Noam Scheiber "Wretched Excess" The New Republic Dec. 3
http://www.thenewrepublic.com/120301/scheiber120301.html
<SNIP> As Northwestern University economist Robert Gordon has pointed out, recessions between 1846 and 1945 were two-thirds as long as their corresponding expansions. Between 1945 and 1982, recessions were only one-fourth as long.
<SNIP>
If this recession is like every other American recession since World War II, that optimism is fully merited. The problem is that there's mounting evidence it's not. This time around, it wasn't a change in consumer spending that brought the economy to a standstill; it was largely a change in business spending
<SNIP> Between October 2000 and March 2001, corporate profits shrunk at an annual rate of 20 percent, as the demand for goods and services fell vastly short of expectations. Facing declining profits, businesses simply stopped spending: Investment in capital equipment froze in the first quarter of 2001, having increased by over 21 percent in the same quarter the year before. Much of the drop-off was driven by an astounding 12.8 percent decline in spending on information technology, which at the time accounted for about half of all capital investment. <SNIP> . By 2000 the size of the nation's managerial class had risen to nearly 20 million, up more than 20 percent since 1994. Which meant that, to really cut costs, companies would have to cut high-paying jobs. And, over the last few months, they've done exactly that. From October 2000 to February 2001, managers accounted for less than 2 percent of the 400,000 Americans who lost their jobs. Between March and June, they accounted for a whopping 64 percent of 486,000.
<SNIP> By any objective measure, the excess in the economy was already great in 1998. Between 1994 and 1998, capacity in three top technology sectors--computers, communications equipment, and semiconductors--increased more than 400 percent. Or, to take an old-economy example, in 1995 the nation had just under 27,000 indoor movie screens. By 1998 that number had risen to over 33,000, even though admissions hadn't risen nearly as quickly.
-------------- next part -------------- An HTML attachment was scrubbed... URL: <../attachments/20011209/a984d3ef/attachment.htm>