Economists at many of the investment firms are going against Greenspan these days. It used to not be like that. Time for Greenie to step down, he's just not on his game anymore.
This is not a normal business cycle issue," argued John Silvia, chief economist at Wachovia Securities in Charlotte, N.C. "This is structural." As the U.S. economy emerged from the recent recession, Mr. Silvia began to notice that economic growth and employment weren't in sync. The economy was growing, but without major job creation.
"We know the old models don't work, but we don't have new ones to replace them," he said, trying to explain why forecasters have consistently been so wrong.
But Peter Morici, a business professor at the University of Maryland, said the productivity argument espoused by the White House is a "cop out." He argued that currencies pegged to the U.S. dollar, particularly China's yuan, have created a chronic U.S. trade deficit, effectively draining production and jobs. The former chief economist at the U.S. Federal Trade Commission, likened the yuan to the "anti-neutron bomb" of the global trading system. "Instead of killing the people and leaving the factories idle," he said. "It takes the factories and leaves the people idle." |
