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Historical Economic Grace Period?

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Old 02-05-2009, 07:58 PM   #1
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Historical Economic Grace Period?

I have a simple question: Historically, how long does it take for a President/Congress' actions to show up in the economy?
Clearly, the current economy lays at Bush and the last Congress' feet. So, legitimately, at what point does the situation fully rest on Pres. Obama, and this Congresses feet?

I believe it would take a minimum of 4 months to judge initial results, and by 1 year, it would be 80-90% of the current crews choices. Does anyone else have an opinion, or economic data to let me know. Thanks
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Old 02-05-2009, 09:05 PM   #2
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Re: Historical Economic Grace Period?

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Originally Posted by CRedskinsRule View Post
I have a simple question: Historically, how long does it take for a President/Congress' actions to show up in the economy?
Clearly, the current economy lays at Bush and the last Congress' feet. So, legitimately, at what point does the situation fully rest on Pres. Obama, and this Congresses feet?

I believe it would take a minimum of 4 months to judge initial results, and by 1 year, it would be 80-90% of the current crews choices. Does anyone else have an opinion, or economic data to let me know. Thanks
It's a major fallacy to think the President of the United States can have a significant impact on the economy in the first place.

There are things they can do, but prevent a recession, or pull us out of one? Impossible. Most of the economy is way out of the government's hands.

The most impact you can expect from lawmakers is to provide the stimulus to shorten the length of a recession. When it takes effect? Very hard to say. Most top economists think with a stimulus package the economy will bounce back in 2010.

But it would eventually bounce back even without a stimulus. It just might take longer.
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Old 02-05-2009, 09:45 PM   #3
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Re: Historical Economic Grace Period?

It depends on the severity of the problem. Four months? Four months can't fix Iceland or Zimbabwe not that we're in the same boat. The right question to ask is should we take action(s) or shouldn't we take action(s), if we take action(s) which action(s) will lead to faster economic recovery. The Austrian, the New Keynesian, the Monetarism, or all of the above approach?
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Last edited by saden1; 02-06-2009 at 12:10 AM. Reason: I added Monetarism and all of the above.
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Old 02-05-2009, 10:28 PM   #4
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Re: Historical Economic Grace Period?

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It depends on the severity of the problem. Four months? Four months can't fix Iceland or Zimbabwe not that we're in the same boat. The right question to ask is should we take action(s) or shouldn't we take action(s), if we take action(s) which action(s) will lead to faster economic recovery. The Austrian or the New Keynesian approach?
Interesting links, however it's certainly not that black or white. I'd say the answer should fall somewhere in the middle, however the current proposal falls closer to New Keynesian approach than Austrian. You've got to have oversight of course, but I fear Obama's proposed package is overcompensation for the past several years.
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Old 02-05-2009, 10:35 PM   #5
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Re: Historical Economic Grace Period?

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It depends on the severity of the problem. Four months? Four months can't fix Iceland or Zimbabwe not that we're in the same boat. The right question to ask is should we take action(s) or shouldn't we take action(s), if we take action(s) which action(s) will lead to faster economic recovery. The Austrian or the New Keynesian approach?
Austrian, we've already been doing Keynesian.
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Old 02-06-2009, 06:38 AM   #6
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Re: Historical Economic Grace Period?

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It depends on the severity of the problem. Four months? Four months can't fix Iceland or Zimbabwe not that we're in the same boat. The right question to ask is should we take action(s) or shouldn't we take action(s), if we take action(s) which action(s) will lead to faster economic recovery. The Austrian, the New Keynesian, the Monetarism, or all of the above approach?
I didn't say 4 months would fix it, I specifically said "to see initial results"
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Old 02-06-2009, 06:43 AM   #7
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Re: Historical Economic Grace Period?

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It's a major fallacy to think the President of the United States can have a significant impact on the economy in the first place.

There are things they can do, but prevent a recession, or pull us out of one? Impossible. Most of the economy is way out of the government's hands.

The most impact you can expect from lawmakers is to provide the stimulus to shorten the length of a recession. When it takes effect? Very hard to say. Most top economists think with a stimulus package the economy will bounce back in 2010.

But it would eventually bounce back even without a stimulus. It just might take longer.
I specifically said President/Congress- obviously the economy is cyclical and the government's actions simply "buffer" it in some ways. I was really wondering more about HISTORICAL results, then opening another round of "Obama speak". That was already going on in a different thread, or 2 or 3.
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Old 02-06-2009, 08:17 AM   #8
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Re: Historical Economic Grace Period?

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Originally Posted by CRedskinsRule View Post
I specifically said President/Congress- obviously the economy is cyclical and the government's actions simply "buffer" it in some ways. I was really wondering more about HISTORICAL results, then opening another round of "Obama speak". That was already going on in a different thread, or 2 or 3.
I have no idea what you're talking about and it seems you have misunderstood me.

The opening post in this thread seemed to indicate that you were placing blame for the current economy at the feet of Bush and the congress of 2000-2008. And that you were looking for a time period at which you could begin passing judgment on Obama.

