That we are not in a recession, based on weak GDP growth and a host of other macroeconomic indicators that have been flat since last summer, is quite remarkable. Here's the path of quarterly investment as a share of GDP:
Note that the fall in residential investment has been just as large and even steeper than the decline in equipment and software investment that was the driver of the last recession. Equipment and software investment fell to and has hovered around the share of GDP that it was in 1993. Residential investment has fallen to that level. It's not clear when the fall will stop.
My undergraduate senior thesis was on realigning elections. It's been a long, long time since it was written, but my research from that admittedly simpler time in American politics has always made me look closely when election results seem to show that something is changing.
The results of yesterday's special election in Louisiana, where the Democrat won in a district that not only has been solidly GOP for more than three decades and would have been easily retained by the incumbent Republican had he not resigned from Congress, are such a sign.
This is especially the case because it follows the Democratic takeover in March of another previously solid Republican House district that absolutely would have remained in GOP hands had the incumbent --former Speaker Dennis Hastert --run for reelection.
Yes, this can and will be spun by Republicans. Poorly funded candidates, special local circumstances that don't translate nationally, bad campaigners, etc. will all be mentioned in the days to come.
There I was, sitting at the kitchen table, sifting through the goodies left by the mailman earlier that day, when I happened upon the following solicitation from Chase:
Take a look at the box highlighting how much the monthly payment is on a $10,000 loan with a stated APR of 5.74%. If I could make loans like that, I'd bail out Bear Stearns myself. Is there no one working at that bank who could figure out that the $10k should have been $50k?
Or are they all doing market research leading them to the conclusion that co-branding with US Airways is the best way to improve their business model?
I'm not sure about Andrew, but Pete and I are old enough to remember Alfred Kahn, the economist who, during the Carter administration began to use "banana" instead of "depression" after the president reportedly was furious about Kahn's speaking the D-word in public.
We're coming up on the 30-year anniversary of this momentous event in the history of economic policymaking. Thanks to Carter and Kahn, a fruit became the name for the economic hardship people were concerned about or actually experiencing.
It was also 30 years ago that Carter was promoting a $50 per person tax rebate to help stimulate the economy.
Carter's $50/person plan was widley derided. I have a lasting memory of
then Ways and Means Committee Chairman Dan Rostenkowski looking down at Council of Economic Advisors Chairman Charles Schultze from his seat at the Ways and Means Committee and asking in a very sarcastic tone what Schultze was planning to do with his $50. It was a simple question that immediately made the policy look silly.