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When recessions end, as they always do, economies recover. Yet today's bipartisan gloom does not welcome improving economic data.
Republicans believe that acknowledging any good economic news must somehow give credit to President Obama's penchant for deficit spending. Democrats believe that disregarding or downplaying favorable economic news provides an argument for even more deficit spending — an economic theory that could be labeled the Grecian Formula.
For dismal politicians and dreary pundits, recent economic news has been terribly embarrassing. Retail sales rose by 7.6% over the past year, and by 1.6% in March alone. Housing starts were also up 1.6% in March, and 20.2% from a year ago. Industrial production increased at a 7.8% annual rate in the first quarter, with the March figure up 6% from last June. The Conference Board's leading economic indicators rose 1.4% in March and 5.6% over the past six months.
When facts are so uncooperative, some seek refuge in theory. Former Labor Secretary Robert Reich, in a recent Wall Street Journal op-ed, argued that the recent good news is flatly impossible:
"The approaching recovery," he wrote, "will be tepid because so many people will lack the money needed to buy all the goods and services the economy can produce. ... Given how many Americans are unemployed or underemployed, it's hard to see where we get sufficient demand to support a vigorous recovery."
That demand-side logic has a big problem: If high unemployment prevented vigorous recovery, then no economy in world history could ever have experienced a vigorous rebound from a deep recession. But that's not true. Aside from numerous "economic miracles" abroad, there were at least two here at home.
In 1982, the unemployment rate hit 10.8% and averaged 9.7% all year. Yet the economy nonetheless grew by 4.5% in 1983, 7.2% in 1984 and continued growing at a 4.3% pace for seven years.
In 1933, the unemployment rate was 25.2%. Yet the economy grew by 10.9% in 1934, 8.9% in 1935, and 13% in 1936. According to Reich's Keynesian musings, what happened in 1983-89 and 1934-36 was inconceivable.
Reich says: "Some economic cheerleaders say rising stock prices are making consumers feel wealthier and therefore readier to spend. But most Americans' biggest asset is their homes. The 'wealth effect' is felt mainly by the richest 10%, whose net worth is largely stocks and bonds. The top 10% accounted for about half of total national income in 2007.
By signing health reform into law, President Obama has launched the most sweeping expansion of federal control of Americans' access to medical services in decades. Republicans charge that the reform package grants the federal government too much power over our health choices. They're right — ...
While President Obama assails the culture of greed and recklessness practiced by the men of Goldman Sachs, his administration is infested with them. The White House can no more disown Government Sachs than Da Boss in chief can disown Chicago politics. Obama headed to Wall Street Thursday to demand ...
Current American relations with our once-staunch ally Israel are at their lowest ebb in the last 50 years. The Obama administration seems as angry at the building of Jewish apartments in Jerusalem as it is intent on reaching out to Iran and Syria, Israel's mortal enemies. President Obama himself, ...
We cannot restore confidence in our economy unless we fully address the root causes of the financial crisis and take definitive steps to ensure that taxpayers are never again forced to pick up the tab for bad bets on Wall Street. The legislation President Obama is promoting, however, does neither ...
According to the Tax Policy Center, a Washington, D.C., research organization, nearly half of U.S. households will pay no federal income taxes for 2009. That's up from the Tax Foundation's 2006 estimate that 41% of the American population, or 121 million Americans, were completely outside the ...
Posted By: ajmc(1085) on 4/26/2010 | 7:58 PM ET
7 months until the general election, do you really trust this regime not to do everything in its power to ram its idiotology through while it has the numbers to do so? When JN published the DHS's Domestic Terrorist profile in 2009, that wasn't to identify potential terrorists, it was the regime's manifesto outlining what it is against & what it fears. One needs to think like a profiler (not Pro-Lifer) to realize what the regime is up to. It has moved past elections and 'playing by the rules.'
Posted By: ajmc(1085) on 4/26/2010 | 7:52 PM ET
being subjected to by this regime, we face obstacles that alter the playing field. With the mushrooming taxes & premiums, and the lost productivity & extended pain due to prolonged waiting periods courtesy of Stealth-Care, 'Knee-Cap'-&-Trade, and the Vanishing Assets Tax (VAT), the oxygen needed to revive our economy will be snuffed out. Brown's victory in MA was the canary in the mine of UHC, and the regime rammed this ruinous legislation upon us while exempting themselves. W/ less than...
Posted By: ajmc(1085) on 4/26/2010 | 7:42 PM ET
Mr. Reynolds, From your comments & those of RR, I believe the 2 of you are talking past each other. Yes, the market is up, but how long can it remain up if employment doesn't rebound significantly? Not only are all levels of gov't hit by reduced revenues, but unemployment comp compounds the challenges gov't faces. I'm in advtg sales & businesses, especially small businesses, are not seeing the cash-flow needed to stay open & fully staffed. I understand the history, but with the history we are...
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