Plagued by seemingly perpetual debt problems due to large welfare states, the Euro-zone, the 17 countries that make up the European Union, has fallen into a recession for the second time since 2009:
The euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed on Thursday.
The French and German economies both managed 0.2 percent growth in the July-to-September period but their resilience could not save the 17-nation bloc from contraction as the likes of The Netherlands, Spain, Italy and Austria shrank.
Economic output in the euro zone fell 0.1 percent in the quarter, following a 0.2 percent drop in the second quarter.
Those two quarters of contraction put the euro zone’s 9.4 trillion euro ($12 trillion) economy back into recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.
A rebound in Europe is still far off. The debt crisis that began in Greece in late 2009 is still reverberating around the globe and holding back a lasting recovery.
Analysts said even the euro zone’s top two economies were likely to succumb in the final three months of the year.
The Bureau of Labor Statistics (BLS) dropped a bomb this morning. Yesterday, there were some positive signals that job growth was increasing compared to recent months. The ADP estimate for August came in at 201,000, which was much higher than the 140,000 estimate.
But the official job report for August was nowhere near expectations. According to the BLS, the economy created 96,000 jobs in August with estimates for June and July being revised downward:
U.S. employers added 96,000 jobs last month, a weak figure that could slow any momentum President Barack Obama hoped to gain from his speech to the Democratic National Convention.
The unemployment rate fell to 8.1 percent from 8.3 percent in July, but only because more people gave up looking for work. The government only counts people as unemployed if they are actively searching.
The Labor Department also says 41,000 fewer jobs were created in July and June than first estimated. The economy has added just 139,000 jobs a month since the beginning of the year, below 2011’s average of 153,000.
That’s not good at all, folks. Remember that the economy needs to create 150,000 jobs each month just to keep up with population growth. So while the spin will be that this is positive, but the economy is still experiencing essentially a net-zero job growth and more people are giving up hope of finding work. Futhermore, James Pethokoukis notes that “[i]f labor force rate had just stayed same as last month, [the]unemployment rate would be 8.4%.”
Over the last couple of years, libertarians have complained about the emphasis conservatives, particularly the Rick Santorums and Mike Huckabees their movement, have placed on social issues. We’ve noted that conservatives should focus their message on issues where they can attract agreement — such as repealing ObamaCare, lessening regulation on businesses, cutting spending, and reducing taxes.
While I support same-sex marriage and have grown increasingly pro-choice within reason, the Republican National Convention was a largely a breath of fresh air from this perspective . That’s not to say that I agree with everything said on the budget, economy or foreign policy, but the discussion of social issues was relatively mild with Republicans choosing instead to place a heavy focus on the economic record of President Barack Obama.
But watching the Democratic National Convention off-and-on for a couple of days, one can’t help but notice the heavy emphasis on social issues. There is certainly a discussion and defense of President Obama’s economic record, but abortion, same-sex marriage, and labor unions been featured heavily.
Of course, this is really isn’t surprising. Democrats have tried to change the narrative at several points since the beginning of the year; usually by complaining that there is some supposed “war” being waged against a segment of the American public.
Back in May, the Congressional Budget Office (CBO) issued a stark warning to Congress that tax hikes scheduled to happen at the beginning of the year could trigger another recession. Since that time President Barack Obama and Senate Democrats have refused to act on extension of all current tax rates, which is the position of House Republicans. Instead, they’ve only pushed for one-year extension for individuals making $200,000 and families bringing in $250,000.
But yesterday, the CBO once again stressed that the looming tax hikes could hurt the economy if the stalemate doesn’t end:
In a fresh warning about the so-called “fiscal cliff,” the nonpartisan CBO reiterated that the U.S. economy will go into a recession next year if the Bush-era tax cuts expire and automatic spending cuts take effect. Read the CBO report.
In its latest report, the CBO predicts that the U.S. economy will grow at a 2.1% clip in 2012, but fall by 0.5% between the fourth quarter of 2012 and the fourth quarter of 2013 under the fiscal cliff scenario.
Previously, the CBO said growth would be 0.5% in 2013 under the fiscal cliff. In its new report it said the “underlying strength” of the economy is weaker.
The CBO said unemployment would jump to around 9% in the second half of 2013 from its current 8.3% if the tax increases and spending cuts play out.
International Data on Living Standards Show that the United States Should Not Become More Like Europe
I’m not a big fan on international bureaucracies, particularly the Paris-based Organization for Economic Cooperation and Development. The OECD, funded by American tax dollars, has become infamous for its support of statist pro-Obama policies.
If you were hoping that the recent economic report would bring a change in direction from the White House on taxes, you were no doubt let down. The Commerce Department reported on Friday that gross domestic product (GDP) grew by only 1.5% in the second quarter of the year and consumer spending was down, once again showing the weakness of the economic recovery.
When pressed on whether or not the weak economic growth would bring a change in direction from President Obama, who is trying pushing tax hike proposal through Congress, White House Press Secretary Jay Carney insisted that tax hikes during a slow economy weren’t a bad idea. Alan Krueger, President Obama’s top economic adviser, also said that the reason the economy was lagging was because state governments need more stimulus spending.
