The good economic news was reported this week that consumer spending rose more than was expected. The bad news was that they were lying, purchases rose 0.3 percent but that figure is the average of all categories. Wall Street was beside themselves with joy and the markets rose on the so-called good economic numbers. Two months in a row with 0.3 percent growth in consumer spending makes them forget that the February number was .0 percent, March 0.1, April negative 0.1, May was negative 0.2 and June is negative 0.1 percent
Some might argue that the trend is going the right direction at least, for these last two months except these numbers are averages. Consumer spending growth for, "all items less food and energy" was zero! Growth for, "food away from home" was zero! Growth for, "services less energy" was zero! Shelter, was zero! A shocker that says as much more than will be noticed is September 1st is the traditional return to school and the number for August apparel purchases were negative 0.1 and apparel purchases for the year are negative 0.4 percent.
The growth that is being trumpeted is actually inflation, gasoline up 4.4 percent, grocery prices up 0.9 percent. Fuel oil has all ready risen 10.6 percent this year and the leaves haven't even finished falling from the trees yet. This is their growth; medical care services up 3.2 percent, electricity up 2.1 percent.
Incomes were alleged to have risen 0.5 percent this month and that is a very good number indeed. Would anyone like to try and guess the largest contributing factor in that rise? Bloomberg- "Incomes were up 0.5 percent, the biggest advance this year, propelled by the resumption of extended and emergency unemployment benefits as wage gains cooled."
Disposable income adjusted for inflation dropped to negative 0.2 percent and government transfer payments in the form of food stamps and unemployment spiked to 1.6 percent. So if we take the recent economists declarations seriously that the recession / depression is over with our anemic 1.4 second quarter economic growth then deduct all those transfer payments you'll see where the actual economy would really stand.
In an interesting side note that when the Federal Reserve measures our economy for inflation they exclude the numbers for food and fuel. The Titanic disaster really wasn't all that bad if you exclude all the drownings. You could call it an unplanned underwater course deviation and explain it all away, see, problem solved.
The economists are not telling the truth and the media is not telling the truth and worst of all the politicians aren't telling us the truth. Politics is the art of spin while leadership is the ability to give bad news and to rally the people.
"Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment." Franklin Delano Roosevelt
The Republicans recent announcement that if elected plan to cut federal spending to 25 percent of GDP is the greatest sign of political insanity since Nero made his horse proconsul. The Republican plan if enacted would cut Federal spending by $700 billion by 2011. Our economy, our real economy is no better today than it was after the crash in 2007 and the trend line is pointing downward and not upward.
We are now three years on from the crash and Mr. Roosevelt's words ring in our ears, "More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return." Home foreclosures in 2007 were 2.2 million in 2008, nearly three million, in 2009 2.8 million and 2010 is expected to see the three million mark again. We are talking about more than ten million homes and the lives of forty million Americans.
Two hundred and fifty thousand people lost their jobs as their stimulus-funded programs began to run out of cash this month. Millions of Americans have been selling belongings trying to make ends meet. In 2008 I saw front yards with boats and motorcycles and jet skis with for sale signs hanging on them. Today title loans advertisements share the airwaves with gold buyers but the gold is running out. The actual unemployment numbers are reaching Great Depression era numbers.
It prompts the question, what is Mr. Obama's vision for America? In 1929 America had a President who unable to find solutions with the proper size and focus and the economy languished for two years and millions suffered. Let's never forget that these economic numbers represent real people and real suffering and real loss. Some Democrats want to look at these issues as pure politics and chastise me for complaining about Obama's center right policies. He's our guy and we shouldn't complain they chide. The goal of government is to protect our well being and winning elections is only the beginning of the story not the end of it.
They are correct however, Barack Obama is our guy and he is also our only hope. The Republicans are quite clearly insane. A mutant party lost in it's own extremism, a party in it's death throes. Democrats who seek to work with these Republican political drowning men will find themselves pulled down with him. If Barack Obama fails with his center right policies who will carry the blame? Will the voting public remember Obama's center right policies or only that he called himself a Democrat?
This is our enthusiasm gap, a continuation of runaway military spending. A capitulation on the stimulus, a capitulation to the healthcare industry on healthcare reform. A financial reform legislation package that won't be fully implemented for a dozen years with more than enough time to water it down or quietly to smother it. A consumer protection agency with no authority that will operate in the basement of the Federal Reserve. It's akin to the Nevada gaming commission operating out of the basement of Caesar's Palace.
It is an administration that likes to look at itself in the mirror striking Heisman trophy poses but doesn't want to get dirty playing football. It is an administration with it's own agenda and not our agenda that two years on has a mortgage relief program that doesn't work. That claims the economy is getting better when it's getting worse. I don't like kicking Barack Obama and I wish I didn't have to but people are struggling and juicing the numbers is not an acceptable answer.
Millions of Americans are in deep trouble from schoolteachers to business executives and are losing their homes. They can't buy school clothes for their children nor can they afford to own a car. It is an emergency equal if not greater in magnitude to 1933 when the factories were closed because now the factories are gone! It is a crisis that cannot wait a crisis that dwarfs any foreign war and every other domestic issue. The failure of the Obama administration to address this crisis straight forward and head on could precipitate the failure of government as a whole. The Republicans if elected will drive us off a cliff while Obama offers drive us down a lost highway site seeing until we run out of gas.
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