All economic discussion here lately really tends to boil down to the question of whether the stimulus programs by Presidents Bush and Obama worked. For most Americans, they’re willing to forgive a great many sins if they actually worked. I could sit down and take a look at what is what, but why bother? Lawrence Lindsey at The Weekly Standard already did it.
Here’s the part that really stuck with me:
Government policies to “stimulate” growth have not done so. Everyone except flacks for the White House knows that the 2009 stimulus package failed miserably to produce the promised results. But even if you buy the White House’s argument that the $800 billion package created 3 million jobs, that works out to $266,000 per job. Taxing or borrowing $266,000 from the private sector to create a single job is simply not a cost effective way of putting America back to work. The long-term debt burden of that $266,000 swamps any benefit that the single job created might provide.
We spent $266,000 – which has to be paid for via taxation – to create a single job. Unless that job is Warren Buffet’s equivalent in income, I think we all got screwed on the deal.
However, remember the horror stories we were told of what live would be like without the stimulus, and how awesome we would be doing if we passed the stimulus? Well, without the stimulus, we were told that unemployment could reach as high as 9%, but that if we passed it we would never see unemployment greater than 8%. Well, we passed it. The result?
Last week, it was announced that unemployment had risen .1%. The economy only gained 54,000 jobs. The Dow was moving in the wrong direction, which affects millions of Americans who don’t remotely qualify as “rich”. What does all of this mean? It’s simple. That’s the idea that we’re in a recovery has as much basis if fact as unicorns and leprechauns.
While we may not be having the collapse we were just a couple of years ago, we’re clearly not in anything approaching a recovery. In a recovery, people go to work. The stock markets builds. Things start moving in a much more positive direction. However, that just ain’t happening.
Instead, we have a great deal of instability. While unemployment may improve over several months, it can then drop over the next month or two. Even with a generally downward trend, that instability doesn’t exactly engender confidence in the US economy.
Things are rough all over though. Greece is looking to the EU for yet another round of bailouts (and people are already protesting the necessary austerity measures to go along with it). Portugal has had a recent change in government due to their economy as well. No one seems to really be doing well.
Now, it’s easy for people to see a couple of indicators and say “See? It’s getting better.” Honestly, I wish that was the truth. However, that just ain’t the case. Instead, those are false indicators of recovery…or so they seem at this point. Had indicators improved over a longer period of time, it might have been fine. Instead, investors are unsure what they should be doing with their money. They seem to decide that it’s best to just sit on their money for the time being. That means money isn’t being invested, money needed to create new jobs.
As has been speculated, the unemployment numbers for May show a slowing job market and an unemployment rate that has increased to 9.1%; according to figures released this morning by the Bureau of Labor Statistics:
The U.S. economy may be in for a prolonged period of soft growth as employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1 percent.
Nonfarm payrolls increased 54,000 last month, the Labor Department said, fewer than the most pessimistic forecast in the Reuters survey and just over a third of what economists had expected.
The employment report which showed broad weakness confirmed the loss of momentum in the economy already flagged by other data from consumer spending to manufacturing, and stoked fears the economy could be facing a more troubling stretch of weakness than had been thought.
“There are plenty of reasons to expect the third quarter will be better. But the question is now becoming how much better?,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
Economists had pinned the economy’s sluggishness largely on high energy prices, supply chain disruptions stemming from Japan’s earthquake and tornadoes and flooding in the U.S. Midwest and South. The department said it found “no clear impact” from weather on the jobs figures.
The private sector, which has shouldered the burden of job creation added just 83,000 jobs, the least since last June, while government payrolls dropped 29,000.
Adding to the gloomy labor market picture, about 39,000 fewer jobs were created in March and April than previously estimated.
Payrolls had been expected to rise 150,000, with private employment gaining 175,000.
There are worries, despite several months of job growth and signs of an economic recovery, that the economy is slowing down:
The drumbeat of bad news about the U.S. economy got louder on Wednesday, rattling financial markets and driving stocks to their biggest drop in a year.
The U.S. factory sector, which has been an engine of the recovery, notched its biggest one-month slowdown since 1984 as companies hit the brakes on hiring and production. Another report showed private-sector hiring dropped precipitously in May, prompting economists to ratchet down their expectations for the closely watched nonfarm payrolls report due on Friday.
The Dow Jones Industrial Average tumbled 279.65 points, or 2.2%, to 12290.14, its biggest point decline since June 4 of last year. Investors piled into the safety of Treasury bonds, sending yields on the 10-year note below 3% for the first time this year. Yields move in the opposite direction of price.
Wednesday’s reports marked a notable shift in sentiment, particularly among stock investors, who have largely shrugged off signs of economic weakness, choosing to focus on strong corporate-earnings growth. The slowdown of manufacturing output could crimp those profits.