My response was neither against nor in defense of President Obama. I'm merely pointing out that one cannot expect the government to have a significant impact on the economy. That IS the historical result. Economies bounce back not because of the actions of their government, but because of innovation by the people, the cyclical nature of business, and the relative health of other economies around the world.

It is the Federal Reserve that has the greatest impact on the economy. But even they have relative little recourse to drive the economy where they wish it to go.
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Old 02-06-2009, 09:52 AM   #9
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Re: Historical Economic Grace Period?

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I have no idea what you're talking about and it seems you have misunderstood me.

The opening post in this thread seemed to indicate that you were placing blame for the current economy at the feet of Bush and the congress of 2000-2008. And that you were looking for a time period at which you could begin passing judgment on Obama.

My response was neither against nor in defense of President Obama. I'm merely pointing out that one cannot expect the government to have a significant impact on the economy. That IS the historical result. Economies bounce back not because of the actions of their government, but because of innovation by the people, the cyclical nature of business, and the relative health of other economies around the world.

It is the Federal Reserve that has the greatest impact on the economy. But even they have relative little recourse to drive the economy where they wish it to go.
Fair enough. I guess I think government policy has definite impact, be it activist or laissez-faire(which i prefer). And also that in American History we might be able to see some trends from when Presidents and Congress transitions.
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Old 02-06-2009, 10:10 AM   #10
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Re: Historical Economic Grace Period?

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Originally Posted by CRedskinsRule View Post
I have a simple question: Historically, how long does it take for a President/Congress' actions to show up in the economy?
Clearly, the current economy lays at Bush and the last Congress' feet. So, legitimately, at what point does the situation fully rest on Pres. Obama, and this Congresses feet?

I believe it would take a minimum of 4 months to judge initial results, and by 1 year, it would be 80-90% of the current crews choices. Does anyone else have an opinion, or economic data to let me know. Thanks
I could blame Bush and congress if this was just a US slump but its world wide so its hard to blame one person. The economy will come back with or without the stimulas its rather or not it speeds up the recovery.
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Old 02-06-2009, 10:30 AM   #11
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Re: Historical Economic Grace Period?

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I could blame Bush and congress if this was just a US slump but its world wide so its hard to blame one person. The economy will come back with or without the stimulas its rather or not it speeds up the recovery.
Agreed.

There could have been more oversight on the mortgage mess, there could have been more oversight on corporate greed, and stuff like that. But it never would have prevented the recession. In fact, if there were tough oversight of mortgage lending, there never would have been the strong GDP growth we saw prior to the recession.

With oversight, we would have experienced slower growth and a softer recession. Without it, we experienced faster growth and a harder recession. In the end, roughly the same number of people would have been out of work for roughly the same amount of time.

Now with a stimulus, we can dig ourselves out sooner but the economy won't bounce back as high. Without a stimulus, it will take longer to dig out, but growth will bounce back higher when we do eventually pull out.

Policy can affect the severity of ebbs and flows, but it can't change the unemployment x time quotient, and it can't change the GDP growth over time.
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Old 02-06-2009, 10:35 AM   #12
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Re: Historical Economic Grace Period?

Four months to see results? What kind of results do you expect to see in 4 months? The unemployment number go down? Consumer confidence index to rise? And what if you don't? Obama FAIL?
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Old 02-06-2009, 11:27 AM   #13
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Re: Historical Economic Grace Period?

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Agreed.

There could have been more oversight on the mortgage mess, there could have been more oversight on corporate greed, and stuff like that. But it never would have prevented the recession. In fact, if there were tough oversight of mortgage lending, there never would have been the strong GDP growth we saw prior to the recession.

With oversight, we would have experienced slower growth and a softer recession. Without it, we experienced faster growth and a harder recession. In the end, roughly the same number of people would have been out of work for roughly the same amount of time.

Now with a stimulus, we can dig ourselves out sooner but the economy won't bounce back as high. Without a stimulus, it will take longer to dig out, but growth will bounce back higher when we do eventually pull out.

Policy can affect the severity of ebbs and flows, but it can't change the unemployment x time quotient, and it can't change the GDP growth over time.
Most of the bills spending on roads and such that may add jobs will not hit for over a year. The main things that will hit this year is tax cuts and aid to the states which I don't think are enough to do very much good. So if the economy is starting to grow in a year are they still going to spend another 400 to 500 billion? I'm sure they will.Much in Obama stimulus bill won't hit economy soon - BusinessWeek
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Old 02-06-2009, 11:29 AM   #14
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Re: Historical Economic Grace Period?

Yes, those are two good examples. At 4 months, I don't think it would be about Obama, as much as the whether the stimulus is having the desired effect.
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Old 02-06-2009, 12:54 PM   #15
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Re: Historical Economic Grace Period?

I understand people are having problems but that does not mean that we should rush to pass a bill spending close to 1 trillion dollars. I think Obama and congress need to step back and take a longer look to what is really needed. The state and cities in my area are rushing in ready to pounce on every penny they can get from this bill. So much more of our money is going to get waisted.
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