There was a lot to talk about in the economy this week.
For starters, the revised number for Gross Domestic Product growth came out yesterday and things are not looking so good. According to the Bureau of Economic Analysis, the economy contracted in the most recent quarter by one percent.
"I think this just shows that the economic growth we have now isn't very robust. It's no time to get complacent, but it's not all bad news. Things are getting a little better," says Cardiff Garcia from the blog FT Alphaville.
However, many argue that in one more quarter, we'll be back in another recession.
Nela Richardson, chief economist for the brokerage and referal site Redfin, believes we should fear these numbers because the goals set by the Feds are not as attainable as they make it seem.
"What it would take for us to reach the 3 percent that the Fed has been forcasting is for us to grow in the second half of this year by 5 percent... I just don't see any evidence of where this growth is going to come. And the reason I'm so troubled is because business investment plumeted so much... There's no indication that the seeds of growth that would hit 5 percent in the second half of the year are actually starting to bloom in the spring swoon," says Richardson.
The inflation number also came out this week. And it appears we had a small increase in inflation.
"It has all kinds of beneficial effects. It also can be a sign that the economy is starting to grow again. But the good thing about inflation when it doesn't spike too quickly is that it means that households are incentivised to spend money because their money is going to worth a little bit less each year. It also means that businesses are incentivised to invest," says Cardiff.
President Barack Obama announced Friday morning he had accepted Eric Shinseki’s resignation. The retired four-star general is no longer the secretary of Veterans Affairs.
While Shineski’s departure may quiet the political storm around how VA hospitals tried to hide long wait times for veterans, it does little to fix the larger task of figuring out what is wrong with the VA health care system and how to fix it.
This is a big job, and many people would say Shinseki’s successor will be in an unenviable position.
“Good luck to whoever comes in,” says Michael Useem, head of the Center for Leadership and Change Management at the Wharton School at the University of Pennsylvania. “This is a turnaround, a restructuring.”
That has been done successfully, he notes, many times in the private sector, but the new head of the VA will face certain pressures someone in the private sector probably wouldn’t.
“It’s a highly politicized environment with not a lot of resources to allocate,” says Tom D’Aunno, a professor of health policy and management at Columbia University’s Mailman School of Public Health.
About those resources…
“The system’s growth has been slower than the growth in the demand for services,” says Jack Needleman, a public health professor at UCLA.
The VA has a pretty big budget, but most of it is tied up in pensions and disability. It is possible Congress could step in and give the agency more money.
Some lawmakers want to make it easier for the agency to hire and fire staff, but Needleman wonders if that should be at the top of the agenda.
“What we have learned from decades of work studying health systems and quality is it’s often a system problem, not a personnel problem,” he says.
And the Veterans Health Administration is a big system that is pretty decentralized.
D’Aunno says there will be additional pressure to fix things fast, but, he adds, real reform would take time.
“This is not about making heads roll,” he says. “This is about doing actual problem solving.”
According to D’Aunno, the new secretary’s first objective should be to build trust among the VA’s ranks, to find out exactly what has gone wrong.