The disappointing U.S. economic data followed poor manufacturing reports around the globe. The numbers, together with evidence of a continuing downdraft in housing and signs that companies and consumers remain apprehensive about spending, suggest the economy is rapidly losing speed.
Why won’t Jon Huntsman be the Republican nominee in 2012? This video posted by Verum Serum highlights many positions Huntsman has taken, including support for cap-and-trade and the stimulus, that aren’t going to jive well with the Republican base:
Over at Slate, Dave Weigel offers up an interview by Neil Cavuto from early 2009 with Jon Huntsman, former Governor of Utah, Ambassador to China and likely GOP presidential candidate, where he not only expressed support in the concept of economic; but believed the package being pushed through Congress wasn’t large enough (emphasis Weigel’s):
CAVUTO: Were you against the stimulus, Governor?
HUNSTMAN: Well, if I were in Congress, I probably would not have voted in favor because it didn’t have enough stimulus and probably wasn’t big enough to begin with.
Huntsman has been playing down his support of the stimulus. For example, in a recent interview with George Stephanopoulos, Huntsman said that he wanted more in terms of tax breaks; including a corporate income tax cut. However, Weigel points to a post at Washington Monthly by Steve Benen, who breaks down that claim; posting video of Huntsman in his on words:
Some Keynesians, such as Larry Summers, are claiming that the recent earthquake in Japan - truly a devastating and saddening event that has claimed the lives of thousands - could help that country’s economy:
It may lead to some temporary increments ironically to GDP as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake Japan actually gained some economic strength.
After expressing sorrow for the people of Japan, former White House economics adviser Larry Summers said, “it may lead to some temporary increments in GDP as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake, Japan actually gained some economic strength.” Any economist is dead wrong to claim that there is a silver lining in a natural or man-made disaster. As it turns out, earthquakes and tsunamis are not stimuli. Destruction will not create prosperity.
As economics Professor Steven Horwitz notes, “If one really believes such disasters are good for the economy, even in the short run, then one should positively recommend burning down neighborhoods and destroying farm machinery. After all, think of the demand for construction workers and equipment, as well as the demand for manual labor on farms that would generate. Why we’d be rich as kings in no time, right?”
President Obama wants to nationalize wireless internet according to a report in New American in what appears to be another measure argued to be stimulus, but in reality is nothing more than just taking over a sector of American industry. New American doesn’t seem to be much of a fan of the proposal either:
In what amounts to the next initiative undertaken by the Obama Administration towards its ever-expanding program of government expansion and nationalization of various aspects of the lives of the American people (such as the government takeover of health care, intervention in banks, and the nationalization of various automobile companies, such as General Motors), the federal government is now embarking upon a program of government-directed wireless internet (Wi-Fi) delivery.
President Obama outlined his plan for government wireless access and broadband expansion at a press conference on February 10th at Northern Michigan University in Marquette, Michigan. The press conference revealed yet another well-known truth about the proposal, characteristic of any other initiatives which believe that government is capable of expanding access to any commodities: it is rooted in his Quixotic, insolvent, debunked, and expansionist view of government, and in his failure to realize the proper relation of government to the myriad possibilities made possible by the free market, in a more efficient and capable manner. The Wi-Fi expansion proposal not only reflects an unconstitutional view of government spending and scope, but is also a continuation of Franklin Delano Roosevelt-style economics, which failed the country in the height of the Great Depression and continue to contribute towards the national deficit and economic woes.
As you’ve probably heard, the January’s unemployment numbers came out on Friday. According to the Bureau of Labor Statistics, unemployment fell last month to 9% (from 9.4% in December) and the economy only added 36,000 - less than what was expected:
The unemployment rate unexpectedly fell to 9 percent in January, the lowest level in nearly two years, but the economy added just 36,000 new jobs last month.
The Labor Department reported Friday that more than 500,000 Americans reported finding jobs in January, improving the jobless rate from December’s 9.4 percent to 9 percent. The last time it was that low was in April 2009.
Experts had expected that the unemployment rate would rise to 9.5 percent for January. In all, 13.86 million people looking for jobs couldn’t find work in January.
“The overall trend of economic data in recent months has been encouraging, as initiatives put in place by this administration are taking hold, but there is still considerable work to do,” said Austan Goolsbee, chairman of the Council of Economic Advisers. While “the 0.8 percentage point decline in the unemployment rate over the past two months is a welcome development,” he said, it still “remains unacceptably high.”
Indeed, the news isn’t all good — even as the unemployment rate shrank, non-farm businesses reported the creation of 36,000 jobs, far fewer than the 136,000 new jobs that had been anticipated for January. Bad weather throughout much of the country is likely to blame, with snowstorms hurting the construction industry especially hard, marked by 32,000 jobs lost last month.
Below is a collection of several links that we didn’t get around to writing about, but still wanted to post for readers to examine. The stories typically range from news about prominent figures in the liberty movement, national politics, the nanny state, foreign policy and free markets.