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OECD: U.S. Economic Growth to Slow Again

One of the enduring myths of the past few years, trumpeted by the White House and accepted by much of the press, is that President Obama has led the economy back to a state of strong, or even solid, growth. Despite annual evidence to the contrary, the myth persists.

If you climb Mount Olympus on your Greek vacation this summer and find Zues hanging out with Hera, let me know. Maybe they have the strong economy up there with them and are willing to send it down.

The Organization for Economic Cooperation and Development is just the latest to notice that the emperor’s economic advisors have no clothes. According to the Wall Street Journal:

OECD’s gauge of future activity suggests that following a return to expansion in the second quarter, the U.S. economy is unlikely to grow as rapidly as it did last year. The leading indicator for the U.S. has fallen in each month this year, and now stands at 99.5. A level below 100.0, where it started the year, signals a slowdown, while a level above signals an acceleration.

Economic growth since 2010, during the “recovery,” has each year been between 1.6 and 2.5 percent in the United States, which, to use a term employed by PhD-level economists I know, really sucks. This, along with growing federal government offers of free stuff, explains why the labor force participation rate is the lowest it has been in 40 years and why income growth has stagnated.

In a little-noticed development last month – the New York Times, for example, relegated it to the B Section – the Federal Reserve actually LOWERED its growth forecast for the year, pegging it to between 1.8 and 2 percent growth. In other words, a little worse than usual for the Obama era. It had been forecasting growth in the range of 2.3-2.7 percent.

A recent article by former Bush economic advisor Edward Lazear helps debunk the other myth peddled by the White House, that this recession is special and harder to come back from. Lazear found that “states that suffered the worst employment shocks in the 2007-09 recession had the most rapid postrecession employment growth.”

Right. So the worse the recession was for them, the better they recovered. How does that square with White House claims that we were dug so far in nationally it was impossible to come out strongly? Lazier cites another study that found “steep recoveries after financial crises.”

Maybe you like Obamacare. Maybe you liked the stimulus. Maybe you like the growth in government. Those are opinions, and that’s fine.

But it is not an opinion that economic growth is strong. That, rather, is mythology written by the myth-makers in the West Wing.

And the Greek tragedy is being lived out by the rest of us.

Economy Contracts; White House: Everything’s Still Cool

The White House today downplayed news that the economy contracted 0.7 percent during the first quarter of the year, arguing “the most stable components of GDP” were growing quite nicely.

The new number was a downward revision of the previous estimate that GDP had increased by a mere 0.2 percent.

From White House Council of Economic Advisor Chairman Jason Furman:

Today’s downward revision to GDP growth was entirely accounted for by revisions to inventory investment and net exports, with other changes being small and neutral on balance. The first-quarter slowdown was the result of harsh winter weather, tepid foreign demand, and consumers saving the windfall from lower oil prices. The combination of personal consumption and fixed investment, the most stable components of GDP, has grown 3.4 percent over the past four quarters. This solid long-term economic trend complements the robust pace of job growth and unemployment reduction over the last year.

Well, all of this is technically true. Furman is too good an economist to start making stuff up, though at this point it must be tempting. But here’s the issue: A strong economy takes hits and keeps on growing, even if at a slow pace for a quarter. Good things make up for the bad. That’s not what’s happening here.

Whatever the excuse making, the economy CONTRACTED. Something’s wrong. Moreover, growth in the fourth quarter of 2014 was a dismal 2.2 percent, and growth in the current quarter – the second of 2015 – is expected to come in at about two percent as well.

We’re at six and a half years. Folks, this is the Obama economy. Annual growth rates averaging a little bit above two percent, which is pathetic by historic standards. And years after the recession ended.

Mr. Furman can go about plucking the strands of good news from his data charts all he wants. But the bottom line is clear.

Despite massive debt-financed government spending and near-zero interest rates, the economy is in crummy shape. And it’s not Bush’s fault.

U.S. Economy Stalls

If anyone has any questions about the decrepitude of the Obama economy and the “recovery” that never seems to get to “fully recovered,” it was answered today as the Commerce Department announced that GDP had expanded by 0.2 percent during the first three months of the year – that is, growth basically stopped.

This comes off a lousy 2.2 percent increase in the fourth quarter of last year, suggesting the slowdown is endemic and not due to the bad winter – i.e. increased cooling due to global warming – or the alignment of the planets, George W. Bush, the Tea Party, or the Nixon administration.

According to the Wall Street Journal:

The U.S. economy slowed sharply at the start of the year as businesses slashed investment, exports tumbled and consumers showed signs of caution, marking a return to the uneven growth that has been a hallmark of the nearly six-year economic expansion.

Economists surveyed by The Wall Street Journal had expected growth of 1% in the first three months of this year.

