posted July 30, 2011 10:36 AM            

Obamanomics: Economy Flat, Going Nowhere Fast; Updated: Obamacare Stalled Recovery
Posted on July 29 2011
Doug Brady

More hope and change in the Age of Obama. The Bureau of Economic Analysis (BEA) released their advance estimate of 2nd quarter U.S. economic growth today. Via CNBC:

The U.S. economy grew less than expected in the second quarter as consumer spending barely rose, and growth braked sharply in the prior quarter, a government report showed on Friday.

Growth in gross domestic product—a measure of all goods and services produced within U.S. borders—rose at a 1.3 percent annual rate, the Commerce Department said.
Also noteworthy, the BEA the significantly revised their growth estimates down for the 4th quarter of 2010 and the first quarter of 2011:

First-quarter output was sharply revised down to a 0.4 percent pace from 1.9 percent.

In addition, fourth-quarter growth was revised down to a 2.3 percent pace from 3.1 percent, indicating that the economy had already started slowing before the high gasoline prices and supply chain disruptions from Japan hit.

While the BEA always revises their estimates as time passes and more complete data is compiled and assessed, these revisions are nevertheless startling. Essentially the economy is at a standstill. Pathetic GDP numbers like these will do nothing to improve the employment outlook, as sustained growth rates in the neighborhood of 2.5 – 3% are necessary just for the economy to tread water in terms of the unemployment rate when you factor in the demographic realities of a growing labor force. Higher sustained growth rates than that are required for the unemployment rate to come down.

Governor Palin has often noted that we know what to do to grow the economy and restore jobs, and President Reagan provides the blueprint. Obama, of course, blames everything on Bush and still tries to claim that he inherited a bad economy. Fair enough on the later: He did inherit a bad economy. However, it was certainly no worse than the mess Reagan inherited from Jimmy Carter. Indeed by any objective measure, what Reagan began with was far worse as the following chart, produced by Mark Perry of the American Enterprise Institute, makes clear:

In any event, I created the helpful table below to compare the first eight quarters of the Reagan Recovery to the first eight quarters of the Obama Recovery (if you want to call it a “recovery”, that is) in terms of real quarterly GDP growth and the average quarterly unemployment rate:

Quarter Reagan (R) (GDP Growth) Obama (O) (GDP Growth) Reagan (R)(Avg. Unemp. Rate) Obama (O)(Avg. Unemp. Rate)
......(R).....(O)......(R).....(O)
1st 5.1% 1.7% 10.4% 9.7%
2nd 9.3% 3.8% 10.1% 10.0%
3rd 8.1% 3.9% 9.4% 9.7%
4th 8.5% 3.8% 8.5% 9.6%
5th 8.0% 2.5% 7.9% 9.6%
6th 7.1% 2.3% 7.4% 9.6%
7th 3.9% 0.4% 7.4% 8.9%
8th 3.3% 1.3% 7.3% 9.1%

See if you can spot the differences. There are several points of interest for me. First, Reagan really did have a deeper hole to dig out from, as Mark Perry’s chart above demonstrates. Second, the Reagan tax cuts were quite a bit more effective at producing economic growth than Obama’s hopey changey Porkulus and Obamacare boondoggles. (Yes, in addition to his claim that Obamacare was a deficit reduction program, Obama also claimed it was essential to repairing the economy or something.) Third, despite Obama’s asinine claim that Obamacare was a “jobs program” and a key to lowering the unemployment rate (don’t tell these guys), it turns out the the real key to lowering the unemployment rate is a growing economy. Who knew?

Reagan certainly did, and that’s why the differences between the Reagan Recovery and the Obama Recovery are so stark. Governor Palin also knows, and that’s why she has frequently said, paraphrasing, that though the solutions may be difficult, they’re also remarkably simple, provided we have a leader with the common sense and experience to follow the time-tested solutions Reagan did. In 2013, the next president will inherit a Jimmy Carter like mess…or worse. The good news is that we know how to fix it, and Governor Palin has consistently demonstrated that she understands this better than any candidate or potential candidate out there. So, in the meantime, as Obama’s poll numbers continue to sink to Carteresque levels , it may be useful to to familiarize yourself with some of the quaint, 1970s era vernacular like “economic malaise” and ”misery index”. It can’t hurt and could even be a valuable conversation starter at a party. Who knows.

