Next Strategy: Declare Victory, Go HomePosted: July 2, 2009
(kinda graphic video, you’ve been warned)
The economy just won’t drink the koolaid and behave. I wonder if that old Mission Accomplished banner is still lying around the White House basement ? After all, white house economics adviser Christina Romer, via the FT says she’s “upbeat on economy.” So, who do I believe: the Obama administration or my lying economist eyes?
The US economy will feel a substantial boost from the Obama administration’s emergency spending package over the next few months,says Christina Romer, a senior White House official, who has warned against tightening monetary and fiscal policy before recovery is well established.
Ms Romer, chairman of the US president’s council of economic advisers, told the Financial Times in an interview she was “more optimistic” that the economy was close to stabilisation.
But while hopeful that America could yet experience a V-shaped recovery, she said it was much too soon to begin tightening policy: “We do not want to repeat the mistake Japan made in the 1990s, when the moment things started to improve they tightened policy.”
Meanwhile, David Axelrod, a senior White House adviser, told NBC Television yesterday the administration would be open to further stimulus if needed. “Let’s see in the fall where we are, but right now we believe what we have done is adequate to the task. If more is needed, we’ll have that discussion.”
Ms Romer’s comments come as opposition Republicans step up their attacks on the $787bn fiscal stimulus, pointing out that it has not prevented unemployment from hitting a quarter-century high of 9.4 per cent.
Ms Romer said stimulus spending was “going to ramp up strongly through the summer and the fall”.
“We always knew we were not going to get all that much fiscal impact during the first five to six months. The big impact starts to hit from about now onwards,” she said.
Calculated Risk must not see what Christine sees in the numbers. If you still are in the dark as to how exactly bad the employment situation is, go check out their graphs. You can also follow my lying eyes over to the Washington Post where the headline and Neil Irwin’s headline: 467K Jobs Cut in June; Jobless Rate at 26-Year High. Come on guys!!! Drink koolaid or DIE!!!!
Employers kept slashing jobs at a furious pace in June as the unemployment rate edged ever closer to double-digit levels, undermining signs of progress in the economy, and making clear that the job market remains in terrible shape.
Wages, meanwhile, were little changed, with average weekly pay for non-managerial workers falling to $609.37, from $609.51. With many people losing their jobs, and those who remain at work making less money, American consumers will be hard-pressed to increase their spending later in the year, despite higher confidence and rising wealth through the stock market.
So, I know the job market always lags the economy, but please Christina, look at the last paragraph. Let’s go to the NY Times. Here’s their nifty little graphic and here’s some of their reality-based commentary.
The losses for June brought the tally of jobs shed since the beginning of the recession to 6.5 million — a figure equivalent to the net job gains over the previous nine years.
“This is the only recession since the Great Depression to wipe out all jobs growth from the previous business cycle,” Heidi Shierholz, an economist at the labor-oriented Economic Policy Institute in Washington, said in a research note. She called this fact “a devastating benchmark for the workers of this country and a testament to both the enormity of the current crisis and to the extreme weakness of jobs growth from 2000 to 2007.”
Let me just say, that when 70% of the GDP of a country depends on household spending, none of this is good news. But hey, the koolaid club just keeps on spinning right here in the same NY Times article.
“We’re seeing a kind of leveling off here,” Labor Secretary Hilda L. Solis said in an interview. “We would have done much worse had we not put the recovery plan in place.”
Early this year, the administration projected that the unemployment rate would peak near 8 percent with the stimulus in place. With joblessness already well above that target, some economists are arguing for another dose of government spending — a call Ms. Solis dismissed as premature. Much of the spending is still in the pipeline and trickling out slowly into the economy, particularly in construction projects that require government permits and planning, she said.
In offering the slow pace of stimulus spending as a partial explanation for higher unemployment, Ms. Solis effectively echoed the criticism that some leveled at the spending package when it was devised: that many of the projects would take too long to have their intended effect.
But Ms. Solis expressed assurances that the program was proceeding according to the administration’s plans.
“We’re making progress,” she said.
What are they on over there? Look at the Calculated Risk Graphs. (Ones that I’ve put up here before but are still being updated in a progressively negative direction.) Those graphs put this downturn into the perspective of all the last downturns since World War 2. Even a petulant clown with fear of numbers can’t miss the trend! This isn’t progress unless you call minusculely less down progress! I’m not seeing any turning points!
The next move has to be for them to declare victory in the rose garden or send us all koolaid with our unemployment checks. Do they really think we are all this dumb?
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