Zachary Karabell

Zachary Karabell
River Twice Research
Zachary Karabell is an author, historian, money manager and economist. Karabell is President of River Twice Research, where he analyzes economic and political trends. He is also a Senior Advisor for Business for Social Responsibility. Previously, he was Executive Vice President, Head of Marketing and Chief Economist at Fred Alger Management, a New York-based investment firm, and President of Fred Alger and Company, as well as Portfolio Manager of the China-US Growth Fund, which won both a Lipper Award for top performance and a 5-star designation from Morningstar. He was also Executive Vice President of Alger's Spectra Funds, a no-load family of mutual funds that launched the $30 million Spectra Green Fund, which was based on the idea that profit and sustainability are linked. At Alger, he oversaw the creation, launch and marketing of several funds, led corporate strategy for acquisitions, and represented the firm at public forums and in the media. Educated at Columbia, Oxford, and Harvard, where he received his Ph.D., he is the author of several books, including the forthcoming Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends on It, which will be published by Simon & Schuster in 2009, and previous books such as A Visionary Nation: Four Centuries of American Dreams and What Lies Ahead, The Last Campaign: How Harry Truman Won the 1948 Election (which won the Chicago Tribune Heartland Award for best non-fiction book of the year), and Peace Be Upon You: The Story of Muslim, Christian and Jewish Coexistence (Knopf, 2007), which examined the forgotten legacy of peace among the three faiths. In 2003, the World Economic Forum designated Zachary a "Global Leader for Tomorrow." He sits on the board of the World Policy Institute and the New America Foundation, and is a member of the Council on Foreign Relations. He is a regular commentator on national news programs, such as CNBC, CNN, and a contributor to such publications as The Wall Street Journal, The Los Angeles Times, The New York Times, Newsweek and Foreign Affairs.

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AUGUST 14, 2009 7:56AM

The recession is over - and it isn’t

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 Cross-posted at River Twice Research.

 With Wall Street - and the Federal Reserve - in a headlong rush to declare the recession over, the economic data has indicated that the simple binary recession-no recession framework obscures more than it reveals. Yes, defined purely in terms of Gross Domestic Product (GDP), the recession looks to be winding down, with strong indications that GDP is about to turn positive after a long and painful swoon.

But GDP alone is a pretty poor proxy for the lived experience of many millions of people. Wall Street may be booming, the market rising, and many companies reporting strong profits relative to weak global economies. Yet that says little about any one national economy, even one as large and prominent as the United States (see my recent Wall Street Journal piece here

This week, the Bureau of Labor Statistics reported that productivity soared in the second quarter, up 6.4%. Economists will tell you that productivity is the key to an expanding economy and to keeping inflation in check. But this surge in productivity – which is unequivocally good for corporate profits – comes at the expense of labor. Unit labor costs plunged 5.8% and hours worked were down almost 7%. So even those still gainfully employed are working fewer hours as companies eke out efficiencies, do much more with less, and make money from diverse markets. As of this year, half of the profits of the S&P 500 companies will come from outside the United States. So companies are doing well, in spite of labor and in spite of the U.S. economy. If you depend on a wage and you live in the United States, this recession began before last year and is likely to last much longer. If you’re a company or if you can access the world of capital in some form or another, this recession was a brief, sharp, and very frightening financial panic that is now ending.

Retail sales – not the best of statistics given the frequent revisions and the fact that gasoline sales and auto sales can shape the overall figure and often do – were also anemic in this week’s release. While reports of the death of the American consumer are much overstated, there should be no doubt that some spending will be decreased by the absence of easy credit and by the psychological overhang of the past year.

The larger point, however, is that we no longer exist in “one” economy that can be simply described by a few select figures. The experience of people in different parts of the country and who are exposed to different aspects of economic activity will vary so profoundly that it is impossible to make any sweeping generalization. That won’t stop people from making them, nor will it prevent analysts and politicians from proclaiming the end of the recession as if that statement meant universal relief. The world has become too complicated for such simplicities, and reality will continue to be far messier than the pat statements and neat headlines that seek to contain it.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

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In my pickup truck yesterday, on my way down to DC on I- 70 East and I- 270 South ...

I heard the mumbo gibber hoopla jumbo.
If you can figure and comprehend:`O Oy!
I'd rather listen to politico hypochondriac!
Let them debate who's fat, skinny, UGLIES!
In my honest opinion, 'UM UBER CREEPY!
Gong. empty clang. delusion. false economy!
Maybe they can debate who might die today?
How many did the Plutocrats proxy kill in war?
Well. 'Um get to gorge on gazpacho and peaches?
'Um sip peach shooter and slurp corn relish radicchio.
I have nothing against enjoying all Natures fruit bounties.
But! (consider pro-war proxy slaughter. where's care, compassion?)
How many filthy lucre hidden bank accounts do these thugs need?
Can they consume more than 3- meals per day? Why ruin posterity?
I wish they'd ponder the simple word FOOL. Food was sure yummy. Last night I wished I remained at the gala longer. I was weary. burp.