A recent shock model applied to the now completed GDP contraction and recovery
Underlines the ridiculousness of these models
So why was this cycle so deep and slow in recovery ?
Enter ivy league number crunchers
Marcus " slick" Watson
and two gun pin head
Jimmy Starkweather
Disentangling the channels of the 2007-2009 recession
By Harvard Professor James Stock and Princeton Professor Mark Watson
Paraphrase by a Jack ass
"Stock and Watson characterized the comovements over 1959:Q1-2007:Q3 of 198 different U.S. macroeconomic variables...
Their first question was whether the observed U.S. macroeconomic data continued to track those factors in the same way during the most recent recession and recovery as they had historically. Stock and Watson's answer was, for the most part, yes. ...
But if the Great Recession can be interpreted as normal responses to abnormally large shocks, what about the anemic recovery? Stock and Watson attribute this to a slowdown in trend growth rates... Again quoting from Stock and Watson's paper:
The explanation for this declining trend growth rate which we find the most compelling rests on changes in underlying demographic factors, primarily the plateau over the past decade in the female labor force participation rate (after rising sharply during the 1970s through
1990s) and the aging of the U.S. workforce. Because the net change in mean productivity growth over this period is small, this slower trend growth in employment corresponds directly to slowdown in trend GDP growth. These demographic changes imply continued low or even declining trend growth rates in employment, which in turn imply that future recessions will be deeper, and will have slower recoveries, than historically has been the case. In other words, jobless recoveries will be the norm."
The slow recovery is structural not macro policy optional
In fact their model implied
an even slower recovery then we have !!!
See post the volcker figure four credit lock
We had our last fast recovery
Since then the rising gal Participation rate of the post Truman era
has first slowed and is now flat
and with aging of the native born pop
Labor force %
is headed into a fall
Each of the last three recoveries has reflected this climate change in job life
We got ourselves
A regular Says law of job market growth here
Apart from productivity gains thru implemented innovations in the social production system
The economy is the size job class souls choose it to be
looking at the job or non job decision
We now choose it to grow slower
we don't what to job attend more
we want to leisure up more
Ominous side bar
Not recovery in the future will be slow AND contractions greater
Ie deeper recessions ???
How this demographic shift " deepens "
future recessions however
Escapaes me