Update: (h/t TT) A superb piece from James Sherk at the Heritage Foundation illustrates just how much a drag on hiring and the overall economy Obamacare is. You really need to read the entire artical but here are a couple key quotes:

Within two months of the passage of Obamacare, the job market stopped improving. This suggests that businesses are not exaggerating when they tell pollsters that the new health care law is holding back hiring. The law significantly raises business costs and creates considerable uncertainty about the future. To encourage hiring, Congress should repeal Obamacare.

posted July 30, 2011 10:53 AM              

we have been here before, jwhop. it is not any one person or president's fault but you could say TYPICAL in the cyclical pattern we have followed since colonial times.

posted July 30, 2011 11:11 AM              

owes $117K in back child support (which he is fighting in court) for his children about whom he cares SO much...and when his wife's lawyer asked the court to suspend his driver's license (as happens to other child-support dodgers) he whined "have you no decency???"

posted July 30, 2011 11:32 AM            

Republicans have seen this movie before. When Reagan made a deal with Tip O'Neill it was One ($1) of tax increases for every 3 ($3) of decreased spending.

demoscats reneged on the deal and we got 3 dollars of increased spending instead 3 dollars of spending reductions.

demoscats pulled the same stunt on George H.W. Bush and it cost Bush re-election.

So, those Reagan budget deficits leftists like to whine about occured as a direct result of demoscat lying and increased spending.

It's obvious to me that you didn't look at the charts. If you had, you would have seen that the circumstances Reagan inherited from Carter were orders of magnitude worse than what O'Bomber inherited.

You would also have seen that Reagan produced stellar results with the economy during the first 8 quarters and O'Bomber has America's economy flat on it's back.

posted July 30, 2011 06:15 PM            

The fact is that O'Bomber increased federal spending about 25% in only 2 years.

posted July 30, 2011 07:23 PM              

the fact remains jwhop that democrats have been around during ups and downs, just as republicans have. but history builds on the past, and tends to be cyclical. as my father in law once confessed to me, his good fortune was first and foremost to be BORN AT THE RIGHT TIME to make hay...others are not so blessed.

posted July 30, 2011 09:07 PM            

How do you spell reality?

posted July 30, 2011 10:27 PM            

I've already pointed out to you that there is no spending for defense on the O'Bomber side of the chart.

That's enough to discredit the chart for any rational person.

posted July 30, 2011 10:47 PM            

at the top you will notice __as well__ the small bit of savings on the Obama side.

posted August 01, 2011 05:59 PM            

As a member of House of Representatives, Ohio Gov. John Kasich chaired a budget finance committee in the 1990s when Congress achieved a bi-partisan deal to balance the federal budget under former Democratic President Bill Clinton.

So, the Republican governor has become somewhat of a go-to historian lately for national media outlets reporting on the budget debate and stalemate over the debt ceiling.

The governor appeared July 17, 2011, on "Meet the Press" as part of a panel discussion that also included National Urban League president Marc Morial, economist Diane Swonk, Honeywell CEO David Cote and CNBC’s David Faber.

Host David Gregory set up part of the discussion with a Wall Street Journal article which rattled off a number of dejecting economic statistics and said that consumer spending has been decimated.

Faber concurred, saying that the United States has a consumer-led economy and consumers just aren’t willing to spend right now.

Cote noted that businesses like his are reluctant to increase production which could in turn create more jobs until they are sure there is demand for their products from consumers.

Then Kasich chimed in.

"Believe it or not, consumer spending is up over the last eight months, OK?" he said.

Swonk, the economist, acknowledged Kasich’s point.

The governor then went on to suggest that business has been slow to grow and add jobs because government has left too much uncertainty hanging in the balance in way of potential increases regulations or business taxes.

Sounds fair enough but is he right about consumer spending?

PolitiFact Ohio consulted the U.S. Department of Commerce’s Bureau of Economic Analysis which charts spending trends.

The most recent information shows that disposal personal income -- meaning money Americans had available to spend after paying typical taxes -- was indeed up eight straight months from September 2010 thru May 2011. June figures were not yet available.

And the personal consumption expenditures -- money spent after taxes and typical living expenses -- were up 11 straight months from June 2010 through May 2011.

PolitiFact Ohio also thought it would be wise to ask a few economists, people who study the ins and outs and make projections about this stuff everyday, to give the rise in consumer spending some perspective.

Dean Baker, a co-director at the Center for Economic and Policy Research in Washington, said Kasich is right, but added a caveat.

"I would just point that this is an extremely low bar. Consumer spending measured in nominal dollars is almost always rising, except in a severe recession," Baker said. "So, saying that consumer spending is up over the last eight months isn’t too different from saying it is warmer in July than January. We pretty much always expect that to be true."

Baker said the rate of growth adjusted for inflation is a better factor for determining consumer spending is really growing to any worthwhile degree.

Gary Burtless, a senior fellow at the Brookings Institution and a former economist with the U.S. Department of Labor, offered another significant measure -- comparing consumer spending in a given month compared to the same month one year earlier.

