More Notes on David Leonhardt on White House Views of the Recovery: Why the Line Wobble?
I had thought that the settled White House line was that the normal sources of recovery are not present when a recession is caused by a financial crisis, and that as a result a post-financial crisis recovery tends to look like an "L" rather than a "V". Given that, I thought the White House line was, the fact that we are recovering at all--that it looks like we are going to get a "U"--is both a miracle and testimony to the strength and power of the administration's stimulative policies.
David Leonhardt says that his sources inside the White House are pushing a rather different line. David Leonhardt writes:
Economic Scene - Betting That Cutting Spending Won’t Derail Recovery - NYTimes.com: An internal memo from White House economists to other senior aides last week noted that policy makers “necessarily tend to focus on the impediments to recovery.” But, the memo argued, the economy’s strengths, like exports and manufacturing, “more than make up for continued areas of weakness, like housing and commercial real estate”...
And he is skeptical about it:
That optimistic take, however, is more debatable today than it would have been a month or two ago. As is often the case after a financial crisis, this recovery is turning out to be a choppy one.... The parallels to 1937 are not reassuring.... Given this history, why would policy makers want to put on another fiscal hair shirt today?...
Either I am misinformed and wrong about what the White House analysis of the state of the economy is supposed to be, or some freelancer willing to leak paper to David is engaged in a line wobble--which doesn't strike me as a terribly constructive thing to be doing.
