The former economic adviser to the Obama Administration has some eye opening comments about the US economy. According to AustanGoolsbee, the former economic adviser to Obama, the US economy will continue to disappoint for the next 12 months. He added that the observers will be disappointed as they expect the economy to surpass the dull phase. According to Goolsbee, this is not going to happen overnight and the observers will have to face the reality.
He said this to a group of investment professionals in Chicago at an annual conference. But he also said that economy is just fine despite the lull phase. He said that the economic observers have unrealistic expectations about the economy. According to him, this has been the case since the Great Recession.
- The problem with the economists was that they predicted that the country will return to the pre-recession economy, which was unrealistic.
- Economists have been making wrong predictions all along.
- They based their predictions on the past scenarios.
- The Federal Reserve also made an ample number of mistakes.
- Economists fail to see the fact that the economic boom we witnessed prior to the recession was based on a bubble. For the same reason, the same cannot be reproduced unless we have a new bubble.
Consumers are done with unhealthy behaviors
When it comes to a strong financial growth, consumers play a big role in initiating it. Here, economists expect that consumers will do the same all over again. They are wrong! The unhealthy spending behavior of the consumers led to the recession. And since they burned their hands in the process, none of them are ready to repeat the same mistake. Keeping that in mind, it is foolish to expect the economy to go back to a place which is dangerous. The said unhealthy behavior signified people spending more than what they earn. If we go back to that, we are up for another recession, which is unlikely to happen as consumers have become rather cautious considering the slow progress of the economy. And if you recall, many economists have been cautious about the Longevity Of A Strong US Economy. Read The Article Here To Learn More.
Things have changed
Economists fail to see the fact that things have changed dramatically over the past few years. It is unrealistic to expect consumers to go back to the spending habits they employed in 2005 and 2006. Consumers are focusing on saving their money now. And they are not in the mood for lavish and unhealthy spending. Therefore, one cannot foresee a sharp recovery in the economy any time soon. Moreover, the surge in oil prices is also a myth; consider the global demand is not strong. We have to consider the fact that emerging markets, China and Europe register a slow growth rate at the moment.
Job growth has peaked
Yes, considering the low productivity and slow growth, companies are not ready to hire additional workers. If we take a closer look, we can see that the most of the growth in the jobs has already happened. Keeping that in mind, a sharp economic recovery is just a myth. If somebody is feeding you that, then it’s time to stop believing that economist.