It’s still the Economy, and Jobs, and the stupid Bush Tax CutsPosted: May 26, 2011
If you do not take a path different from the path that wrecked the economy, the economy will not improve. So, why–for the umpteenth time since I started this blog 3 years ago–do I find myself writing on the same economic dynamics? Wasn’t there supposed to be a game changing election in there somewhere?
First, we just got the news that jobless claims are up. The new twist is that corporate profits are down. It had to happen sooner or later. There are only so many profits you can wring out of your business by ‘austerity’ measures like lay offs and not ordering as many office supplies. It’s obvious the ‘Economy is still Struggling’.
Unexpectedly weak consumer spending kept the economy stuck in a slow growth gear in the first quarter and would likely struggle to regain speed amid signs of a slowdown in the pace of job creation.
Data on Thursday showed the economy expanded at an unrevised 1.8 percent annual rate in the first three months of this year, while the number of Americans claiming unemployment benefits unexpectedly rose 10,000 to 424,000 last week.
The rise in jobless claims and the weakness in first-quarter consumer spending, which offset upward revisions to business inventories and investment, set the tone for more lackluster growth this current quarter.
Some businesses were surprised by the weak consumer spending. Their CEOs need to get out of their offices and country clubs and go see how the other 99 percent lives. Our wealth is down because our house values keep falling. We’ve lost at least 2-3 years of returns in our investments and pensions and many folks still haven’t recovered their pre-recession balance. Gas prices and food prices are taking larger percentages of folks’ budgets. The very rich are the only ones that can really fling the bucks around at this point and they can go anywhere they want to do that. They’re not stuck with the offerings at the local strip mall. We ignore the sluggish labor markets at our own peril.
Business investment–the smallest contributor to the GDP–was up and Government spending was down. Exports looked better than expected but they are still a very small part of our economy these days. This is now the seventh straight week that jobless claims were above the 400,000 mark. What is even more remarkable is that the BLS could not name any factor that could be an outlier contributing to this persistent trend.
Meanwhile, the conversation in Washington DC continues to be the Ryan budget and Medicare. The U.S. Senate voted down the Ryan budget I was amused by Karl Rove’s WSJ op-ed today that explained that folks would like their plan if it was just put into a populist message. I guess when you’ve got people buying into such nonsense as decreasing taxes raises tax revenues you get to thinking that you can sell them anything with the right spin on it. However, George Bush and the Republican Party own the Deficit. Their cronies should be the ones to pay it down.
The nonpartisan Center on Budget and Policy Priorities has updated research that projects nearly half of public debt in 2019 will be attributable to President George W. Bush’s tax cuts plus the ongoing wars in Iraq and Afghanistan. The tax cuts left the American treasury particularly vulnerable when the financial crisis hit, the CBPP reports: “The events and policies that pushed deficits to these high levels in the near term were, for the most part, not of President Obama’s making. If not for the Bush tax cuts, the deficit-financed wars in Iraq and Afghanistan, and the effects of the worst recession since the Great Depression (including the cost of policymakers’ actions to combat it), we would not be facing these huge deficits in the near term.”
It simply baffles me that we can’t even get the most stalwart Democratic politicians to pay attention to the miserable jobs market. It’s two years into a Democratic administration. Where is the will to put America back to work?