Look at the figures that way, and Kasich looks golden again as year-to-year consumer spending has been up for over a year.

And he agreed that the rate of grown adjusted for inflation was also a good measure. When seasonally adjusted for inflation, Burtless said that consumer spending actually fell slightly, by one-tenth of a percentage point in two months, April and May.

Kasich is correct, though, that consumer spending, measured in inflation-adjusted dollars, has been risen overall the past eight months.

In fact, the year-over-year spending comparison shows that real consumer spending has been higher than the year ago amount since December 2009.

posted August 03, 2011 02:14 PM            

Say WHAT politifact and acoustic??

Americans cut spending for first time in 20 months
By MARTIN CRUTSINGER - AP Economics Writer

WASHINGTON (AP) — Americans cut their spending in June for the first time in nearly two years after seeing their incomes grow by the smallest amount in nine months. The latest data offered a troubling sign for an economy that is adding few jobs and barely growing.

Consumer spending dropped 0.2 percent in June, the Commerce Department said Tuesday. It was the first decline since September 2009.

Some of the decline was the result of food and energy prices moderating after sharp increases earlier this year. When excluding spending on those items, consumer spending was flat.

Still, consumers also cut back on big-ticket items, such as cars and appliances, which help drive growth.

Incomes rose 0.1 percent, the smallest gain since September. Many people are also pocketing more of their paychecks. The personal savings rate rose to 5.4 percent of after-tax incomes, the highest level since August 2010.

The data confirmed last week's report that showed the economy expanded at an annual rate of just 1.3 percent in the spring after only 0.4 percent growth in the first three months of the year. It also highlighted that consumer spending softened at the end of the April-June quarter, which could mean the sluggish economy is worsening.

Stocks fell after the report was released. The Dow Jones industrial average dropped more than 100 points in morning trading. Broader indexes also declined.

"The recent run of weak economic news has made us more concerned that any rebound will be more modest than previously looked likely," said Paul Dales, senior U.S. economist at Capital Economics.

High gas prices and unemployment have squeezed household budgets this spring. Many Americans are cutting back on purchases of cars, furniture, appliances and electronics. Consumer spending is closely watched because it accounts for 70 percent of economic activity.

Employers have responded by reducing hiring. The economy added just 18,000 net jobs in June, the fewest in nine months. The unemployment rate rose to 9.2 percent, the highest level this year.

The government issues its July employment report on Friday.

Businesses are creating fewer jobs despite reporting strong earnings and sitting on large cash reserves.

"What worries me is that businesses are deriving their strong earnings growth through productivity gains, limited wage increases and foreign activities," said Joel Naroff of Naroff Economic Advisors. "While that may be good for an individual firm, when most companies do that, income gains become so limited that spending and ultimately growth fades. That is the problem we are now facing."

The biggest drop in spending occurred in such items as food and gasoline. Spending on such non-durable goods fell 5.5 percent, reflecting price declines after spikes early this year. An inflation gauge tied to consumer spending dropped 0.2 percent in June, the biggest one-month decline since September 2009. Outside of food and energy, prices were up 0.1 percent.

Still, spending on durable goods, such as autos, also fell in June 1.1 percent. One reason for the decline may be the shortage of popular car models in showrooms.***note, no one wants the O'Bombermobile death traps Detroit is producing** Supply chain disruptions caused by the March earthquake in Japan have limited production of auto and electronic parts.

Many analysts are still hopeful that growth will rebound in the second half of the year. They expect auto production and sales to pick up once supply chain disruptions ease.

But the turnaround may not come for a while. Manufacturers had their weakest growth in two years in July, according to the Institute for Supply Management.

And gas prices remain high, even after coming down from their peak of nearly $4 a gallon in early May. The average price for a gallon was $3.70 on Tuesday — 14 cents higher than a month ago and almost a dollar more than the same month last year.

posted August 03, 2011 05:59 PM              

not just our consumer joe but the WHOLE WORLD has been ******** bricks with the kabuki performance going on in washington of late.

posted August 04, 2011 11:49 PM            

It's his corporate buds...like GE CEO Jeffery Immelt...O'Bomber's Jobs Advisor, which didn't pay a penny of Income Tax on all that American business.

posted January 06, 2012 01:05 PM            

..WASHINGTON (AP) — A burst of hiring in December pushed the U.S. unemployment rate to its lowest level in nearly three years, giving the economy a boost at the end of 2011.

The Labor Department said Friday that employers added a net 200,000 jobs last month and the unemployment rate fell to 8.5 percent, the lowest since February 2009. The rate has dropped for four straight months.

The hiring gains cap a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hasn't happened since April 2006.

