Yesterday Fed Chairman Bernanke is reported to have said something to the effect that the ‘economy probably is in recovery, but for those without jobs and at risk of losing jobs recovery will be long and slow in a period when unemployment rates are likely to go up somewhat from here before leveling out and then declining’.  Aside from the operative word being ‘probably’, as I have said previously on this blog to an economist recovery is a technical term that means GDP is increasing not decreasing.  Aside from the fact that Government reported numbers are constantly being readjusted over time people act on those numbers as they are first reported much like piranhas group and devour cattle crossing an Amazon river.

Think of it in absolute numbers.  Suppose GDP is 100 units, but a serious economic downturn takes it down to 75.  It then increases to 76, a 1.3% increase over 75, but still a 24% decrease from 100.  Economists say ‘hurrah’, economic recovery is upon us, and the media picks up this mantra.  It is hardly likely such ‘good news’ is seen as such by Main Streeters.  I recommend you not get confused by ‘the facts’, and think for yourself what the absolute numbers mean.  To me, they mean a long protacted period of economic times in the U.S. that may not approach the economic buoyance of the 2003 - 2007 period in that country (measured by consumer spending power) for many years, if it ever does.

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