If you think the Economy is recovering, think again
By Krystle Weeks | Wednesday, May 4th, 2011 | Policy, PoliticsWhere’s the hope and change that was promised to Americans in 2008, when then candidate Barack Obama was campaigning for the Presidency? Now, the hope has dissolved, along with your change. Over the course of Obama’s term as President, we have seen unemployment numbers at an all time high, and the government continues to spend above and beyond its limits.
Despite unemployment and government spending, there are two additional factors that will prove the economy is in a downslide. Take for example, yesterday, an independent ratings agency, Weiss Ratings, indicated that the U.S. rating should be a ‘C’. According to Martin Weiss, President of Weiss Ratings, a ‘C’ Rating is comparable to a triple-B S&P rating. These ratings are justified by the massive debt burden and economic volatility.
The other factor that does not bode well for economic recovery is the decline of the dollar. According to a Reuters report, the dollar fell to a three-year low due to the unemployment numbers.
The question remains: When will the federal government wake up and actually address the debt burden and unemployment? This is not recovery by any stretch of the imagination.
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Growing up in Maryland typically does not yield a Republican. Fortunately, Krystle Weeks was one of the lucky few booted to the Commonwealth for her staunch conservative views. From an early age, she has been debating politics, and since 2006, she has been involved here in the Commonwealth helping Republican candidates to victory. Aside from politics, Krystle is a runner and a dynamite cook. You can email her here. Krystle also blogs at Crystal Clear Conservative and Charm Offensive Cooking.
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41 Responses to "If you think the Economy is recovering, think again"
Doesn’t the decline of the dollar make US products more competitive on the international market, make US tourism more affordable, thus boosting the US economy? Isn’t this why we’ve been pressuring the Chinese for years to stop keeping their currency undervalued making their good artificially cheap to boost employment?
And secondly, the unemployment rate isn’t even close to historical highs, I think were around 15% off historical unemployment.
Short answers: No, and no. The more the administration or federal government does to address the latter, the more of the former we will have, because capital will simply freeze up or invest elsewhere.
If you really look at the future, you will see there is no chance of turning this around by republicans or dems. Our jobs are gone overseas and are not returning. Blame to CEO’s, shareholders, consumers as there is plenty of blame to go around.
You blame Obama but that is misdirected because if McCain was sitting in the White House, the furture isn’t going to change. No jobs in manufacturing means no income for millions of Americans. No income means no internal growth as our money is shipped overseas to foreign workers. Government is the only job sector that can’t be shipped overseas. Reality is reality…
Great article as usual Krystle
These political hacks have their fingerprints all over the housing market, auto industry, financial, farming and now the oil industry.
This anti-corporate mentality is exactly why our jobs are moving overseas and if you believe in Keynesian economics, I guess you missed school the day they explained that it eventually collapses.
Reality is government doesn’t work, there’s evidence all over the world and in our history books. The less capitalism that is practiced, the more poverished the people are.
I meant “the more impoverished the people are.”
Ms. Weeks has to turn to a tertiary source to make the comment she has made and also ignore the signs of a solid recovery that surround us. If republicans think they can win next time with the same tactics they won last time, they have a real problem. Fact is, the continuing recovery, and signs that our economy is growing, that companies are investing, that jobs are being created in the private sector, that unemployment is decreasing, and that citizens realize that a policy of enforced extreme austerity would be damaging to all of us, means that republicans must stop embracing extremism and get back to their roots. Of course, since those who advocated that have been ostracized and condemned within the party does provide a significant challenge to rebuilding that party.
Extremism is a federal government with a budget ($4B) that could only be supported by two other countries (China and Japan). Well, maybe one. That is extreme.
In addition, they’re destroying the oil industry, proping up bad business practices by bailing out GM and Wall Street and now they are working on the true American worker, the entrepreneur.
I didn’t even touch on the housing, healthcare and insurance industries which they have already destroyed. And all these lawyers/politicians can do is blame others and play politics.
Well, at least we don’t have to worry about the bubbles…at least the up side.
