“Higher gas prices, severe storms and belt-tightening at the Pentagon,” AP Economics writer Jeannine Aversa contends, “slowed the economy in the first three months of the year.” She forget to mention increased federal regulation, regulatory uncertainty and moratoria on energy exploration. And the high corporate tax rate.
New economic data, Neil Irwin reports in the Washington Post, “show the recovery is so weak that it doesn’t take much to knock it off its stride“:
The 1.8 percent pace of increase in gross domestic product in the first quarter, according to a Commerce Department report Thursday, is down from a 3.1 percent gain in the final months of 2010. It is also lower than the level of growth that, over time, would be expected to drive down joblessness. The U.S. economy needs to grow about 2.5 percent annually to keep unemployment steady given continual growth in the labor force and in worker efficiency; even stronger GDP growth is needed to bring unemployment down.
Via Jennifer Rubin who also noted that “inflation also shows a marked change“. We may officially be out of the recession, but Gallup reports that “Twenty-nine percent said the economy is in a depression and 26 percent said it is in a recession, with another 16 percent saying it is ‘slowing down’.” (Via Instapundit.)
This ain’t, as Philip Klein details, Ronald Reagan’s recovery:
. . . first quarter GDP grew at a mere 1.8 percent clip. While the number is an advance estimate and could change, it’s not going to get near the 5.1 percent growth in the comparable quarter during Reagan’s first term (i.e. Q1 1983). And while growth is expected to pick up in the second quarter, it won’t get anywhere near the 9.3 percent rate of 1983’s second quarter. . . .
Yet it’s also important to note that Reagan was also fighting a battle on multiple fronts. He took office after a year of 13.5 percent inflation in 1980, and by 1984 it dropped to 4.3 percent. On the flip side, Obama took over at a time of low inflation, and we’re now starting to see prices rise, especially on food and gas, which Americans tend to notice.
Perhaps the Obama recovery is so anemic is because “the government,” as Irwin reports, “is straining for ways to jump-start the economy.” Government is not going to jump-start this economy. But, there is one thing it can do to bring it back: get out of the way.
UPDATE: The editors of the Washington Examiner show just why Barack Obama in no Ronald Reagan:
The contrasts between Obama and Reagan couldn’t be starker. Reagan signed the biggest tax cut in history, removed burdensome regulations on businesses, and began to release the nation from the choke hold of labor unions, as exemplified by his firing of 11,000 striking air traffic controllers. Obama has pursued the opposite course, opening with an $862 billion economic stimulus package even though similar policies proved ineffective during America’s Great Depression in the 1930s and Japan’s lost decade in the 1990s. He spent over a year pushing for his government takeover of the health care system, legislation that included $813 billion in tax increases in addition to a raft of new regulations on businesses.
Read the whole thing.
Another factor in the anemic “recovery” is the absolute hostility of this administration toward Free Enterprise, expressed as:
– The de facto shutdown of offshore oil production and continuing threats to make domestic oil production more expensive (while subsidizing foreign oil production).
– Massive new financial regulations that increase the bureaucratic overhead companies have to comply with, making American companies less competitive than foreign ones.
– Use of the National Labor Relations Board as a political tool; overtly pro-union and hostile to business, even to the point of suing businesses on behalf of unions to destroy jobs.
– Ongoing threats to raise taxes on employers.
This administration is overtly and openly hostile to free enterprise and private employers. They enact policies that stop businesses from doing business (especially oil companies) and punish companies for creating jobs and being profitable. This is no way to secure economic growth.
We are talking about an administration that has so screwed the economy that getting a job at McDonald’s is considered a cause for celebration.
McDonald’s hired 62,000 employees out of 1 million applicants, for an acceptance rate of 6.2 percent. In 2011, the application acceptance rate at Harvard was also 6.2 percent. Which means, under Obama, getting a job at McDonald’s is as hard as getting into Harvard.
The old economic axiom, “Supply and Demand”, has been replaced with “It is GWB’s fault”. The new answer to all economic questions.
The Obama Regime’s power-grabs are hurting the economy.
Hey, that’s right – didn’t Democrats always used to make fun of McDonald’s jobs, or something?
America’s problems right now are sad because they are so unnecessary, but “every cloud has a silver lining” and in this case, I’m glad that we’ve at least been given such a clear disproof-by-demonstration of leftie economics.
Lefties always thought that they could do better than the Reagan recovery (and the Clinton recovery that was produced by his following Eisenhower-like policies, under Gingrich’s whip and under good after-effects of Reagan). Now it’s been proven: They can’t.
The same thing happened in the Depression. Hoover, contrary to myth, was a Big Government guy who pursued a very activist response to the Depression of 1930. That is what made it into a full-fledged depression. And Roosevelt, of course, did even more Big Government, which dragged out the depression for 8 more years of agony. But the lefties got to write the history on that one, so, impossible as it should seem, they turned Roosevelt the Destroyer into some sort of economic genius. (No, he wasn’t.)
Big Government does not stimulate economic recovery, it drags on it, by several channels:
– Actually getting in the way of new businesses/jobs. (Regulatory threats, mandates and other burdens that halt businesses and job creation in their tracks. Think EPA and ObamaCare.)
– Preventing critically needed adjustments like the liquidation of failed businesses/jobs. (Think bailouts.)
– Taking private resources/capital and redeploying or “redistributing” it. (Think taxes, borrowing and money-printing that fund government “jobs” but in so doing, aren’t there to fund self-sustaining new businesses.)
