Today the IMF released its complete Article IV Consultation report, focusing on US economic development and policies. While there are 70 pages or so of textual fluff (it comes from the IMF after all), where the report excels is in presenting the complete picture of the "bipolar recovery" in the United States, in about 50 or so charts, which is a recovery for some and an outright recession if not depression for most. Furthermore, the report corroborates that when it comes to the economy, the US "recovery" has been one of two stories 7 quarters following the business cycle trough: a contraction in virtually all key non-business segments, including real GDP components, fixed investments, and the business sector, and a flourishing renaissance for the business sector and for financial firms, profits and financial conditions. In other words, from the very beginning the whole purpose of the orchestrated recovery was one and one only: not to improve the general economic situation, but to pander to corporations and to the wealthiest. It is no wonder that rumors of social disobedience and discontent are getting ever louder: by now even the most average American has understood that the administration has betrayed them. However, we do not want to delve in the ethics of it all. Others will do that. Instead, here are all the charts that tell the story of America's recovery. Or, more specifically, lack thereof as the case may be and is.
First the one chart that compiles it all: comparing recoveries across different verticals 7 quarters after a business cycle trough.
Here is how the IMF summarizes its key findings (full report here). All these are well-known to regular readers:
- The U.S. economy continues to recover at a modest pace, in line with international experience following severe financial crises.
- Several indicators point to a significant growth slowdown in the first half of 2011, which appears partly related to transient factors.
- Macroeconomic policies have thus far remained supportive, but face tighter constraints going forward.
- The current recovery has been held back by significant adverse feedback loops between housing, consumption, and employment
- Housing markets remain depressed, given a large overhang of vacant or distressed properties—a key legacy of the housing bubble.
- Household balance sheets have suffered considerable damage from the housing bust.
- The state of the housing market plays an important role in explaining the weakness of U.S. private demand.
- Job growth has been held back by the weak recovery of aggregate demand as well as by the low employment intensity of output gains.
- Major labor market dislocations may have pushed up the structural unemployment rate.
- Improving financial conditions have helped underpin the recovery, but healing is still incomplete.
- Securitization activity remains substantially below pre-crisis levels.
- While corporate spending remains relatively weak, firms have had record-high profit growth and large firms face easy financing conditions.
- U.S. exports have been buoyed by strong external demand, even though the external sector has not added to growth.
- Despite a string of very large current account deficits, the U.S. net international investment position (IIP) has deteriorated only modestly during the past decade, and the net income balance remains positive.
- Looking ahead, the recovery is expected to continue despite the expected fiscal tightening, helped by accommodative monetary policy, while inflation should remain subdued.
- Over the medium term, both saving and investment are projected to rise, leaving the current account deficit broadly stable around current values.
- Core inflation remains subdued, despite some recent firming.
- Downside risks to the outlook have increased. These include:
- Renewed housing market weakness
- Unfavorable fiscal outcomes
- Further commodity price shocks, which could impact both growth and inflation
- Credit supply constraints
- Challenging conditions for some European sovereigns
- The authorities broadly agreed with staff’s near-term outlook and risks, but considered that the recovery could be firmer next year as headwinds lessen.
Or not. It won't be the first time the IMF has been wrong about everything. or the last time. Anyway, the full text can be found here.
And now for the start attraction: lots of charts.
Figure 1. The Recovery in Perspective
Figure 2. The Economy Hit Another Soft Patch in the First Half of 2011
Figure 3. Macro Policy Levers are Strained
Figure 4. Real Estate Still Under Stress
Figure 5. Households Shedding Debt Burdens
Figure 6. Loss of Household Wealth Weighing on Consumption
Figure 7. Lack of Dynamism in Labor Markets
Figure 7. Lack of Dynamism in Labor Markets (continued)
Figure 8. Slow Financial Sector Healing
Figure 9. Corporate Sector Gaining Strength
Figure 10. Core Inflation Remains Subdued
Figure 11. The Dollar, Financial Flows, and Trade
Figure 12. U.S. Federal Government Plans to Embark on a Fiscal Consolidation
Figure 13. State and Local Government Finances Are Under Pressure