There's a big difference between the economy bottoming out and actual recovery or growth. The cheerleaders and some in Washington are flogging the big news about the bottom coming soon. Finding the bottom is good news but in no way does that mean that happy days are here again so go back to spending like it is 2006. Hardly. Tough days are ahead including higher unemployment and slow (or flat) corporate earnings. More Krugman via the AP:
Krugman said that he would not be surprised if the U.S. recession, which began in December 2007, ended in August or September this year. But job losses were likely to continue into 2011, meaning "the period of a depressed economy" could last until 2013 or 2014, he said.NOTE FROM JOHN: This is why the stimulus package was necessary. This is why the Republican arguments, that a lot of the stimulus pending won't happen until after this year, and thus it's really wasteful pork, are specious.
Krugman, who teaches at Princeton University, won the Nobel Memorial Prize in Economic Sciences last year for his analysis of how economies of scale can affect international trade patterns. He also writes columns for The New York Times.
The U.S. economy, the world's largest, contracted a worse-than-expected 6.1 percent on an annualized basis in the first quarter. Americans increased purchases of cars, furniture and appliances, but businesses cut back spending and exports had their biggest drop in 40 years. The U.S. unemployment rate hit 8.9 percent in April and many economists expect it to reach 10 percent by year's end.