The steady drop is a positive sign for President Barack Obama, who is bound to face voters with the highest unemployment rate of any sitting president since World War II. Unemployment was 7.8 percent when Obama took office in January 2009.

Still, the level may matter less to his re-election chances if the rate continues to fall. History suggests that presidents' re-election prospects hinge less on the unemployment rate itself than on the rate's direction during the year or two before Election Day.

For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9 percent last year, down from 9.6 percent the previous year.

Economists forecast that the job gains will top 2.1 million this year.

The December report painted a picture of a broadly improving job market. Average hourly pay rose, providing consumers with more income to spend. The average work week lengthened, a sign that business is picking up and companies may soon need more workers. And hiring was strong across almost all major industries.

Manufacturing added 23,000 jobs. Transportation and warehousing added 50,000 jobs. Retailers added 28,000 jobs. Even the beleaguered construction industry added 17,000 workers.

A more robust hiring market coincides with other positive data that show the economy ended the year with some momentum.

Weekly applications for unemployment benefits have fallen to levels last seen more than three years ago. Holiday sales were solid. And November and December were the strongest months of 2011 for U.S. auto sales.

Many businesses say they are ready to step up hiring in early 2012 after seeing stronger consumer confidence and greater demand for their products.
http://news.yahoo.com/unemployment-rate-falls-lowest-nearly-3-years-133550210.html

posted January 06, 2012 01:17 PM            

By Rick Newman | US News – 2 hrs 6 mins ago..

Could President Obama be a "job creator"?

That buzzphrase has been the Republicans' way of referring to business owners who are supposedly hamstrung by overregulation and outdated economic policies that Obama has pursued over the last three years, including the controversial stimulus program from 2009. Obama himself is a "job killer" in the argot of leading Republicans like Mitt Romney and John Boehner. But Obama may have some persuasive facts at hand to help refute that claim come Election Day.

[See 11 companies on the edge in 2012.]

The latest unemployment report was modestly better than expected, with 200,000 new jobs added to the economy and a slight drop in the unemployment rate, to 8.5 percent. For once there was no need for caveats explaining that the seemingly good news actually masked more troubling signs deeper in the numbers. The economy has now added jobs every month since September 2010, and the pace of job gains appears to be accelerating. After many fits and starts, in other words, the economy may finally be strengthening in earnest.

There's almost no plausible scenario in which an Obama re-election in November would be a shoe-in. The unemployment rate on Election Day will probably still be above 8 percent, which would make Obama, if re-elected, the only president since the Depression to win a second term with such a high jobless rate. Housing will still be a mess and many middle-class Americans will feel they're worse off than they were four years earlier.

But if current trends continue, Obama will have some upbeat news to run on. The economy has already added about 2.7 million jobs since employment bottomed out at the beginning of 2010. If the economy keeps adding 200,000 jobs per month, on average, it would mean another 2 million new jobs by the time Election Day rolls around. That would allow Obama to say--accurately--that under his stewardship, the economy has added nearly 5 million new jobs over the last two years.

That could all happen with the unemployment rate going up, not down, as discouraged workers who had given up finding a job re-enter the workforce, creating a bigger pool of people technically counted as unemployed. Conventional wisdom holds that no president can get re-elected with such a high unemployment rate, no matter what else is happening. But this could be yet another rule of thumb proven obsolete by the dramatically changing economy.

Voters on Election Day will probably be much more influenced by whether they feel their own fortunes are improving than they will by the number that represents the unemployment rate. When Ronald Reagan got re-elected in 1984, the unemployment rate was 7.2 percent, then a record-high for a post-Depression president winning a second term. But the economy had been adding jobs for 20 straight months at that point, which created a tangible sense of things getting better. If the current string of job gains continues, Obama will have 26 straight months of job gains behind him, besting Reagan's run.

There's still a lot that could go wrong for Obama. Many economists expect a pullback in consumer spending in 2012, because spending in 2011 rose faster than income, which means shoppers used their credit cards more and drew down their savings. As they become more frugal in 2012, that's likely to slow the overall economy. A financial meltdown in Europe remains possible and could throw the U.S. economy back into recession. A showdown with Iran could cause an oil spike that pushes gas prices above $4 per gallon. And unforeseen shocks are always a possibility.

posted January 06, 2012 02:09 PM            

quote:

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That could all happen with the unemployment rate going up, not down, as discouraged workers who had given up finding a job re-enter the workforce, creating a bigger pool of people technically counted as unemployed. Conventional wisdom holds that no president can get re-elected with such a high unemployment rate, no matter what else is happening. But this could be yet another rule of thumb proven obsolete by the dramatically changing economy.

---

And I do believe it is the "discouraged workers who have given up finding a job " that accounts for the decline .