Mike Barrett- It appears that you are completely divorced from reality and facts. The unemployment numbers have gone up now 4 weeks in a row. The solid recovery you talk about apparently exists only in your mind. You have most definitely earned the title Bagdad Mike-
http://politicalhumor.about.com/library/images/bliraqdenial.htm
It’s excessive taxation and over regulation stupid
In the short term, addressing unemployment and adressing the deficit and the debt, are in conflict.
Cut government spending, increase unemployment.
In the long term, getting the economy moving again boosts employment and hence government revenue, shrinking the deficit and the debt.
That’s how we balanced the budget in the ’90s, and it’s the only way we’ll do it again.
Shaun,
I think I’m gonna need the long answer. I just want to get this straight here: you’re saying
1. a lower value of the Dollar will not boost US exports and increase tourism,
2. that our government hasn’t bee pressuring China to float their currency on the open market because by keeping it artificially low it’s hurt US manufacturing,
3. and that we’re near historically high unemployment?
Steve,
We balanced the budget in the 90s from Al Gore’s Internet, not by dumbass investments of lawyer/politicians. Al Gore’s Green movement is not going to pull us out this time. Come on Steve,
“the dollar fell to a three-year low due to the unemployment numbers.” Say what???? J.R – do you proof contributors before uploading?
ToR – you’re right; the cycle works somewhat like this:
– The dollar drop has NOTHING to do with our unemployment rate; it reflects international investor concerns. Foreigners have pumped enormous amounts into buying our debt and are now getting skittish (for a number of reasons) that too much of their wealth is in dollars … so they begin to park assets elsewhere … which, in turn, causes the dollar to drop.
- As the currency deteriorates it becomes more expensive to IMPORT goods and services from other countries. A weak currency typically leads to inflation because it prompts companies (that export to the U.S.) to raise prices.
- However, this time exporters can’t afford to raise prices nearly as quickly – anything that damages an already weak U.S. economy also hurts them – so importers are trying to hold the line on prices (and taking hits to profit margins instead).
- In the short term, a weaker dollar can lower trade deficits and boost job growth (especially in manufacturing). As U.S. goods & services become cheaper (compared to competitors in other countries), demand increases – and boosts US production (which hopefully boosts employment).
- The downside: a weakened dollar makes it harder for Americans to afford foreign-made products. That hurts the US consumer and world economies that rely on US exports to fuel domestic growth – this is a big concern right now for the southern Euro sector and parts of Asia.
I think that the thing many can’t wrap their heads around is that the FED policies and the devaluation of the dollar is creating inflation in other areas of the economy. In essence we have inflation and deflation going on at the same time. Which one might say is causing our economy to hyperventilate. Trouble is sooner or later we’re going to pass out.
William Bailey,
Manufacturing job losses have been a reality throughout the boom years of the 1990s and continued during the 2000s. This past (and I emphasize PAST) recession had nothing to do with job losses in the manufacturing sector. And, it might surprise you to know, that manufacturing job losses are not a US phenomenon caused by outsourcing jobs overseas. Our rate of job losses in that sector have been matched by losses in Japan, Brazil, Mexico, and India. The problem is not outsourcing but increased automation of production lines which require fewer human workers.
And before you predict the end of civilization as we know it, put this in the historical context of the 19th Century when the US economy lost agricultural jobs at a far greater rate as a percentage of the adult workforce.
Our economy is not getting worse–it is fundamentally changing and those who fail to change with it will be left behind. The days when you could graduate from high school with no specialized skills, get a job at the plant, and retire after 35 years with a middle class standard of living are long gone. Get used to it.
@HisRoc,
I agree with the modernization of industries but that would happen under a free-market society.
When you cripple the oil industry in the Gulf and outsource it to Cuba, Brazil, Mexico and China. It isn’t quite the modernization transition we’re talking about. There’s a difference between shifting technologies which normally happens within a free market society and moving to bogus industrial market like green energy, undeveloped vehicles and taking over corporations. And I could go on.
The Volt is a dismal failure and would not be here if it wasn’t for political hacks. The unions are strong arming Boeing and the NFL. And the firing of CEOs from their firms are not principles to promote a free-market.
