Explaining Southern California's economy

Why Black Friday can't save us from the fiscal cliff

"Black Friday" Marks Start Of Holiday Shopping Season

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Marking the start of the holiday shopping season, 'Black Friday' is one of American retailers' busiest days of the year.

Now that Black Friday 2012 is in the history books, we can all start arguing over whether it lived up to the hype. Forbes' Tom Van Riper cites a Deutsche Bank analyst who says that the results were basically flat compared with last year. CBS News sees it a little differently.

Regardless of how the big day ultimately works out, there are some inevtiable questions — given our continued sluggish recovery from the Great Recession — about whether the consumer can somehow rescue the economy. That could be too much to ask of the retail sector, which makes up less than 10 percent of U.S. GDP, as I noted on "AirTalk" ahead of Black Friday and its more recent offspring, Black Thursday. 

Others disagree. Last week, the L.A. Times ran a macro/microeconomics-mash-up-story about the Black Friday shopping frenzy and what it might mean for the overall economy, beyond the bottom line of retailers. Here are the critical paragraphs:

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California's economy is headed in the right direction, but recovery will be slow

Los Angeles skyline

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Los Angeles should start to catch up on its economic recovery in 2012 and 2013, according to LAEDC economists.

The Kyser Center for Economic Development, part of the Los Angeles Economic Development Corp. (LAEDC), has just released its 2012-13 mid-year forecast for the nation, the state, and various metropolitan regions in the Southern California. The data contained in the report is considerable, so I'm going to focus on the national and regional picture in this post, with an emphasis on Los Angeles County.

The Kyser economists aren't predicting a recession in 2012 or 2013. But they do anticipate sluggish, subpar growth: 2 percent GDP growth in the U.S. for this year, and only 2.2 percent growth for next year. They don't see the unemployment rate falling nationally by much over the next two years. It's currently at 8.3 percent — and by the end of next year, it will be at 8 percent.

There's a very big however in all this fairly grim prognostication: inflation should remain low for the 2012-13 period. This means that we're not seeing a repeat of the dreaded "stagflation" of the 1970s, when we had weak growth, high unemployment, and prices rising through the ceiling. What's happening now is different: the economy is wading through muck and mire, struggling to make any gains, and people have become so frustrated with the job market that they're dropping out completely, possibly never to return. I call this this "stuckflation." This is an economy that isn't tipping into recession, but that can't gain any momentum.

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