As the stock market and exchange traded funds (ETFs) continue to oscillate between black and red and the global recession persists, the nation’s means of production are being sidelined.
Some experts suggest that if the recession were to come to a halt today, it would take our mighty nation at least three years to return to full output and employment to enable the economy to operate at full throttle. What is daunting is that the shortfall is to the tune of $1 trillion in annual sales and other transactions, states Louis Uchitelle of The New York Times.
This severe loss of output hasn’t been seen since the 1981-1982 recession and it took seven years to recover from it. Recovery from our current recession will probably follow the same path. It will be difficult and take time to find occupants for empty stores, convince factories to ramp up production, hiring the right qualified workers to handle an increase in production and prevent imports from entering the country taking away from domestic production. To put it in perspective, the Congressional Budget Office reported that the economy is currently operating at 7% below its potential capacity.
What’s most disturbing of all is that entrepreneurs are as inventive as ever, but it is like panning for gold to get venture capitalists and investors to bankroll their creations. After all, it is innovation that enables nation’s to become world powers.
Optimistic economists of the current recession state that the absence of inflationary pressure is an upside. Generally, with excess capacity, shortages don’t prevail and prices don’t elevate and interest rates are kept low to entice borrowing and spending. Unfortunately, in the current situation, neither is happening and demand continues to shrink while idle capacity builds up.