Bill Mitchell — US growth performance hides very disturbing regional trends

Last Friday (October 27, 2017), the US Bureau of Economic Analysis published their latest national accounts data – Gross Domestic Product: Third Quarter 2017 (Advance Estimate), which tells us that annual real GDP growth rate was 3 per cent in the September-quarter 2017, slightly down on the 3.1 per cent recorded in the June-quarter. As this is only the “Advance estimate” (based on incomplete data) there is every likelihood that the figure will be revised when the “second estimate” is published on November 29, 2017. The US result was driven, in part, by a continued (but slowing) contribution from personal consumption expenditure which coincided with record levels of household indebtedness. How long consumption expenditure can be kept growing as the debt levels rise is a relevant question. At some point, the whole show will come to a stop as it did in 2008 and that will impact negatively on private investment expenditure as well, which has just started to show signs of recovery. Governments haven’t learned that relying on personal consumption expenditure for economic growth in an environment of flat wages growth means that household debt will rise quickly and reach unsustainable levels. How harsh the correction will be is as yet unclear. But when it comes, the US government will need to increase its discretionary fiscal deficit to stimulate confidence among business firms and get growth back on track.

Bill Mitchell – billy blog
US growth performance hides very disturbing regional trends
Bill Mitchell | Professor in Economics, University of Newcastle, New South Wales, and Director of the Centre of Full Employment and Equity (CofFEE)

Andrew Kliman — Clarifying ‘Secular Stagnation’ and the Great Recession

Interesting analysis showing that conventional narrative is wrong.

So, what should be done to confront the prospect of secular stagnation? I wholeheartedly agree with Gindin when he writes that '[if] we don't assert that we refuse to take it anymore, the other side will simply keep demanding more from us,' and when he suggests that working people need to assert their 'independence from capital' and resist 'integration … into the neoliberal project.' Yet I would add that we also need to support and encourage working people's efforts to assert their independence from the trade-union bureaucracy and other pro-capitalist opponents of neoliberalism, whose aims and interests are quite different from theirs. An independent path is also needed because, if there is a pro-capitalist solution to the malaise other than letting it run its course, no one yet knows what it is. The system's leading economists are just now waking up to the possibility that our present predicament is not a mere after-effect of a financial crisis. Austerity policies haven't extricated the economy from the slump but, as the U.S. case shows, neither have wildly expansionary fiscal and monetary policies.

Class struggles, taking a variety of traditional and new forms, have accelerated throughout the world during the crisis, and a late 2011 Pew Research Center poll of U.S. residents found that a large majority of black people, a majority of people under 30, and almost half of low-income people and Hispanics had a positive perception of socialism. The problem is that these struggles have been derailed and confined by attempts to integrate them into the anti-neoliberal-but-pro-capitalist project, and that most of the Left, including the 'socialist' Left, has been backing these attempts instead of listening to the renewed aspiration for a socialist future.

I think a socialist way out of the crisis is a real historical possibility now, but only if the ferment from below is met halfway with a sober, rationalist politics that says, 'the solutions that have been tried to fix capitalism aren't working. We have to find a way out of this system, but we don't really know yet what must be changed in order to transcend it. So the only solution is you. It's up to you to take control of the process of figuring this out. Once you know what you’re doing, you’ll be able to do more than express your anger and appeal to leaders to help you. You can take charge.'

New Left Foundation
Clarifying ‘Secular Stagnation’ and the Great Recession
Andrew Kliman | Professor of Economics at Pace University, New York