GDP growth of 3.2 percent ain't good enough
The advance number for Q1 growth was released today: 3.2 percent (this link is to a WSJ summary of economist opinions). Three-point-two would be good in normal times, but it's not enough to catch-up to where the U.S. economy "should" be.
I'm skeptical this is a solid recovery. I'm skeptical there won't be a double dip. Why? Because interest rates are very low and have to rise sometime soon, because federal spending stimuli are fading, because I believe in a place called California, and because so much of the durable consumption seems driven by cut-rate deals (Toyota in Q1 offered zero-percent financing for the first time in history). Thin ice.
This would be a good time to reread Mankiw's argument that this is a Unit Root recession, not a Trend Stationary recession. A rebound to normalcy would be nice, but we all know better than to believe the housing bubble defined normalcy. It's time to shelve fantasies that a stimulus, any stimulus, can or should get America back to artificial prosperity.
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