It was nice when the dollar did the talking rather than a corrupt political class. When incandescent lightbulbs are outlawed…free market is not an accurate description and neither is modernization.
The opportunities for these so called high school educated, middle class is far more accessible than you give credit.
JJ,
The unions are strong-arming the NFL? Now you have really lost me. Dan Snyder and his fellow owners should take $1B away from the players on the field so that they can make more money while the players have an average life expectancy of 56 years after retiring? Cry me a river for the poor owners.
While the republicans have done all they can to kill the recovery, it is simply delusional to think that a policy of enforced austerity will build the kind of confidence we need to keep this recovery going. The loss of public jobs, while necessary, is already a drain on the economies of states like California and New Jersey, and one need only look to Great Britain to see how their adoption of this policy has curtailed growth and business development. Long term, yes, we must do as Clinton and the republican congress did, adopt pay go, reduce and eliminate the deficit so the debt comes down as well. But a sound and robust economy is the best way to move ahead, and elimination of the Bush era tax breaks for the rich and powerful corporations and individuals is crucial to bringing our budget back into balance. Now, such boring and moderate rhetoric does not provide the red meat to the radical fringe, but hey, it will improve your 401k.
HisRoc: You better get out more. We are headed downhill… I see it everyday with educated citizens across this country. Even with a college degree, they have no long term job prospects and no manner to catch up. Traveling across the country, I’ve seen hundreds of factories closed and boarded up or fenced off that used to provide jobs for Americans who in turn provided additional jobs for more Americans. Success and prosperity went hand in hand and grew our economy. Success was in reach of most Americans. The employment system provided for a stable economic base to create small business, work at a stable job and/or created the chance to give your children a brighter future than our own. That is gone and I don’t see it returning…
Today as I see the young employees entering the job market, they accept any job they can get even if they are over qualified. An example: Today’s fire departments are hiring graduates with Masters Degrees for a job paying them $38,000 a year. That is a very sad indicator of our economic reality. Years ago when I graduated with several degrees, I could count on a very successful and financially rewarding lifestyle based on my business skills and abilities. I’ve lived that dream and been rewarded very well for my efforts. Today, it isn’t even close as an advance degree is no guarantee of success and many of them have only student loan payments looming as a reminder of the college experience. Those are the fortunate ones… Worse not all our citizens should attend college nor do we have the system to supporting everyone’s educational needs if they wanted or could attend college. We need a method to give them a chance to see success in their future. How? I do not know. So how they catch up is beyond me and their reach.
I agree they are being left behind. Unfortunately sooner or later, they will rise up weapons in hand. Desperation, necessity and frustration are daily occurrences in many citizens’ economic lives. You wrote: “get used to it” but I don’t see that as a safe or proactive manner to deal with this issue. As I travel across the nation, I’ve seen the results and I just can’t “get used to it”. JMO
“The loss of public jobs, while necessary, is already a drain on the economies of states like California and New Jersey…”
Can I get some of what you are smoking? That is like saying that driving my car less is making my gasoline cost go up. The excess of public jobs in California and New Jersey, with their expensive Cadillac health care plans and defined-benefit early retirement, was the drain on the economies there as taxes were raised to pay higher and higher state and local government budgets. And guess what happened? As taxes on businesses and business owners rose, they re-located elsewhere taking jobs with them. Sure, raise taxes on “the rich and powerful corporations and individuals” and watch what happens. BTW, do the math: you can double income taxes on the top brackets and on corporations and entitlement spending on Social Security and Medicare will still continue to rise twice as fast as GDP. At the current rate of growth, entitlement spending will rise from the present 9% of GDP to 12% in the next 10 years alone. Sometime between 2030 and 2050, depending on whose predictions you believe, entitlement spending will consume 50% of GDP. How do you propose that we tax our way out of that box, genius?
@HisRoc, Adrian Peterson with his $10M salary and Rashard Mendenhall’s $4M salary does not classify them as modern day slaves. Just as Charlie Sheen slaves for his $2M an episode. As I concede to a degree to the NFL players getting paid more, I cannot for the Boeing situation.
