Janet Yellen Speaks, Makes Critical Points, and Presents a Graph I Shoulda Made

February 12th, 2013 at 4:21 pm

I’ll have more to say about this remarkable speech given yesterday by Fed Vice Chair Janet Yellen (getting ready to go on NOW with Alex Wagner on MSNBC).  Well—remarkable in the sense that it’s brimming with common sense that is far too uncommon these days.

Read this now and study this chart, one I’m kicking myself for not making.

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5 comments in reply to "Janet Yellen Speaks, Makes Critical Points, and Presents a Graph I Shoulda Made"

  1. Smith says:

    What’s different this postwar recession?

    1) Severity
    Only 1946 demobilization downturn exceeds 3.5% GDP drop in 2009
    Only 1982 1.9% comes close.
    Others less than 1%.

    2) Zero lower bound
    1982 had 6.2% inflation rate, recovery not reliant on fiscal stimulus. (plus Fed induced to combat inflation)

    3) 2001 lessons ignored
    The 2001 jobless recovery showed tax cuts for rich is poor stimulus or technological productivity gains now cut labor demand even in recession, probably both

    4) Decline of liberalism, labor, and the left, rise of the right.
    8% unemployment (really 10%+ ) accepted, no challengers from left, no red scare, no Huey Long. 99 weeks of unemployment, bread and circuses help. Moreover, the right frames debate, Reagan trumps FDR.

    5) Modern living standards, safety net, employment, mean even poor and lower class have amenities unthinkable 67 years ago. Wallmart is not the coal mines, 488,000 coal miners in 1950, 82,000 today. Long recession more bearable.


    Also, I’ve read just a 2.5% growth rate the next four years will leave unemployment at 6.5%

    I favor stimulus (infrastructure, aid to states for teacher rehires) and a quicker recovery.

    • Smith says:

      Left out the “What’s different this postwar recession” is given as an explanation as to why fiscal policy was so different. The primary answer was severity. But I also could include minor points, the deficit and debt before start of recession, and unfortunate coincidence of the figure “trillion dollars” appearing at this moment in history. It sound larger than a bgillion.

    • Fred Donaldson says:

      Coal miners in 1950 were very well paid (three time equivalent “service workers” today), unionized and didn’t qualify for food stamps, because their employers couldn’t shaft them financially, just send them down the shaft to feed their families, buy homes and get pensions that would amaze workers today.

      Recently, union leaders agreed to replace $6.50 an hour contribution to pension funds with a $1.50 payment to a 401K, so retirement for them is going to be tougher. Bean counters win again, and more money for lobbyists.

  2. Peter K. says:

    Hopefully this is a sign that the Fed will be vocal about the facts of the weak recovery. Year-in and year-out Bernanke has politely asked for more help from the rest of the government to no effect.

  3. Fred Donaldson says:

    We also have to look for another missing ingredient in this “recovery” – optimism! The public has been fed so much baloney about deficits, no more Medicare, end of Social Security, cuts to TriCare and military pensions, all together a dismal picture, which would discourage a saint from praying.

    Can’t forget films of FDR “nothing to fear, but fear itself,” and the optimism of IKE, JFK, even Reagan.

    Instead, the population hangs its head in fear of the next government services cut, the next business to eliminate thousands of employees.

    Recoveries work better when the populace is not near suicidal from despair, fostered from the top down.