Recovery By The Numbers

A single number tells us most of what we need to know about the recession and prospects for recovery.  That number is gross private domestic investment.  It averaged 16% of the GDP in 2006-7, 11% in 2009, 12.4% in 2010.  For the first half of 2011, it was 12.6%. This decline is large enough to account for most of the increase in unemployment.  It must be reversed; there is no other way of returning to high employment. Households are doing their duty, spending 95% of their income.  Consumption is a dependent variable; it will never pull us out of recession.  Consumption stimulus policies have failed and wasted tax revenue.  Only more jobs and paychecks can do the job. The Federal Reserve has maintained a discount rate of one quarter of one percent for 3 years to encourage lending and investment.  It has done as much as it dared to raise exports and reduce imports by increasing the money supply and devaluing the dollar. Government has increased...(Read Full Article)

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