The illusion of a "weak recovery” – language the government prefers to “double dip recession” – continues being perpetuated by monthly “reporting errors” of economic data.
Just as the Census Bureau’s August report of a small gain in July residential housing starts was due to a downward revision of the prior month’s report, the Federal Reserve Board’s September 15 report of a slight increase in industrial production was achieved by revising downward July’s initial reporting. The optimistic July report made July look good, and the downward revision of the optimistic July number made August look good. It is by such means that the public is being fooled into believing a recovery is underway.
Many forecasters and policymakers continue to expect a recovery, because postwar Keynesian macroeconomics (demand management) is operating at full blast. According to Keynesian gospel, the two main components of expansionary economic policy are low interest rates and government deficit spending. Keynesians view supply as essentially passive, merely a response to government policy, which can be adjusted as needed to produce the desired expansionary result. (more)
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