Breaking … WSJ Discovers Lack of Demand is behind Weak U.S. Economy

Via Andrew Leonard at Salon, the Wall Street Journal today reported the results of a survey they conducted with 53 economists:

In the survey, conducted July 8-13 and released Monday, 53 economists—not all of whom answer every question—were asked the main reason employers aren’t hiring more readily. Of the 51 who responded to the question, 31 cited lack of demand (65%) and 14 (27%) cited uncertainty about government policy. The others said hiring overseas was more appealing.

Only the conservative WSJ, the President, and Congresss could be surprised by these results. I’m not sure who these 53 economists were, but I think they must have been rather conservative, because the survey found that most did not think the government should do anything more to stimulate the economy.

Despite their forecasts for slow growth and an elevated unemployment rate, the economists aren’t in favor of further action either by the Fed or the federal government. Forty-one economists in the WSJ survey said the central bank shouldn’t pursue another round of bond-buying aimed at reducing interest rates, and thirty-eight said another round of fiscal stimulus shouldn’t be a part of any deficit-reduction package.

Economists added that they hope that as conditions begin to improve, albeit slowly, consumers will become more optimistic. “For whatever reasons, in addition to discrete headwinds, I think we’ve taken a hit to animal spirits and as those headwinds fade sentiment will revive,” said Stephen Stanley of Pierpont Securities. “Optimism can be self-sustaining, but pessimism can also provide a persistent drag.”

If any of the economists the WSJ talked to mentioned the possibility that the government itself could create jobs and thus stimulate demand–as FDR did the last time things were this bad, the WSJ did not report it.

Andrew Leonard crows:

what could be more obvious, even in the absence of rigorous training in economics? In the absence of demand, businesses will refrain from ramping up production and adding staff — no matter what employers think about the future regulatory climate. To prime this pump, to rev up this engine, to get the “delicate machine” working properly, the first focus for economic policymakers should be figuring out ways to boost demand.

Wouldn’t the best way to do that be to create jobs? Even Andrew Leonard doesn’t mention that. It seems ass-backwards to me to talk about getting consumers to spend more in order to get companies to start hiring. How can consumers spend more when many of them are unemployed? Maybe Dakinikat can explain this to me.

Anyway, it’s pretty amazing that the WSJ is admitting we have a demand problem. Now if only they could convince President Obama…