Now that the advance GDP growth number for the first quarter has come in lower than expected, the White House is trotting out their favorite excuse for a slow economy: not enough government spending.
Cue the soundtrack blaming the rich- and bin Laden.
If Obama could only dispatch the rich with the same resolution he bare-handedly killed Osama bin Laden, man, GDP sure would grow then, huh?
These are probably the same distractions the administration will use next month when they revise downward the first quarter GDP number to 1.9 percent from the disappointing 2.2 percent advance that was reported Friday by the Commerce Department.
The newest GDP numbers have confirmed what the poor numbers in the job market have been telling us: This is a weak economy, not able to create jobs, despite a great deal of available money.
That’s one reason why we see spurts of economic activity.
The money is there, but the confidence is lacking.
Fourth quarter GDP grew at an annualized rate of around 3 percent. And the slowdown since then is leading some economists to question the government’s numbers on the employment front too.
“Although the economy continued to expand in the first quarter, the GDP data at face value are disappointing but also puzzling,” said John Ryding and Conrad DeQuadros of RDQ Economics reports CBSMarketWatch. “Private sector hours worked rose 3.7% in the first quarter — what were these workers producing? The unemployment rate fell from 8.5% in December to 8.2% in March — how can this be if the economy was only growing at around its potential rate?”
Obviously the Commerce Department doesn’t talk to the Bureau of Labor Statistics, the government brain trust responsible for the magical- and only mathematical- drop in unemployment over the last several months. And don’t worry: no humans were actually employed in the creation of the declining unemployment report.
Recommended
Economists, and the unbeguiled, wonder how unemployment can be going down in an economy that is slowing down
The head of the White House Council of Economic Advisers, Alan Krueger, Class Warrior, said on his blog that reduced government spending created the drag on the economy. It’s worth noting that federal, state and local government spending slowed down more in the fourth quarter of 2011 than it did in the first quarter of 2012.
Because in reality, the data shows that as government ratchets down spending, that the private side of the economy can fill the gap quite adequately.
It just won’t while Obama is president.
"If only the private sector components of GDP are considered, GDP grew by 3.5 percent," Krueger wrote according to Politico.
Yeah and if solar power was economically viable, unicorns wouldn’t be extinct.
When government spending makes up a smaller part of our GDP, private investment then can grow the country’s GDP by much closer to the 3.5 percent private economy number Krueger cites than the 2.2 percent number Obama has created.
But the White House under the leadership of Both Ways Barry continues to play it both ways.
When things are bad, he blames reduced government spending; when things are good, he blames reduced government spending.
And no; that’s not a typo. Blame is all he’s got.
Obama has nothing to offer us but blood, toil, sweat and blame.
Because while consumers have done the real heavy lifting economically that the government under Obama has been so terrible at, that can’t last forever.
Americans are dipping into savings to keep spending alive.
“It is clear that the rise in consumption was driven by a decline in savings; the personal saving rate dropped to 3.9% from 4.5%, the lowest since 2007,” said Neil Dutta, from Bank of America Merrill Lynch. “Meanwhile, real disposable income rose just 0.4% despite the improvement in employment. Lower savings plus weak income is not a favorable combination for the consumption outlook.”
More worrisome is that demand domestically is still below pre-recession figures: “And final sales to domestic purchasers (what Americans — not foreigners — bought),” notes Rex Nutting, of CBSMarketWatch “are still below pre-recession levels.”
The real game, then, is to get business investment going again.
“Strip away the inventory growth,” writes Rex Nutting, “and final sales in the economy increased 1.6%, the fourth quarter in the past five that was below 2%. Although all the headlines report on the GDP numbers, the number to watch is final sales, because that gauges demand for our products, not merely how much we made.”
Businesses frankly don’t want to part with much cash now because they are frightened by the regulatory, legislative, political, electoral and constitutional excesses of the Obama administration, especially if there is a second term for him.
As he told his Russian counterpart president Medvedev: “This is my last election. After my election I have more flexibility.”
And that worries the heck out business.
“Measures of profits are well above their pre-recession peaks,” said Scott Hoyt, senior director of consumer economics at Moody’s Analytics according to the Washington Post. “Businesses are flush right now, but they are very scared. They are hoarding their cash rather than distributing it in hiring, investment or giving it to shareholders.”
And that won’t change until after the first Tuesday after the first Monday in November.
November of 2012 or 2016 remains to be seen.
"Like" me on Facebook and you'll get sneak peaks of columns and, as an added bonus, I will never raise your taxes. Send me email and I just might mention you on Sunday.
Join the conversation as a VIP Member