A glance at the NIPA data from Q1

Consumption appears to have stabilized after the portion due to the housing ATM was deducted in third and fourth quarter 2008, but at 71 percent of GDP is still quite high.  Investment and goods exports were the big losers in Q1.  Government’s contribution was slightly negative, surprisingly.  The effects of the stimulus have yet to be felt from government spending directly.

With industrial capacity utilization at 67 percent and weakened consumer demand and higher saving, derived investment demand (from consumer demand) is likely to remain weak for some time, although I expect an upturn from current extremely depressed levels about yearend. 

	2009-I
Gross domestic product	14089.7	100%
Personal consumption expenditures	9941	71%
Nonresidential investment	1336.6	9%
Residential investment	383.4	3%
Change in private inventories	-121.4	-1%
Net exports	-333.4	-2%
Government expenditures	2883.3	20%

I persist in thinking that the problem of achieving appropriate levels of aggregate demand would be best achieved by providing the unemployed with a livable dole in the form of workfare and health benefits while they seek private sector employment.  America is going to have to come to something like this if external funding does not appear for our deficits.  We don’t save enough to finance them.  Triage will be necessary.  Reminds me of a line from an old Supertramp song, “Soapbox Opera”:

I said father Washington, you’re all mixed up,
Collecting sinners in an old tin cup.