The first-quarter figures repeat a common pattern in recent years: one or two strong readings followed by a big slowdown . . . And while most economists expect another second-quarter rebound, some forecasts are muted. Ahead of Wednesday’s GDP release, for example, J.P. Morgan Chase was predicting only a 2.5% pace in the second quarter.

Wednesday’s report showed consumer spending, which accounts for more than two-thirds of economic output, decelerated to a 1.9% pace in the first quarter, down from 4.4% growth in the fourth quarter.

Households last year were buoyed by strong job growth and tumbling gasoline prices. But fuel costs have crept up since the start of the year and the labor market appeared to downshift in March, damping confidence.

Oh wait a second. The White House did find someone else to blame. FOREIGNERS.

“Economic growth in the first quarter was restrained by factors including, tepid foreign demand and harsh winter weather,” wrote White House Council of Economic Advisors Chairman Jason Furman. “This report underscores that the U.S. economy is directly affected by the global economy.”

Unfortunately, Furman neglected to mention the actual, primary cause of the slow economic growth.

If you are causing an economic slowdown, please stand up.

Obama stands

The U.S. Economy: A Man-Made Natural Disaster

I remember a few weeks ago hearing White House press Secretary Josh Earnest mention the strong economy.

Strong economy?

The economy is actually quite weak. Still.

Former Sen. Phil Gramm, R-Texas, an economist, takes a look at the Obama recovery and makes a simple argument: Bad Policy makes for bad economies.

From the piece:

How bad is the Obama recovery? Compared with the average postwar recovery, the economy in the past six years has created 12.1 million fewer jobs and $6,175 less income on average for every man, woman and child in the country . . .  At the present rate of growth in per capita GDP, it will take another 31 years for this recovery to match the per capita income growth already achieved at this point in previous postwar recoveries. When the recession ended, the Federal Reserve projected future real GDP growth would average between 3.8% and 5% in 2011-14 . . . Even though the economy never came close to those projections in 2011-13, the Fed continued to predict a strong recovery, projecting a 2014 growth rate in excess of 4%. Yet the economy underperformed for the sixth year in a row, growing at only 2.4%.

Well that’s the effect. According to Gramm, the causes are numerous, and can be traced to Obama. He has put together one of the most detailed and precise lists I’ve seen of Obama-generated conditions that are dragging the economy down.

  • Marginal tax rates on ordinary income are up 24%, a burden that falls directly on small businesses.
  • Tax rates on capital gains and dividends are up 59%, and the estate-tax rate is up 14%.
  • While tax reform has languished in the U.S., other nations have cut corporate tax rates.
  • The U.S. now has the highest corporate rate in the world and the most punitive treatment of foreign earnings.
  • Federal debt held by the public has doubled, so a return of interest rates to their postwar norms, roughly 5% on a five-year Treasury note, will send the cost of servicing the debt up by $439 billion, almost doubling the current deficit.
  • Large banks, under aggressive interpretation of the 2010 Dodd-Frank financial law, are regulated as if they were public utilities.
  • Across the financial sector the rule of law is in tatters as tens of billions of dollars are extorted from large banks in legal settlements; insurance companies and money managers are subject to regulations set by international bodies; and the Consumer Financial Protection Bureau, formed in 2011, faces few checks, balances or restraints.
  • With ObamaCare the government now effectively controls the health-care market—one seventh of the economy.
  • The administration’s anti-carbon policies hamstring the energy market, distort investment and lower efficiency.
  • During Mr. Obama’s presidency, the number of Americans receiving food stamps has risen by two-thirds and the number of people drawing disability insurance is up more than 20%. Not surprisingly, labor-force participation has plummeted.
  • Crony capitalism and artificially low interest rates have distorted the capital markets, misallocating capital, overpricing assets and underpricing debt.

GDP growth in the fourth quarter of 2014 was 2.2 percent. Growth for the first quarter of 2015, which will be announced next week, is projected to be below one percent.

Now that’s what I call a man-made natural disaster.

WH Doesn’t Deny Small Business Growth “Stalled Out”

White House Press Secretary Josh Earnest Tuesday was unable to launch a serious counterargument to Hillary Clinton’s claim that small business creation in the United States has “stalled out” under President Obama.

Notice how he tried to dodge the question and, when ABC news reporter Jonathan Karl wouldn’t let him get away, went to the fallback strategy – blaming Republicans. Earnest also employed the familiar tactic of saying he wasn’t familiar Clinton’s remarks, which if true suggests there’s a problem in the White House press office since Hillary made the remark the day before.

KARL: Former Secretary of State Hillary Clinton, you may have heard, is in New Hampshire — been in New Hampshire. And she made a comment about the economy, and I wanted to get your reaction to this. Regarding small business creation, she says that small business creation has “stalled out” — she was surprised to learn this — has stalled out in the United States. Does the White House agree with Hillary Clinton’s analysis of the state of the economy regarding small businesses?

