It looks like Obama’s out there, talking about how we are back from the brink again. It would help Obama’s credibility if the economic news was actually positive. Here is a recap since I left on vacation a little more than a week ago.
GDP declined over the last most at an annual rate of 1%. Everyone’s getting excited that it’s a little better than expected. Break out the champagne at the white house. For all you on the left that think we are on the cusp of recovery, you need a little refresher in the art of big recessions. I know, we haven’t had one in 30 years, but this is what a long recession looks like (GDP for the 80’s recession at the right) and we haven’t even had an uptick in GDP yet.It looks like incomes dropped, but according to the news it’s not bad because it was the result of timing issues in the stimulus. Personally, I find it appalling that the stimulus is so poorly timed. The benefit to the long term stimulus was supposed to be that we were going to see a continuous stream of stimulus. People aren’t going to increase spending if their incomes are constantly increasing/decreasing by historic amounts. Also, weren’t we supposed to double the rate of the stimulus spending for the summer?
The big positive news that everyone is talking about is that consumer spending increased by .04 percent. That’s great news except the increase was a result of inflation increasing in the same month. We actually had a decrease in consumer spending, because it didn’t keep pace with inflation.
It’s time to break free of the economists and their “it’s better than predicted” predictions. These guys haven’t seen a real recession in 30 years. They are rusty.
The unemployment data comes out on Friday. I can’t wait to hear the administration talk about how great the economy is doing next week.
5 comments
I feel defeated. I'm having trouble defending my boy Obama these days. Don't get me wrong, I still like him, and I think he has the right idea, but much like Bush with the war on terror, they both had some good ideas and pretty lousy execution.
August 5, 2009 at 2:06 AMWe know trickle down supply side economics doesn't work because the rich don't invest in the poor, they invest in themselves, which makes a ton of sense to me, even if I don't agree with it. Obama's "bottom up" (i suppose demand-side?) economics appears to be failing beacuse he is not putting to gear the movers and shakers of the economy - the middle class. Unless you set a tax at like 65%, there's no way you can make enough money to get out of this rut with rich people alone. A lot of these programs which stimulates growth stimulate it closer to the lower end of the middle class spectrum which is partly why we haven't seen an increase in consumer spending. The price is right for entrepreneurs to come into the fold, but the difficulty of getting loans and taxes slow down the engine. If california has to resort to legalizing weed to pay its bills (which I don't necessary disagree with) then I can't expect the unemployment data to have much good news in it...
Cgen - Great to have you back, you've missed a lot in the national scene in such a short amount of time. Where did you go on your vacation.
August 5, 2009 at 11:47 AMAnyway great points on the economy, pulling up the chart from the late 70s to the early 80s puts us at about midway through this recession? I can see that being the case.
The Law - Don't feel defeated friend, just point to the things that you know are right, question your leader and reps when you disagree, don't waver calling them out when they are wrong. It sounds to me like you are at my 'Bush realization' about 6-7 years ago. I slowly transformed into a massive critic and opponent of his. BTW, I agree that california should legalize pot and tax it.......but isn't it insane that such is one of the only solutions for the CA budget fiasco?
tL - that's the problem with stimulus. It's like trying to open a new store, if you don't understand the market, you can lose big. I think Biden let the cat out of the bag, they didn't think it would get this bad.
August 6, 2009 at 8:02 PMLCR - nice to hear from you as well. might be halfway, but there's a lot of piece, it would not be crazy to see the economy start tanking again if we continue to stagnate as we are.
I am about to do a similar post on economic "decoupling" where markets and prices go up yet businesses close and jobs are lost. That is the first sign of runaway inflation.
August 6, 2009 at 11:20 PMTL, how can bottom up economics work when there is no money at the bottom. Trickle down economics didn't work well because capital gains taxes prevented the trickle. Had Capital Gains taxes been 0, like even in many communist countries, trickle down economics is the only possible option, unless you can explain to me how a homeless crackhead will give me a full time job and insurance with a 401k.
August 6, 2009 at 11:27 PMPost a Comment