Compared to a world in which real GDP remained at the (thusfar) all time high (achieved in 2008 Q2), the BEA's report this morning shows that through 2009 Q1 the U.S. economy had lost $181 billion (measured at 2008 Q4 prices).
$181 billion is equivalent to:
$181 billion is equivalent to:
- $592 per person, which is equivalent to
- 4.6 days of GDP (that is, we are producing like we took 3 weeks of vacation per year, in stead of two), and is
- MUCH less than government spending on bailouts, and is
- MUCH less than government spending on "stimulus"
Hopefully, some political entrepreneurs will soon find it optimal to put the "crisis" in perspective and protect the taxpayer from further losses.
More likely the P.E´s. will say "we need more" (bailots and stimulus". So thinks Krugman!
ReplyDelete"Back in March, when I was lamenting the inadequate size of the Obama stimulus, I made this prediction:
Republicans are now firmly committed to the view that we should do nothing to respond to the economic crisis, except cut taxes — which they always want to do regardless of circumstances. If Mr. Obama comes back for a second round of stimulus, they’ll respond not by being helpful, but by claiming that his policies have failed.
And I laid out the following scenario:
So here’s the picture that scares me: It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up. Mr. Obama finally concedes that a bigger stimulus is needed.
But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts.
It’s only June, but Republicans are already claiming that the Obama economic plan has failed. (Yes, that’s insane — hardly any of the money has flowed to the economy yet — but this was predictable.) Meanwhile, unemployment is already above 9 percent. And the green shoots are looking browner by the week, especially on the jobs front: new claims for unemployment insurance are stubbornly running at more than 600,000 a week, far above the 350,000 or so that would be consistent with a stable unemployment rate.
We really do need a bigger stimulus. But it’s going to be hard slogging". PK