– Driving capital out of the country. (Think ZIRP, Zero Interest Rate Policy.)
– Discouraging savings, thus preventing real capital formation. (Again think ZIRP as it drives down the savings rate.)
– In general, driving talent and entrepreneurship out of the economy; “making Atlas shrug”. (Think massive deficts, which present the scary and depressing prospect of massive future taxes. Specifically, massive-and-growing debt levels reduce the discounted, after-tax, present value of future cash flows from investment.)
– Driving up the cost of imports that are needed to manufacture goods domestically. (Think QE leading to dollar devaluation leading to oil being $110/barrel, instead of $60 or $80. This is how you get stagflation, i.e., inflation and declining living standards in a context of weak growth.)
Reagan’s recovery was accomplished with low taxes, some de-regulation, high interest rates and a *rising* dollar. High interest rates encourage capital formation. A rising dollar means that imports (like oil, but others as well) get cheaper and accordingly, Americans have a higher living standard.
Obama thinks he can have a recovery with 0% interest rates and a weak dollar, as it will encourage export jobs or something. He can’t and it won’t. The global economy is so integrated today that most U.S. exporters are, in fact, highly dependent on imported parts and other imported factors. A weak dollar worsens their costs. There has been a little bump in exports from the weak dollar; I’m sayinig it will not last as (or if) the dollar gets even weaker. Obanomics is wrong.
Ending Obanomics will, temporarily, mean a greater recession. But we can’t avoid it – Obanomics must and will end with a greater recession, one way or another – so we may as well get it over with.
Yep. They also sneer at Americans who work at Wal-Mart. Why Burger King and Target are immune, I have no idea.
The WSJ gets it, in today’s editorial:
The thing about a recession is that the official definition sucks.
A recession is over when the economy is at its absolute worst. That’s the definition. When the economy has fallen so far that it can’t fall anymore, the recession is over.
This is also how the recession can be pushed back heavily into the Bush era: the recession begins when the economy is at its best.
It’s Garbage in, garbage out economics. It means nothing to the real world.
Ending Obanomics will, temporarily, mean a greater recession. But we can’t avoid it – Obanomics must and will end with a greater recession, one way or another – so we may as well get it over with.
Maybe, maybe not.
It is probable that the vast amount of “stimulus” money that Obama spent is actually translating into some amount of goods and services, which means that cutting it off would thus take that out of the economy and cause some downward pressure.
But I tend to be far more of the mind that all the “stimulus” did in terms of the private market was to provide inflated price support for “green” vaporware (Solyndra) and housing; the vast and overwhelming bulk of what the “stimulus” did was to prevent local, state, and Federal agencies from having to downsize.
Normally, something that causes unemployment, i.e. all those local, state, and Federal workers being told to take a hike, would be bad for the economy since it would theoretically take household income out of it. But when one thinks of it, every penny that a government worker is paid comes out of someone else’s household income, so removing that government worker does not in fact really remove value from the economy; at worst, it’s a neutral transaction, and at best, it keeps money in the private market.
This is basic workforce management. Companies regularly do this sort of evaluation of whether or not positions are a value-add; that is, by having them around, do you either a) grow the company revenue or b) reduce the company’s expenses? If the answer is no, you remove the position; even though you’re removing someone who is providing you work, you don’t need the work they are providing.
The thing is, you’re dealing with Barack Obama and his acolytes like Levi, who think every inch of government is a “value-add”. This is why Obama’s lies about “waste” in government are so transparently obvious; he is not capable of eliminating waste in government because he is not capable of deeming any government position as wasteful.
This is critical to understanding liberal thought processes. Liberals do not see any difference whatsoever between handing out checks to a crack addict and providing tax incentives to business. In their minds, the end product is exactly the same and has the same value to society. They blather on about “human capital”, but they honestly believe that a crack addict has exactly the same “human capital” value as a trained engineer. Hence their insistence that it’s “unfair” that the crack addict doesn’t make as much as the engineer: they can’t tell the difference between the two.
This is also the crux of the issue over gay marriage. Liberals (including the vast and overwhelming majority of gay and lesbian people) have actually convinced themselves that there is no difference in value to society between an opposite-sex and same-sex relationship. They talk about how necessary children are, how important it is that children be supported, how children are our future, etc. — but then insist that the relationship that has been proven to be best at producing and supporting children is no better than any other. It’s a function of the fact that they see absolutely no difference in value to society between a stable loving two-parent opposite-sex household producing and raising their own children and two barebacking gays whose “marriage” consists of occasionally sleeping in the same bed and demanding the tax advantage.
Fair points.
It’s true. Nancy Pelosi insisted a few months back that government spending for poor people (which would have to include crack addicts) is the best stimulus.
I’ve noticed in discussion with many lefties, that they haven’t a clue how wealth is created – they think it’s just there, for them to “distribute” – and that they have a constant underlying assumption that, if one person has more than another, some kind of crime (corruption or some other injustice) had to be involved.
No, the difference is the crack addict is more likely to vote for them. Taking things away from people who won’t (or can’t) vote for you and giving them to people who will has been the founding principle of the Democrat party ever since Andrew Jackson confiscated land from Indians (non-voters) and gave it to white settlers (voters).
Obamanomics needs to have a stake put in its heart, decapitated & buried for the monster it is; otherwise, unemployment will grow. However, I think Obama wants this since he thinks dependancy on the Big feral Government beast will give him an automatic constituency. Obama is wrong in his thesis. Otherwise, Jimmy Carter would have gotten a second term in 1980.