Reserve Bank of Boston's 60th Economic Conference, with president Eric Rosengren exploring what went wrong in the recovery from the recession.  Technically it was over by June 2009, and Obama’s goosing the economy with payouts to special interests and bail outs hadn’t even gotten out the door.

Without ever getting to the heart of it (I personally think it was Obama’s personality and negativity that caused workers and investors to hold back with a wait and see attitude) Rosengren lists

changing demographics

falling labor participation

higher savings rate (imagine complaining that people were holding on to their own money and not buying stuff they didn’t need)

low inflation

even when full employment returned, the economy was sluggish

low federal funds rate

treasury rates low

price to earning ratio for stocks were low

rents were low

rapid appreciation in commercial real estate

capitalization rates were at historic lows

Conclusion:  Recovery was mostly bad news and it may be the new “normal.”

Hmmm.  Maybe not Mr. Rosengren.

No comments: