PeakTrader.com

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PeakTrader said...

We still need pro-growth policies that will reduce the unemployment rate faster.

So, the economy can expand faster to raise tax revenues and lower unemployment benefits, which will help shrink budget deficits.

We need to cut hundreds of billions of dollars in government spending and use every dollar for tax cuts, and deregulate to stimulate growth.

Federal spending has increased by over $1 trillion and federal revenue has decreased, since 2007:

Federal spending 2007: $2.73 trillion.
Federal revenue 2007: $2.57 trillion.
Budget deficit 2007: $161 billion.

Federal spending 2011: $3.82 trillion.
Federal revenue 2011: $2.17 trillion
Budget deficit 2011: $1.65 trillion.

(2011 estimates)

The U.S. will lose $2.9 trillion in wealth in a four-year period from underproduction, which is wealth lost forever:

The Output Gap
January 19, 2011
Paul Krugman

"...there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce (over four years; 2008-2009-2010-2011, based on real output)."

And the U.S. will continue to lose wealth until the output gap is closed:

Will the U.S. recover lost output and jobs?
January 12, 2011
The Levy Economics Institute

"Real GDP needs to grow at 5.2 percent (per year) from now (2011) to 2015, to achieve this result (close the output gap)."

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morganovich said...

"lose wealth"?

my god, krugman has become such a worthless political shill.

opportunity cost is not the same as "losing wealth".

only working 40 hours when you could have worked 50 is also not "losing wealth" it's a missed opportunity.

these are such simple economic concepts that there is no way krugman does not understand them. he has traded every once of integrity and economic rigor he ever possessed for celebrity and political agenda.

he is nothing more than a shill now.

i'm not sure if it's sad or disgusting, but it certainly one of the two.

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PeakTrader said...

Morganovich, the opportunity cost is gaining leisure and giving up labor. You could view leisure as wealth.

Nonetheless, the U.S. is underproducing by a large margin. The country is not even close to full employment (e.g. 40 hours a week).

Normally, actual output is roughly equal to potential output (e.g. in the mid-2000s), and sometimes actual output exceeds potential output (e.g. in the late-1990s).

However, the output gap (where actual output is below potential output) hasn't been this large for this long since the Great Depression, and it looks like it'll close slowly.

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