Experts: Economic Recovery Is an Illusion

Wednesday, 07 Nov 2012 10:21 AM

By John Morgan

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The U.S. economic recovery could be a mirage that will disappear, according to experts cited by U.S. News & World Report.

While a lot of the recent economic news appears to be favorable, much of the improvement is due to government intervention. Whether the economy can continue to strengthen without continuous government help remains unclear.

“We have questions about the economy that have never been asked before,” Ron Weiner, founder and president of wealth-management firm RDM Financial Group, told U.S. News.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

“These are roads that have never been ventured down before.”

Gross domestic product (GDP) grew 2 percent in the third quarter, up from 1.3 percent in the second quarter. However, experts say the economy is still not growing fast enough to add the number of jobs needed.

Meanwhile, the huge cash infusions by the Federal Reserve, whereby hundreds of billions of dollars have been pumped into the economy, have made the economy appear more robust than it really is, according to Shawn Ritenour, a professor of economics at Grove City College.

“I don’t think it’s a good sign when the largest contribution to GDP is government spending,” he said. “I would not be surprised, if the government stimulus goes away, to see quite a bit of this recovery was a stimulus bubble.”

Others believe the U.S. economy is recovering, but is characterized by fewer jobs because of technological advances and mechanization.

Writing for Vox, economists Nir Jaimovich of Duke University and Henry Siu of the University of British Columbia said if current trends prevail, future recoveries might likewise remain jobless.

“The pace of job polarization was greatly accelerated in the last recession, and the pace of automation and progress in robotics and computing technology is not slowing down either,” they wrote.

“If the past 30 years is any guide, we should expect future recessions to continue to spur job polarization. Jobless recoveries may be the new norm.”

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

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