EconomicCrisis.US

High unemployment and sluggish growth is causing the US economy to lose any momentum it had in terms of a recovery, Pimco’s Mohamed El-Erian told CNBC on Thursday.

“Today’s numbers (jobless claims) are better than last week’s,” said El-Erian, CEO of the world’s largest bond fund. “But it’s not a good overall. What this tells us is that the employment picture is difficult in creating and holding jobs. And the bigger picture is that the economy is losing momentum when it comes to growth.”
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The plunge in the U.S. economy in 2008 and 2009 became an irresistible opportunity to pronounce the failure of the form of capitalism that emerged at the end of the 20th century. “One had expected competition and abundance for everyone, but instead one got scarcity, the triumph of profit-oriented thinking, speculation and dumping,” said Nicolas Sarkozy, the president of France. The current crisis, he noted with a certain pleasure, signaled the end of the “illusion of public impotence” and the “return of the state.”

There was ample reason for such grave-dancing. Between July 1, 2008, and June 30, 2009, total U.S. economic output, adjusted for inflation, dropped at an annual rate of 3.8 percent—the worst 12-month decline since 1946. The unemployment rate, which started 2008 at 5 percent, had doubled by the fall of 2010. The number of jobs fell for 21 months in a row, and by May 2010 the median unemployed worker had been out of work for 23 weeks—compared with 10 weeks in the depths of the 1973-75 recession.
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Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions “a depression, and not just some garden-variety recession,” and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered “euphoric response.”
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Federal Reserve Bank of Chicago President Charles Evans said Tuesday the economic recovery is “extremely modest” but he believes it’s unlikely the economy will fall into a double-dip recession.

The pace of recovery from the worst economic meltdown since the Great Depression is “slower than we had hoped for,” said Evans. He acknowledged that although the risk of a double dip is higher than it was six months ago, it is “not the most likely outcome.”

Recent economic figures point to a faltering economy, including surprisingly weak housing data, released after Evans’ remarks Tuesday to the Indianapolis Neighborhood Housing Partnership.
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