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Thursday, January 23, 2014

Cost of Recession and Austerity in Convenient Clock Form

You've probably heard of the U.S. Debt Clock. I'm not linking to it because its goal is to strengthen deficit hysteria, one of the techniques used to try to destroy the welfare state.

But have you seen the U.S. Lost Output Clock? This is much more informative, showing us just how high the cost of recession and slow recovery (due to austerity, especially at the state and local level) has been. The total now stands at over $5.2 trillion. (H/t @nielsandeweg and Dean Baker)

Here is the clock as of about 2:00pm EST January 22:

United States Lost Output Clock


Lost National Income since the Financial Crisis of 2008.

Blue line = Potential GDP (if capital and labor are fully employed with adequate demand)
Red line = Actual GDP 


As noted, this is calculated by summing the distance between actual and potential gross domestic product. It's a scary picture, especially because there doesn't seem to be much recent change in the distance between the two lines.

Something worth looking at every few months as a reality check. It is, as Paul Krugman says, time to End This Depression Now!


  1. Perhaps we have gone through an economic adjustment from which there is no recovery, rather than a recession followed by a recovery.

    1. Hi Jerry, that is a very scary thought. If we don't change policy, I'd say it's a likely outcome.

  2. I'm not an expert so I ask this in all sincerity: 1)How is Paul Krugman's proposal, that is to increase government spending to jump-start the economy any different from FDR's Alphabet-Soup Era policy? (2) What is your opinion, if any, regarding Amity Schlaes analysis and conclusion that such policies were ineffective?

    1. Krugman's view is very similar to what Roosevelt did. I think he even supports government employment; I do, in any event.

      I don't read her, but I find that conclusion unlikely. When FDR decided to balance the budget again in 1937, the U.S. went back into a severe recession.

  3. UK version done by same guy @austerity_sucks commentry by yours truly.