Krugman continues as a pessimist. One can read the present moment as competing, self consciously competing, public narratives. Deficit hawks filling the newspapers with "woe is me the deficit/debt brings the sky down." Against the narrative that says the US goes nowhere and possible back into recession if something is not done about jobs.
Purveyors of each narrative keep their main audience in mind: the WH.
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Paul Krugman - New York Times Blog
December 1, 2009, 11:30 am
Double dip warning
I’ve never been fully committed to the notion that we’re going to have a “double dip” — that the economy will slide back into recession. But it has been clear for a while that it’s a serious possibility, for two reasons. First, a large part of the growth we’ve had has been driven by the stimulus — but the stimulus has already had its maximum impact on the growth of GDP, will hit its maximum impact on the level of GDP in the middle of next year, and then will begin to fade out. Second, the rise in manufacturing production is to a large extent an inventory bounce — and this, too, will fade out in the quarters ahead.
Two stories this morning highlight the risks. The WSJ has a report on highway construction titled Job Cuts Loom as Stimulus Fades:
Highway-construction companies around the country, having completed the mostly small projects paid for by the federal economic-stimulus package, are starting to see their business run aground, an ominous sign for the nation’s weak employment picture.
Meanwhile, the ISM for manufacturing suggests that industrial growth is already slowing down.
I’d be more sanguine about all of this if there were any indications that private, final demand is taking off — consumers, business investment, whatever. But I haven’t seen anything suggesting that sort of thing.
The chances of a relapse into recession seem to be rising.
krugman.blogs.nytimes.com |
