Thursday, June 23, 2011

okun contradicts gentle ben ....maybe sez wolfers

"   1.       You need economic growth in excess of around 3% to lower the unemployment rate.

2.       If GDP grows a percentage point faster—which counts as a very optimistic forecast at the moment—then unemployment will fall by half a percentage point, from say, 9% to 8.5%.


Now keep your eye on the red dots, which show the Fed’s unemployment projections. These unemployment forecasts are all more optimistic than Okun’s law suggests. That is, the Fed is projecting better news on the unemployment front than is justified by their economic growth forecast."
---- wolfers

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err don't get too  excited  doom and gloomers

draw a horizontal  line at the zero point on the vertical axis across the graph
now  draw a vertical line up from the 3% point on the horizontal axis

see any dots where they ought not to be ???
ie south west of these two lines intersection

i do

real point 

look at the  "predicted  " rate of gdp growth  that closes the gap
to 5%
 looks to be  off the bottom south east end of the data spread  eh ?

talking 9 % baby ...9 % to get there in one year

gentle ben 's latest projections
this year not even 3%
next year maybe 3.5 %  .. but less then  4 %
  and 2013  ???
after barry gets re elected and there's no pressure

4 % or so ....maybe ..if the Almighty smiles on us



we could do it it of course  ourselves without divine help
   just run  a big enough  increase in the federal fiscal deficit (net of any state or local contraction)

 say we're at 3 % now 
 then 6 % that might take 5 to 6% increase
                                     in deficit as percent of gdp

 or another 800- 900  billion net gubmint deficit increment 
                  and sustain  it  thereindefinitely only tapering off
  as  we close the trade gap and see a lift in the corporate  and or housing spending rate
sufficient to sustain the necessary  aggregate spending at that level   and keep the whole national system
in  addition
   growing at at least  three percent