Austan Goolsbee, a University of Chicago economist and former chief of the President's Council of Economic Advisers, addressed a luncheon crowd. It was a thoroughly unexpected performance: there's a strong overtone of Jon Stewart from The Daily Show, an almost antic energy. The presentation was one-third Goolsbee family anecdotes ("when I'd complain about a problem, gramma would say '80% of us don't care. . . and the other 20% are glad about it'"), one-third White House anecdotes and one-third economic arguments.
The short version:
the next 12-18 months will be tough because the old drivers of recovery aren't available this time. Over the last century, house prices appreciated by 40 basis points annually for the first 90 years. From 2000-08, it appreciated 1350 bps annually. In the future, 40 bps is likely about right which means that a recovery in the housing industry won't be lifting all boats any time soon.
We'll know the economy is recovering when 25 year olds start moving out of their parents' basements, renting little apartments, buying futons and cheap pots and pans. (Technically, an uptick in household formation. Since the beginning of the recession, the US population has grown by 10 million but the number of households has remained flat.)
The shutdown is probably a good thing, since it will derail efforts to create an unnecessary crisis around the debt ceiling.
in the longer term, the US will recover and grow at 3.5% annually, driven by a population that's growing (we'll likely peak around 400 million while Japan, Western Europe and Russia contract), the world's most productive workforce and relatively light taxation. While Social Security faces challenges, they're manageable.
The Chinese economic numbers can't be trusted at all. The US reports quarterly economic data after a 30 day lag and frequently revises the numbers 30 days after that. China reports their quarterly numbers one day after the end of the quarter and has never revised any of the numbers. A better measure of Chinese activity is derivable from FedEx volume (it's way down) since China is so export driven.
One highight was his report of a headline from The Onion: "recession-plagued nation demands a new bubble to invest in ... so we can get the economy going again. We need a concrete way to create illusory wealth in the near future."
David
Comments
Regards,
Ted
http://discuss.morningstar.com/NewSocialize/blogs/etf2013/archive/2013/10/03/good-news-and-bad-news-from-goolsbee.aspx
(But it's nice to know there's a suitable replacement waiting in the wings for Jon Stewart - should he retire)