Tweet
Seven months ago, as Obama was preparing to take office, we were all scared shitless. There’s no other way to put it. Republicans and Democrats alike were terrified about what might happen to the economy in the coming months and years. Here’s what Paul Krugman had to say in a January 4 op-ed in the New York Times:
The fact is that recent economic numbers have been terrifying, not just in the United States but around the world. Manufacturing, in particular, is plunging everywhere. Banks aren’t lending; businesses and consumers aren’t spending. Let’s not mince words: This looks an awful lot like the beginning of a second Great Depression.
Today, however, the picture looks much more encouraging:
The long-battered U.S. job market showed some signs of improvement in July as employers cut far fewer jobs from payrolls and the unemployment rate fell for the first time in more than a year, according to a government report Friday.The Labor Department reported a net loss of 247,000 jobs in July, the fewest job losses since August 2008. Economists surveyed by Briefing.com had forecast a loss of 325,000.
The job loss in June was also revised lower — to 443,000 job losses from 467,000. The unemployment rate fell to 9.4% from 9.5% in June, the first decline in that closely watched reading since April of 2008. Economists had expected unemployment to rise to 9.6%.
President Obama, as expected, is being cautiously optimistic:
Today, we’re pointed in the right direction. While we’ve rescued our economy from catastrophe, we’ve also begun to build a new foundation for growth. We have a lot further to go. As far as I’m concerned, we will not have a true recovery until we stop losing jobs.
Republicans leaders, however, are singing a different tune. On Sunday, as word of the good economic news was beginning to emerge, John McCain made a point of raining on the parade:
The stimulus has had some effect, but what I worry about are the long-term effects, because what we are doing is committing generational theft. We have put trillions of additional debt on future generations of Americans. The stimulus package, I believe, was so large and the deficit and debt problem is so overwhelming, that Americans now are very concerned about their children’s futures and the debt we’re laying on them. And so I think that has contributed to lack of progress on health care.
Two points to ponder about the good news and the sour Republican response:
1) McCain, in his hubris, seemed ignorant of the past 28 years of American history. Republican presidents have consistently mushroomed the debt, while Clinton did a good job of reigning in spending and bringing the debt down. And the only reason Obama has been required to spend so much is to clean up the economic and health care messes that the GOP has left behind. Will the Republicans ever own up to their failed policies, or do they think America is short-sighted enough to blame Obama even as he is succeeding in turning things around?
2) Imagine that McCain had won the election, and that six months into his term we were seeing the same signs of recovery. What do you think the Republicans would be saying?
5 Comments
July in terms of employment and August with back to school spending probably are the best two months we and Obama have to look forward to, and even with that we are looking at a quarter of a million jobs lost in July. The housing sector is continuing its collapse. Commercial real estate is going. Pension funds have lost huge amounts and are setting themselves up via risky investments to lose a lot more. State budgets are going to be a nightmare next year.
What we are seeing is not recovery but an extremely expensive and wasteful effort to re-inflate a burst bubble. The financial sector remains as unreformed and predatory as ever.
I think we would all like to see things get better, but a couple not so bad months does not constitute recovery.
The things you mentioned are the inevitable fallout of what happened before Obama took office. You say the stimulus is a failed effort to falsely re-inflate a bubble. I say it is an effort that is working and needs to be redoubled. Aren’t we better right now than most people thought we would be six months ago?
In terms of the fundamentals, we are worst off than we were 6 months ago. I don’t think anyone thought that the injection of $7 trillion into the financial sector would be without effect. Money from the stimulus was largely misdirected and what was on target has barely begun to flow. So the stimulus per se has had little effect.
PW, I think your assessment of a bottom to the housing market is premature. Foreclosure rates were slowed by external pressures and this caused a temporary support in prices, albeit at a lower level. But foreclosure look to be on the increase and this could again exert downward pressures on price. Decreasing home prices are serious bad news for mortgagees since so many of them now have negative equity. If you took a $200,000 mortgage out on a house that is now worth $140,000 and looks to go to $120,000 in a year, lower housing prices are not good news. Consumer spending accounts for something like 70% of our economy. Where is a recovery fueled by such spending going to come from when so many homeowners are looking at vastly increased debt from the fall in house prices?
The Obama Administration is running a major propaganda effort to push the greenshoots storyline, but essentially all the positive developments in the economy have a very Potemkin quality to them. I get the feeling that most people really don’t understand how badly the economy has gone off the rails, and remains off them or how little or poorly directed what has been done by both the Bush and Obama Administrations has been.
I lost over half of my retirement savings under Bush. In the past 3 months under Obama I have recouped 1/4 of my losses. Obama and his team are trying to bolster this country and it will take time. The stimulus package has not gone out to all the states yet.
All I can tell you about the Bush 8 years is that it ruined my life and the lives of others around the globe. Each time one of those far right demogogues gets into office our economy falls to its knees.
Actually, the housing sector bottomed out in most of the US by February and is finally starting to bottom out even in California. Month-to-month sales in most of the country have been steadily climbing, though prices haven’t risen — but we don’t want prices to rise again as they were too high anyway.
MinnTac, an important provider of taconite iron ore to US industry, had shut down all but one of its five production lines in June. They’re reopening one this month and will have two of the other three open next month. Since the appliance industry is MinnTac’s main customer, that shows that orders for big-ticket items besides cars are expected to rise if they haven’t already. (And of course Cash for Clunkers, in addition to clearing the air — literally — is stimulating the Big Three to make more cars.)