The NBER has declared 2007 the start of the latest recession. Unemployment was the main reason cited for the declaration. The unemployment rate of 6.5% shows that the economy is producing less that the full employment GDP. Consistent with the model, prices have fallen to 214.935 a full .1% from August 2008. When employment drops, many other macro stats follow. New Orders for Manufactured Goods, New Orders for Manufactured Durable Goods, Business Inventories, Retail Sales, Producer Price Index for Finished Goods,Wholesale Inventories, Housing Starts are all down. Given the wage rigidity of contracts that will expire in the future, wages will be slow to adjust. We are going to be in this recession a long time.
What exactly does this mean to the average family and how should it change my daily activities?
ReplyDeleteAny ideas on how long this recession is going to last? How bad do you think it'll get?
ReplyDeleteMike,
ReplyDeleteHow does wage rigidity in the US compare with other countries?
great site! Do you have any information that shows a possible deflationary or stagflation cycle?
ReplyDeleteHi, a little heady but got me thinking....
ReplyDeletethanks
Hey Mike, I always like your drawings but a legend on this one would help. I have no idea what LRAS, SRAS, or AD stand for...
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