7/23/12 2:59 PM – Has the US Really Had a Recovery?

Long-time readers know I am an avid reader of Barron’s Magazine. Though the tone, especially that of editor Alan Abelson is, let’s say skeptical, there is a lot of good information there.

Alan has often praised Stephanie Pomboy for her economic insights and she is sometimes interviewed for the weekly magazine and was again this weekend. One of her interesting comments this week was that of the recovery in GDP (gross domestic product – the measure of the total output of the economy) since before the economic crisis that most people date to 2008, 83% of the increase was from price increases, leaving only 17% of the recovery to come from an increase in actual demand. Put another way, the actual recovery since 2008 has only been 1/6 of even the anemic pace reported by the government.

And, of course, the US recovery is being impacted by the deepening recession in Europe. CNBC reports that over the last 30 days estimates for second quarter GDP have been coming down quickly.

Retail sales today are actually lower in terms of number of units sold than before the crisis. All the reported growth and more has been from higher retail prices.

Of course, one of the points from my montly newsletter for July is that paying down consumer debt is not really very far along. In fact, Ms. Pomboy says what others have said, namely that most of the recovery has come from high-end consumers spending more, not the rank-and-file.