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I think we may have to wait until the unemployment rate drops to pre-Great Recession levels before we can draw firm conclusions.

• byoung2 13y ago
  Exactly... Plus, companies that had layoffs over the past 5 years likely still have empty cubicles to fill first as they increase hiring. It will be a few more years before they need bigger spaces.
• toomuchtodo 13y ago
  The only way the unemployment rate (the true unemployment rate, U6 [http://www.bls.gov/news.release/empsit.t15.htm] http://www.bls.gov/news.release/empsit.t15.htm]) is going to drop is if more people continue to permanently exit the workforce [http://data.bls.gov/timeseries/LNS11300000 http://data.bls.gov/timeseries/LNS11300000]. There just is not enough consumer demand, even with prodding by the Fed with QE to increase employment.
  • eli_gottlieb 13y ago
    Why on Earth would monetary stimulus to the lending markets create consumer demand? Should we really continue believing that demand is supposed to come from credit rather than wages?
    • toomuchtodo 13y ago
      I completely agree with you, but I don't control US monetary policy shrugs Too many people believe growth is a requirement, vs a steady-state economy.
      • eli_gottlieb 13y ago
        Well I wasn't even talking about growth vs steady-state. I was talking about monetary policy vs fiscal policy. A traditional Keynesian stimulus would have been fiscal in nature, and preferably direct state spending on productive matters. Here's a few things that could have been done: * Increased spending on scientific research * Reform the health-insurance system to a universal system for greater efficiency while pouring extensive funding into it * Vast amounts of infrastructure and public-works projects (especially: bridges, sewage infrastructure, electrical grid, fiber-optic internet, etc) * Refunding/renationalizing state universities Most of these sorts of things were utterly uncontroversial until the "neoliberal bloom" of the 2000s, in whose wake Western politicians have apparently forgotten how all their predecessors have managed recessions ever since the Great Depression. And that's before we talk about undoing financialization and fixing the world's iniquitous trade policies! Those would be controversial!
    • MaysonL 13y ago
      Brad DeLong had an interesting post [0] on that question Friday. Basically, the strong market reaction to the talk this spring of tapering convinced him that yes there is a strong effect on long term interest rates which then stimulates investment. [0] http://equitablegrowth.org/2013/11/15/743/what-is-quantitative-easing-doing-is-it-doing-anything http://equitablegrowth.org/2013/11/15/743/what-is-quantitati...
    • cmdkeen 13y ago
      Lower mortgage rates. If your mortgage goes from 5% to 4% your monthly discretionary income can increase markedly. If you spend it then, boom, increased consumer demand.
      • VLM 13y ago
        LOL no all it means is the sales price goes up. Harry HowMuchAMonth can pay $2K/month on his mortgage, and that's exactly how much he WILL spend regardless of interest rates. All the interest rate controls is how big of a check the former owners will get. Although your reaction mechanism is wrong, the end result is the same, although the former owners are likely to roll their immense check into their new real estate purchase, eventually, at the far end, as people move into nursing homes or whatever, they DO cash out and those guys spend the "gains". One problem is I don't know if $5K/month nursing homes are considered discretionary consumer spending. There are also people who cash out refinance, and spend it on jet skis and Harleys. That works great at long as real estate prices only go up, regardless of personal income declining.