drevno

Seeds of an Economic Recovery?

The current numbers may indicate what size the US economy is (as well as other economies around the world) when in the "idle" mode. There is neither a pronounced growth anywhere (i.e. boom) nor further rapid contraction (bust).

There's no growth because there's ample idle capacity to cover the essential needs. The replacement of the machinery and other productive capital items is not necessary for another few months. Ditto regarding the huge inventory of houses and commercial real estate, the full strategic reserves of oil and other materials, etc. The same goes for the households - people can and obviously are postponing certain major purchases.

But there's no bust either. Essential machines, engines, parts, cars, telecom equipment, health supplies, housing repairs, infrastructure repairs, government expenditures on services and such must be performed. Replacement and essential innovation must go on in both the industry and the households, at least at a pace indicated by the current numbers.

Although imprecise, this may be actually an example of a temporary economic equilibrium, a pause (inevitably including a small growth here or a further small contraction there). And likely, the calm before the start of the next increased activity cycle in the relatively near future..