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.
The Congressional Budget Office (CBO) projects that budget deficits will be nearly $1.7 trillion greater under President Barack Obama’s budget than the estimates released last month by the White House Office of Management and Budget (OMB).
The two agencies frequently conflict on budget projections. The OMB sort of takes a guess on what economic growth will look like over a 10-year period and scores a president’s tax and spending agenda based on those estimates. The CBO, however, is more restrained in its approach.
The discrepancy between the two reports is due to the CBO’s assumption that current law remains largely unchanged. The nonpartisan fiscal research agency also believes that tax revenues will be $1.8 trillion lower than the OMB, which is due to less rosy economic projections over the next 10 years (2015-2024).
President Obama’s budget estimates that budget deficits over the next decade will come in at approximately $4.93 trillion (Table S-1 of the OMB report). But the CBO estimates that deficits will be significantly higher, at $6.56 trillion (Table 1 of the CBO report), or $1.64 trillion greater than the administration’s estimate.
Here’s a look at the year-by-year differences:
“The American founders often referred to a ‘Liberty Tree.’ Our generation didn’t plant that tree - we didn’t grow that tree - we were simply handed it by the generations of Americans who came before us….Let us highly resolve not to rest until we have delivered to our sons and daughters a Liberty Tree that is just as healthy, a Constitution that is just as strong; and a nation that is just as free as those that our fathers and mothers gave to us.” — Rep. Tom McClintock (R-CA)
— Senate Dems finally rollout Obamacare fixes: After months of talking about the need for fixes to the law, six Senate Democrats have finally offered some specifics on how they plan to address at least some of Americans’ concerns. The biggest proposal is the introduction of a “Copper Plan,” which, they write at Politico Magazine, “will give consumers more control over their own coverage, spur competition and, most importantly, increase affordability.” Two of the Democrats, Sens. Mary Landrieu (D-LA) and Mark Begich (D-AK), are up for reelection this year and are thought to be among the chamber’s most vulnerable members. Despite the push for fixes, the Heritage Foundation notes that most of the six “didn’t have strong initial reservations about the massive bill when Obama signed it into law in March 2010.”
Not too long ago, Christiana Figueres, the U.N. climate chief, gained some notoriety after praising China’s communist government for its efforts to combat climate change. She didn’t mention the 94 million deaths for which communists regimes are responsible, nor China’s ongoing human rights abuses.
The crazy from the radical environmental left, however, doesn’t end with Figueres’ fawning over communism. Nope. Believe it or not, a couple of environmental groups are actually arguing that the United States needs to “de-grow” the economy:
Environmentalists at the New Economics Foundation in London and the Worldwatch Institute in Washington, D.C. argue that cutting the 40-hour work week and using less electricity is necessary. This includes a living wage requirement and a more progressive tax code.
“There’s no such thing as sustainable growth, not in a country like the U.S.,” Worldwatch senior fellow Erik Assadourian told Sierra Magazine.
“We have to de-grow our economy, which is obviously not a popular stance to take in a culture that celebrates growth in all forms,” he said. “But as the saying goes, if everyone consumed like Americans, we’d need four planets.”