US recovery from current recession to be sluggish
Wednesday, 8 April 2009
From Fazle Rashid
NEW YORK, April 07: The shortfall in annual sales and other transactions in the US is running at $1.0 trillion. Recovery from the current recession will be sluggish. It was seven years before the economy regained lost production after 1981-82 recession which was much milder than the current one.
Factory owners who are hesitant to ramp up production will wait until they are sure of demand. Hiring the right peo ple for an operation will take time. And imports, entering the country in ever greater quantities will slow any expansion by siphoning sales from domestic producers wrote New York Times (NYT) today.
Then there is the growth rate itself. In the six years of recovery from 2001 recession to the current one, the economy grew at an average rate of only 2.5 per cent adjusted for inflation. If that growth were to resume, just $350 billion will added requiring three years to restore $1.0 trillion in the lost capacity. But getting the economy to grow at all after so much output has been lost and so many jobs have been lost will not be easy, NYT in an analysis said.
Similar views have been expressed by many reputed newspapers and magazines. Manufacturers are using only 68 per cent of the factory capacity
Worse the recovery, when it comes, will be feeble as the over-indebted rebuild their balance sheets and export-dependent countries reorient their economies towards domestic spending. There are risks in soaring government debts and swelling central bank balance sheets. Companies have slashed production, postponed investment, and laid of workers in millions. Financial system remains dysfunctional. Trade flows are shrinking at their fastest rates felling export dependent economies.
NEW YORK, April 07: The shortfall in annual sales and other transactions in the US is running at $1.0 trillion. Recovery from the current recession will be sluggish. It was seven years before the economy regained lost production after 1981-82 recession which was much milder than the current one.
Factory owners who are hesitant to ramp up production will wait until they are sure of demand. Hiring the right peo ple for an operation will take time. And imports, entering the country in ever greater quantities will slow any expansion by siphoning sales from domestic producers wrote New York Times (NYT) today.
Then there is the growth rate itself. In the six years of recovery from 2001 recession to the current one, the economy grew at an average rate of only 2.5 per cent adjusted for inflation. If that growth were to resume, just $350 billion will added requiring three years to restore $1.0 trillion in the lost capacity. But getting the economy to grow at all after so much output has been lost and so many jobs have been lost will not be easy, NYT in an analysis said.
Similar views have been expressed by many reputed newspapers and magazines. Manufacturers are using only 68 per cent of the factory capacity
Worse the recovery, when it comes, will be feeble as the over-indebted rebuild their balance sheets and export-dependent countries reorient their economies towards domestic spending. There are risks in soaring government debts and swelling central bank balance sheets. Companies have slashed production, postponed investment, and laid of workers in millions. Financial system remains dysfunctional. Trade flows are shrinking at their fastest rates felling export dependent economies.