@Mike, What would help my 401K is to get the government’s eyeballs off my retirement. NJ, CA and England would be the last places I would look for economic examples.
@William, Smaller government would help that situation immensely. When they quit picking winners and losers, you’ll be able to prosper off the fruits of your labor.
An example of raising taxes and businesses moving out is evident with a recent increase in Illinois, they lost Amazon directly because of that.
Actually, Medicaid is not a budget issue; it by law must pay for itself. That said, I agree that minor changes need to be made that will restore it to self sufficiency at least for the next 75 years or so. The sooner these changes are made, the better, but not during the budget process.
Medicare is a different matter. It too needs reform, especially in the area of cost containment, and the establishment of medical courts and regulations for care to prolong life are essential.
But of course, the biggest budget drivers are in defense. We must cut proposed weapons systems, reverse the “grow the army” initiative, restructure the military away from the cold war toward counter insurgency and asymmetric warfare, and reduce the cost of engagement in wars.
Yes, the federal workforce should decline, NASA missions can be curtailed, earmarks are history, and farm and corporate subsidies and tax credits reduced.
Do these things, and the deficit will be cut, then eliminated, and the debt will go down to a manageable level as well.
William Bailey,
Your comment is full of anecdotal evidence and bereft of facts. And, BTW, I have a firefighter in the family and neither he nor his buddies have bachelor degrees, much less a masters. If you know a firefighter with a masters degree, it is probably either from a diploma mill like Strayer or the degree is in fashion design.
As for worrying about the day when people will “rise up weapons in hand,” I am much more concerned about the fact that in China today government population regulation and family preference for a male heir is causing a 2-1 imbalance of male-female births. What is going to happen in the next generation when hundreds of millions of Chinese men of military age can’t find wives or meaningful employment? Think about that when you want to cut Defense spending to reduce the deficit instead of raising the Social Security retirement age and increasing Medicare co-pays.
John Jackson,
The exception does not prove the rule. For every Adrian Petersen there are dozens of second team, special teams, and even the occasional starter making the NFL minimum of $355,000. And the average player career is 3.2 years.
Other than that, I agree with you comment.
BTW, you are right about Amazon. Taxes were the reason that both Hilton and Northrop Grumman left California and moved to Virginia.
Hisroc – Interesting analysis. If you are right that the biggest defense challenge in the next generation will be millions of bored, horny Chinese dudes, wouldn’t it make more sense to take a portion of the defense budget and invest it in Chinese porn? Properly done, we could cut our defense budget, generate a huge new source of revenue to both fund our entitlements and reduce our taxes, and pacify a potentially troublesome, hostile and unpredictable Chinese generation. Problem solved.
Time for my nap, now.
aznew,
Actually, the Defense budget includes development of new saltpeter-tipped precision guided nonlethal munitions, but don’t tell anyone I told you.
Sleep well.
William Baily: The sky isn’t falling. For the foreseeable future manufactured goods will continue to dominate U.S. trade. Yes, we lost over 8 million jobs between ’07 and ‘09—the largest decline since the Depression – and about half of the unemployed are permanently terminated. And yes, the recovery will be sluggish because of 1) the huge household debt restraining consumer spending (households account for about 70% of GDP) AND 2) the impact of globalization (which we’ve largely ignored for decades).
But manufacturing still contributes $1.6 trillion to the GDP and employs 13 million people. We’re a far cry from “no jobs in manufacturing”. And yes, we can build the sector back up, but it will be with DIFFERENT manufacturing … and the exploding Chinese export market is helping us do just that. As long as the world needs ‘product’, there will always be a manufacturing base – but it won’t be smokestack industries; it will be high tech manufacturing.
John Jackson, I’m confused. A free market is totally unregulated by anyone – other than the players IN the market. It’s simply theory and has never existed, TMK. In fact, the closest example I can come up with is OPEC ~ and that’s not working out for world OUTSIDE the market. I can understand limited regulation or reduced legislation … but an all out free market would be a nightmare scenario.
I’m not talking about anarchy, even free markets need regulations to protect third parties. When the federal government is contemplating 1099s for business transactions, those are signs of an out-of-control government.
