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Disappointing Second Quarter Growth Numbers Bode Well For A..."Lost Decade"

Samuel Staley
August 27, 2010, 6:18pm

The U.S. Department's Bureau of Economic Analysis revised downward their estimates of second quarter 2010 growth by a dramatic one third to an anemic 1.6 percent. At least it wasn't as big of a drop as private economists had forecast, which was 1.4 percent (or perhaps it did?). I weigh in on what the numbers mean on the National Review's blog The Corner. In part, I say:

"While growth was still positive, its rate is downright anemic in the wake of such a steep recession. Moreover, estimates of consumer spending were adjusted upward, showing just how weak the Keynesian concept of demand-led growth, boosted by government spending, really is.

"Ultimately, the U.S. economy needs a major supply-side adjustment to bring investment in line with real consumer demand, not the smoke-and-mirrors kind promoted by federal largesse. The commercial real-estate market needs to sort itself out before meaningful, growth-inducing lending can occur, but with the economy in such disarray, many banks still don’t know how to value the  real-estate assets on their books."

Also, check out J.D. Foster's contribution to the discussion.

Also, check out Anthony Randazzo's policy study for Reason Foundation on Japan's Lost Decade as well as our more comprehensive analysis of the Great Recession, the bailouts, and the so-called Stimulus.


Samuel Staley is Research Fellow


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