But perhaps not enough.
Perhaps we have become too accustomed to the other post-World War II recoveries, which were so different. There were no excesses to overcome from a stock market bubble and an insane rush by business to expand far beyond demand. Instead, when consumption rose, there was shortage and rising prices. To control inflation, the Fed pushed up interest rates. In response, consumption subsided, provoking a recession -- until rates came down and pent-up demand reasserted itself. Business stepped up investment to keep output abreast of demand, and recovery was on its way.
In the current cycle, however, consumption -- particularly for cars, housing and appliances -- never tapered off from very high levels during the nine-month recession that started in January of last year. It has still not tapered off, but it is not rising, either, and that is a problem. Recovery requires increased consumption and business investment to make the economy grow. The danger today is that demand will decline instead, and recession will return.
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