Currently, we have a government picking winners and losers throughout our economy whether it’s the courts as in the NFL, review boards dictating to Boeing, bailing out Wall Street financial firms or buying companies like GM. Propping up bad business practices is nowhere near a free market.
I advocate an extremly “Smaller government.” Sorry if I misled you but we should have more faith in our fellow Americans, we’ve always been very good at making things happen when they need too. Something the federal government has difficulty doing.
HisRoc: I feel like I’m having a debate with Kirwin and no matter what I post from my personal experiance, background and education, I’ll get some type of meaningless BS response. There is no point to continuing to respond.
You win. Congratulations.
William Bailey,
You might want to take note of the fact that BK is the only person who hasn’t given you “some type of meaningless BS response.” Maybe if you stop posting meaningless BS comments, you won’t get responses in kind. Of course, you could always try applying facts and logic to support your position if you had any.
This is not about winning. As the Boss wrote, “nobody wins unless everyone wins.” But, if you can’t run with the big dogs then keep your puppy ass under the porch.
Today’s jobs report indicates once again that the momentum of the recovery is increasing and is based upon a solid foundation of real growth and development, not the fake hot air of the period of irrational exhuberance. I regret the fact that many are still unemployed or under employed, yet I applaud the President and his economic advisors for keeping their eye on the long term strategic necessities which depend upon education, investment, and establishment of fairness in our economic system. The President’s steady hand and rational approach in domestic and international affairs is not only comforting, it is exemplary, and provides a strong foundation in his negotiations on the budget as well.
Mike,
Are we reading the same jobs report? Unemployment rose to 9.0%, the number of unemployed for less than 5 weeks increased by 242K in April.
“Nonfarm payroll employment rose by 244,000 in April…” Those are jobs at McDonald’s. Yes, a firm foundation on fast food chains. While Michelle Obama is advocating to close those jobs.
HisRoc: You’re too quick to discount William Bailey. “Perception is reality” ; voter psyche plays a HUGE role in elections, as candidate campaigns clearly illustrate, e.g. “Are you better off now than you were 4 years ago?” Bill Clinton could “feel your pain” better than most – for a reason. And, at its most extreme, collective angst put Bonaparte and Hitler into power. It’s unwise, IMO, to discount its impact or importance.
~our youngest will go directly to grad/law school, a major change from ‘my’ day, when it was much more common (and employee preferred) to work between undergrad & MBA degrees.
WB is right; leave Hampton Roads or NOVO economies, both heavily supported w/ military and government contract spending & paychecks, and you do find a different reality. When a Ford plant closes in Norfolk, it’s a big hit, but a hit within a much larger economy that can absorb workers and recover from temporary tax base losses. OTOH, when IP shuts down a paper mill in Franklin, the impact slams all of Western Tidewater w/ revenue (25% of Isle of Wight budget) and income losses. In that setting, the shutdown produces secondary economic tsunamis that take out restaurants, hardware stores, auto dealerships, etc. and wrecks school budgets, churches, and YMCAs. Intellectual capital and skilled labor move elsewhere, home values decline further, and more businesses and community organizations close. In short, an entire community (and region) is radically altered ~ by one plant closure. We (republicans) discount those personal experiences (and facts) at our own peril.
WB is also spot on regarding employment opportunities for young adults & graduates. Businesses are not hiring (or hiring at a reduced pace) and older workers stay in the workforce longer – far fewer job openings. In fact ~and pardon the anecdote!
There must be dialogue and unified focus (rather than dismissive put-downs) on an alternate path to success for non-college bound students. The community college system is being tapped to fill in the gaps (with specialty work-force-development type courses), but there is great merit in revisiting an enhanced version of the old VOTEC path (which appears to have been dumped in the last decades for ‘equal access’ reasons). Germany builds the best products, worldwide; they do it with a highly skilled workforce educated at the HS level in a dual education school system. We can learn much from Germany’s model… and it is in ALL of our best interests to explore multiple paths to prosperity for college (and non-college) educated citizens.
Besides … ‘conversation’ on BD would be boring ~ if we all agreed!
