Two ways to end a recession, one when everyone's credit cards are maxed out
Crossposted to darksumomo.
Do you remember when W told the country to go shopping to fight the terrorists after 9/11? It sounded silly, but my guess is that W wasn't worried about the terrorists at all; he was worried about the recession. What I found interesting was that people listened and the call worked.
Here's a graph of real retail sales for the U.S. from 1992 to 2009 from Calculated Risk. Recessions are shaded.
See that big red spike at the right edge of the first shaded band? That was America going shopping. Right after that, the recession ended.
Now, what did the country do to get out of this recession?* After all, a lot of people's credit cards are maxed out and the home ATM has been closed for years. Well, Obama wasn't so crass as to tell us to go shopping, but his policies had the same effect.
Remember Cash for Clunkers? As part of the stimulus, the government gave out rebates for people to trade in their inefficient cars and buy more fuel-efficient new cars. That happened last July and August. Watch the effect on car sales.
See that spike? That was the result of a lot of people buying with government help. Watch when the recession is called as over. Whoever is in charge of Calculated Risk, along with a lot of other economics bloggers, has already said that last July was the end of the recession.
Obama didn't have to say "go shopping." He just had to provide a big enough carrot.
*Yes, folks, the recession has already ended, even if the jobs aren't returning yet. The end will be called later this year as having happened in the middle of last year, just watch.
Do you remember when W told the country to go shopping to fight the terrorists after 9/11? It sounded silly, but my guess is that W wasn't worried about the terrorists at all; he was worried about the recession. What I found interesting was that people listened and the call worked.
Here's a graph of real retail sales for the U.S. from 1992 to 2009 from Calculated Risk. Recessions are shaded.
See that big red spike at the right edge of the first shaded band? That was America going shopping. Right after that, the recession ended.
Now, what did the country do to get out of this recession?* After all, a lot of people's credit cards are maxed out and the home ATM has been closed for years. Well, Obama wasn't so crass as to tell us to go shopping, but his policies had the same effect.
Remember Cash for Clunkers? As part of the stimulus, the government gave out rebates for people to trade in their inefficient cars and buy more fuel-efficient new cars. That happened last July and August. Watch the effect on car sales.
See that spike? That was the result of a lot of people buying with government help. Watch when the recession is called as over. Whoever is in charge of Calculated Risk, along with a lot of other economics bloggers, has already said that last July was the end of the recession.
Obama didn't have to say "go shopping." He just had to provide a big enough carrot.
*Yes, folks, the recession has already ended, even if the jobs aren't returning yet. The end will be called later this year as having happened in the middle of last year, just watch.