Brad DeLong puts yesterday’s GDP numbers in perspective:
In the first six months of 2011 real GDP grew at an annual rate of only 0.8% per year. At that growth rate, unemployment will rise at about 1 percentage point per year.
I need to see the guts of the numbers, but unless there is something very odd in them, the chance that the unemployment rate will be above 9% in November 2012 just crossed 50% heading upward.
A rational Federal Reserve would:
- Begin QE III today.
A rational administration would:
- Announce a technical fix to the debt ceiling today: the economy does not need the risk.
- Abandon all long-term budget negotiations with anybody who requires cuts to the deficit over the next eighteen months to come to the table: the economy needs stimulus, not contra[c]tion.
- Take every single uncommitted TARP and TALF and whatever dollar, leverage it up, and throw it at the economy to boost aggregate demand.