Unemployment frequently goes up even as jobs created goes up. More hope, so those not looking start looking. The stock market showed they like the increased employment and the signs that the economy is back on a solid footing. Now I know that seriously disappoints the tacticians on this forum who want our economy to fail so the President does not get reelected. Sorry folks, that is not my priority. I want to see solid growth, investment in education and infrastructure, and capitalism at work to put our nation back to work. Frankly, Cantor and Dr. Death in the Senate can spin all they want, but the economy is doing just fine, thank you, whether that helps your majority or prospects for the Presidency or not.
MB “… the economy is doing just fine” - in your dreams.
JJ- Why do you keep bringing up the NFL? It only hurts your case. Because, of course, the NFL is not a free market, it’s a monopoly market. In a free market, each player could negotiate with whichever team he wanted to whenever his contract ended and there would be no draft.
I wouldnt’ have like being restricted to negotiating with one company for a job when I came out of college.
In case you hadn’t noticed, the current labor strife in the NFL is the result of the owners locking the players out, not a strike. The current labor contract has benefited both the players and the owners, the owners are the ones who want significant changes, including some like the change from 16 to 18 regular season games, that jeopardize player’s health and safety.
@SV,
I love snipers, but you have me on the NFL. Last night, I was trying to figure my stance on unions. Before last year, I blindly supported unions but their tactics completely open my eyes. Here’s my stance on these three categories:
1) Public Sector Unions. The Wisconsin teachers union and other public sector unions should not exist because they are bartering with politicians and bureaucrats that have similar interests, gain support.
2) Free Market Unions. The Boeing incident and the auto industry have showed how unions kill private corporations, this is why they are less than 10% of the private sector.
3) Monopoly Unions. I was being unfair to the players’ (i.e. NFL) union in this portion because these players don’t have anywhere else to go. So, with the players unions I concede.
Now, I made the categories up so I could distinguish them for my own purpose. I concede the NFL for this instant but it still doesn’t negate my original argument. In my post at 14:13pm yesterday, I did concede to a degree to HisRoc comments. It’s just my fingers were typing faster than my brain.
Now, I’m on the right track with the NFL, NBA and MBL players unions.
JayD,
“Perception is reality” has been one of my hallmark expressions for many years. As a consultant who specializes in knowledge management and knowledge transfer, I frequently tell my clients that people love innovation, but they fear change.
The occasion of IP closing a mill in southwest Virginia is hardly a new phenomenon in the American economy. It is a story line that is older than John Steinbeck’s novels. Shit happens. That doesn’t mean that the end of days is near. However, our political “leaders” seem incapable of speaking truth to their constituents. They curry favor and votes by telling people what they want to hear and not what they need to know. “We are going to re-open the plant.” “We will bring good, high-paying jobs back.” “You don’t need to adapt, the government will take care of you.” You might call that perception management; I call it pandering.
I have numerous relatives in my extended family who have recently finished school or are in the process of doing so at stages ranging from high school/community tech to Ivy League business and law schools. Their job search experiences are far different than mine was when I graduated from college back in the late-20th Century. But my experience was far different from my father’s experience, which was far different from his father’s experience. Our society as a whole, not just our economy, continues to evolve. Get used to it.
BTW, I might have been dismissive of WB, but he started it. He bailed out when I called him on his assertions. That is neither a conversation nor a debate.
HisRoc: I get change,have no problem with change. And I agree with you ~ with one difference.
We don’t live in Oakie ‘30s society. Today, we ALL pay when a job is lost to recession, offshoring, or tech evolution. We pay through lost GDP, lost taxes, and through state & federal taxes that fund multiple (and some mandated) safety net programs.
Honestly (and I’m not the chicken-little type), I don’t believe we’ve ever seen American economic conditions quite like today; we aren’t simply loosing jobs to evolution or competition ~ the government is literally hurling them out of the country.
Is this typical marketplace evolution? Or raiding the treasure to guarantee political power – before/during/after a 99% government-made recession?
Krystle Weeks, please become more educated on your writings before publishing them. You clearly don’t know anything about the American government. Its sad that people as poorly educated as you have a say now a days because of the internet.
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