EARNEST: I didn’t see the entirety of her remarks, but I can tell you that the President certainly believes that there is more that we can do here in Washington to put in place policies that will further strengthen job creation in our economy . . . blah blah blah blah blah . . .

KARL: But do you agree with Hillary Clinton that under President Barack Obama small business creation has “stalled out” in the United States?

EARNEST: I’m not sure that’s a direct quote. I suspect that it’s not. But I would — the President has —

KARL: She used the phrase “stalled out”. She said small business creation has “stalled out.” Do you agree that it has stalled out?

EARNEST: The President himself has said many times that there are additional important steps that could be taken by Washington, D.C. where members of Congress no longer serve as an impediment to forward economic momentum, but actually that they can support it.

KARL: That’s not my question, though. I just asked, do you agree that small business creation has stalled out in the United States?

EARNEST: Again, I didn’t see the entirety of her remarks.

KARL: Forget what she said. Has small business creation stalled out in the United States?

EARNEST: Well, we’ll take a look at the statistics and get back to you.

KARL: Okay, thanks.

More Obama-Style Economic Growth

Ahh, the Summer of Recovery. I remember it like it was yesterday. It was 2009, and we danced, we sang, and we toasted the stimulus, which was going to pull us off the sickbed and out of the doldrums. And then, the summer went by, and there was no recovery.

For years, we waited. Occasionally, we danced yet again, thinking, at last, this was it, the summer of recovery. But still, it never came.

And then there was 2014. Now, it seemed, the Sumer of Recovery was upon us, despite the fact that the economy actually contracted in the first quarter and never mind that because it was due to the cold weather which BTW was because of global warming you global warming deniers.

And then there was indeed, recovery in the summer. The economy grew at a rate of five percent as the hot months floated by. But then, the Summer of Recovery, as it has done year after year, faded into the Winter of Relapse.

The economy expanded during the last three months of 2014 at an annualized rate of 2.6 percent, the Commerce Department announced today, a middling performance that is the rule, not the exception, for the Obama years. Even with the high growth rates of the second and third quarters, economic expansion for the year is 2.4 percent, just slightly better than the 2.2 percent growth of the previous four years of Obama’s reign.

According to the Wall Street Journal:

The report portrayed a persistently uneven recovery that has yet to fire on all cylinders. Consumers—buoyed by surging job growth and a dive in gasoline prices—boosted spending in late 2014 at the fastest pace in almost nine years. But business investment slowed to a paltry pace, government outlays fell and export growth eased.

What’s more, things aren’t expected to be any better during the first quarter of 2015, the Journal reports.

The White House will make the excuse that we’re doing better than Europe. But Europe is mired in Socialism and has little chance of strong growth. That is, they’ve already achieved the goals Obama is seeking for us. But of course Obama hasn’t yet completely delivered us to our Worker’s Paradise, so we at least, with the right policies, have a shot a doing better. And with gas prices plunging, things should be better.

We should be toasting our Summer of Recovery. If only we could get out of the intensive care unit.

Economy Adds 321,000 Jobs in November

The U.S. economy added 321,000 jobs in November, a robust pace that makes the number of new jobs created this year the highest since 1999, the Labor Department reported this morning.

The numbers for the last two months were also revised upward, showing employers added 243,000 in October instead of the 214,000 previously stated and 271,000 in September as opposed to 256,000.

The unemployment rate remained at 5.8 percent.

The White House immediately seized on the report to try to undermine conservatives who may move to shut down the government.

“Job growth in November was strong, and the economy has now already added more jobs in 2014 than in any full calendar year since the late 1990s.,” said White House Council of Economic Advisors Chairman Jason Furman. “To create an environment in which this progress can continue, it is critical that Congress take the basic steps needed to fund the government and avoid creating disruptive and counterproductive fiscal uncertainty.”

Economy Grows at Four Percent Rate

The U.S. economy bounced back nicely in the second quarter, growing at an annual rate of 4 percent, while the previous month’s contraction was revised upward from decline of 2.9 percent to 2.1 percent. The growth, along with a string of monthly job gains ranging over 200,000, suggests the possibility of sustained growth. But the… Continue Reading

Forecasters Slash Second-Quarter Growth Forecasts

President Obama has been running around like a child who just got a dollar from the tooth fairy, trumpeting the latest jobs numbers as evidence his master plan has been working all along. “The economy has built momentum!” the president exclaimed during an impromptu appearance in Washington Friday. “We are making progress!” Actually, he looks… Continue Reading

Strong Jobs Growth in June

The Labor Department today said the economy added 288,000 jobs in June while the unemployment rate dipped to 6.1 percent from 6.3 percent, signaling sustained, robust job growth has arrived, at least for now. May’s increase was adjusted up to 224,000 from 217,000 while April’s number was pegged at 304,000 from the previous estimate of… Continue Reading