It seems, however, that not only will the White House push more stimulus gimmicks, they are going to continue to push a tax hike that will have anywhere from a 1.3% to 2.9% contraction in the economy.
But Keynesians pushing a tax hike during tough economy times is question, one that would probably earn the ire of the man himself. Christina Romer, who served as an economic adviser to President Obama, once noted that tax hikes hurt the economy:
On the campaign trail and during the third presidential debate with Sen. John McCain (R-AZ) in 2008, then-candidate Barack Obama promised that Americans would see a “net-spending cut” during his presidency.
The claim was met with a boatload of skepticism given that Obama was proposing massive expansions in healthcare and non-defense discretionary spending; however, we all crossed our fingers that he would follow through, but we didn’t hold our breath.
The skepticism proved to be justified. Just a couple of months after coming into office, President Barack Obama told Americans that under his budget that there would be trillion dollar deficits as far as the eye can see.
He wasn’t kidding. The Congressional Budget Office released its budget report for this current fiscal year yesterday, predicting yet another trillion dollar budget deficit and unemployment hovering around 9%:
The Congressional Budget Office on Tuesday predicted the deficit will rise to $1.08 trillion in 2012.
The office also projected the jobless rate would rise to 8.9 percent by the end of 2012, and to 9.2 percent in 2013.
These are much dimmer forecasts than in CBO’s last report in August, when the office projected a $973 billion deficit. The report reflects weaker corporate tax revenue and the extension for two months of the payroll tax holiday.
If the CBO estimate is correct, it would mean that the United States recorded a deficit of more than $1 trillion for every year of Obama’s first term.
Yesterday, the Bureau of Labor Statistics released jobs number from the month of April, which found that the economy created 165,000 jobs — slightly more than the 150,000 jobs the economy needs to produce to keep up with population growth.
Employment rose by 165,000 jobs in April, according to the monthly economic report released Friday by the U.S. Bureau of Labor Statistics. And unemployment dropped slightly from 7.6 to 7.5 percent—a minimal change, but one marking a steady, .4 percent drop since January. It’s the lowest unemployment rate in four years.
Employment increases were seen in professional and business services, food services and drinking places, retail trade and health care, according to the report.
The Labor Department also announced revised and more positive figures for February and March: Employment for February was revised from 268,000 to 332,000 jobs gained and for March from 88,000 to 138,000 jobs gained.
There’s definitely some good news there after years of lagging economic growth. But there are still some concerns about another economic slowdown. But it should be noted that the U-6 unemployment rate, which many call the true measure of the jobs picture, inched up to 13.9% from 13.8%. Reuters noted that the “details of the report remained consistent with a slowdown in economic activity.”
During a House Small Business Committee hearing last week, Douglas Holtz-Eakin, who served as director of the Congressional Budget Office from 2003 to 2005, explained that the compliance costs of ObamaCare — passed as the “Patient Protection and Affordable Care Act” — could cost businesses up to $24 billion and 80 million hours of paperwork.
“The [Affordable Care Act] is very costly,” Holtz-Eakin explained to the committee. “It has about $24 billion in reported regulatory compliance costs. These are estimates that come from the administration itself. Eighty million hours of paperwork time spent complying with those regulations. To give you some perspective - that’s 40,000 full time employees filling out paperwork for a year nonstop”
Responding to a question from Rep. Tom Rice about the affects of the bill on the economy and ostensibly the American people, Holtz-Eakin said, “This is a negative; I don’t think there’s anyway around that.”
“Whatever your other objects might be, if you set out to enhance job creation and growth in the United States, you wouldn’t pass a bill with a trillion dollars of tax increases, a large entitlement program, and this amount of regulation,” Holtz-Eakin continued. “That isn’t a good strategy.”
Holtz-Eakin also noted that the insurance tax will be passed onto consumers in their health insurance premiums. He also agreed with Sen. Max Baucus’s recent comments that the implementation efforts of ObamaCare will be a “train wreck.”
The Club for Growth, one of Washington’s most high-profile conservative organizations, released its annual scorecard earlier this week, providing a measure of who in Congress is fighting to reduce government spending and regulation.
The scorecard shows how members of House of Representatives and the Senate voted during the 2012 session on key, pro-growth issues ranging from keeping the 2001 and 2003 tax cuts in place to capping transportation spending to expanding free trade to banning earmarks.
“Whether it was the GOP’s support of massive tax increases or the constant assault on liberty by the Obama administration, the pro-growth caucus in Congress has a lot of work to do in 2013,” Club for Growth President Chris Chocola explained in a statement. “The Club’s scorecard is intended to help our members and the general public understand who talks a good game on limiting government and passing pro-growth policies, and who backs up their words with votes.”
So who in Congress have been working for the taxpayer? Obviously, we can’t list everybody who scored well, for sake of space, so we’re going to limit it to the top in each chamber. You can find the 2012 scorecard by clicking here.
Best of the Best in the House of Representatives