Comments on: Fed’s Yellen: A View of the Economic Crisis http://wallstreetpit.com/6674-feds-yellen-a-view-of-the-economic-crisis Tue, 22 May 2012 19:21:52 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Daniel Habtemariam http://wallstreetpit.com/6674-feds-yellen-a-view-of-the-economic-crisis#comment-35630 Daniel Habtemariam Wed, 15 Jul 2009 14:36:42 +0000 http://wallstreetpit.com/?p=6674#comment-35630 Let's be clear - deflation is a horrible thing, and we're certainly slowly heading towards the conditions necessary for it, but no one is saying we're anywhere near it or that the prospects of falling into it are especially high right now. Checking the consumer price indices since the financial crisis hit last fall, we have month to month changes in inflation of {0%, -2%, -3%, -2%, +1%, 0%, -1%, 0%, 0%, +2%}, hardly what I'd call persistently negative numbers. Dr. Yellen put it very well, pointing out that we're looking at sub 2% inflation (disinflation), making the right conditions for but not necessarily precipitating deflation (it makes it conceivable if and only if the effects of high unemployment drive wages and prices down). My point: There's a difference between necessary and sufficient causes of deflation, so let's not go crazy speculating here. That said, does anyone else see the good news in this? Yellen independently asserts what Bernanke and the FOMC has been saying for months - we know when the recession is ending - it's ending in Q3 FY09 (followed by unemployment topping off in Q2 FY10 - Yellen didn't mention unemployment, but the FOMC has). The Administration's most conservative estimates have GDP going positive in Q4 FY09 and unemployment maxing out a year later in Q4 FY10. The always thougtful Mark Zandi estimates positive GDP growth at least by Q4 FY09 and unemployment turning around in Q3 FY10. The bottom line is: the recession is ending THIS YEAR, and unemployment is turning the corner NEXT YEAR. It will be a jobless recovery, but doesn't it make you feel good to know to know that there's an evidence-based consensus building on exactly how bad it'll be and when we should expect it to end? Let’s be clear – deflation is a horrible thing, and we’re certainly slowly heading towards the conditions necessary for it, but no one is saying we’re anywhere near it or that the prospects of falling into it are especially high right now.

Checking the consumer price indices since the financial crisis hit last fall, we have month to month changes in inflation of {0%, -2%, -3%, -2%, +1%, 0%, -1%, 0%, 0%, +2%}, hardly what I’d call persistently negative numbers.

Dr. Yellen put it very well, pointing out that we’re looking at sub 2% inflation (disinflation), making the right conditions for but not necessarily precipitating deflation (it makes it conceivable if and only if the effects of high unemployment drive wages and prices down).

My point: There’s a difference between necessary and sufficient causes of deflation, so let’s not go crazy speculating here.

That said, does anyone else see the good news in this? Yellen independently asserts what Bernanke and the FOMC has been saying for months – we know when the recession is ending – it’s ending in Q3 FY09 (followed by unemployment topping off in Q2 FY10 – Yellen didn’t mention unemployment, but the FOMC has).

The Administration’s most conservative estimates have GDP going positive in Q4 FY09 and unemployment maxing out a year later in Q4 FY10. The always thougtful Mark Zandi estimates positive GDP growth at least by Q4 FY09 and unemployment turning around in Q3 FY10.

The bottom line is: the recession is ending THIS YEAR, and unemployment is turning the corner NEXT YEAR. It will be a jobless recovery, but doesn’t it make you feel good to know to know that there’s an evidence-based consensus building on exactly how bad it’ll be and when we should expect it to end?

]]> By: Stephanie Smith http://wallstreetpit.com/6674-feds-yellen-a-view-of-the-economic-crisis#comment-33588 Stephanie Smith Sun, 12 Jul 2009 19:02:10 +0000 http://wallstreetpit.com/?p=6674#comment-33588 It seems like an inevitable downward spiral: unemployment, downward pressure on wages and prices and low inflation that could turn into deflation. If the U.S. economic upward turn doesn't benefit the job market, where does that leave the rest of us. Turning to spiritual guidance may be the next step, which would curb the distinction between church and state but possibly lead to a more informed public. I just hope this "transitional moment" doesn't lead to the two becoming totally intertwined. http://www.newsy.com/videos/the_ethics_of_economic_survival It seems like an inevitable downward spiral: unemployment, downward pressure on wages and prices and low inflation that could turn into deflation. If the U.S. economic upward turn doesn’t benefit the job market, where does that leave the rest of us. Turning to spiritual guidance may be the next step, which would curb the distinction between church and state but possibly lead to a more informed public. I just hope this “transitional moment” doesn’t lead to the two becoming totally intertwined.
http://www.newsy.com/videos/the_ethics_of_economic_survival

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