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The GDP (Gosh-Darn Pathetic) Economy

The miserable, deliberately imposed "new normal."

Tom Blumer


May 7, 2014 - 11:08 pm
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As the POR (Pelosi-Obama-Reid) economy nears the end of its sixth year, one thing we can say for certain is that the “fundamental transformation” President Barack Obama, Senator Harry Reid, Congresswoman Nancy Pelosi and their party have long wished to impose on these United States has made measurable progress.

Democratic Party housing policies caused the recession. Obama’s conduct during the 2008 campaign and the presidential transition period lengthened it. His administration’s failed 2009 stimulus plan, followed by over five years of cronyism, demagoguery, and regulatory zealotry — now briskly advancing into bald intimidation — have slowed the alleged recovery to a crawl and exacerbated the very income inequality the left routinely denounces.

If there was a record for most economic reports issued which are worse than they initially appear, this bunch would hold it by a wide margin.

An obvious example of a bad number made worse after just a little investigation is in the April 30 report on first-quarter economic growth.

The government’s Bureau of Economic Analysis told us that the nation’s gross domestic product grew by a virtually imperceptible 0.025 percent (0.1 percent annualized). Even assuming no population growth, an equivalent result in the employment arena would see a company grant a 10 cents per week raise during each of the next four quarters to a worker currently earning $400. But of course, the U.S. population did grow, and real per capita GDP fell. Fixed investment, the factor which above all others drives genuine long-term growth and prosperity, contracted.

Obamacare defenders celebrated one component of the result, claiming that the first quarter of the statist health regime’s implementation was the only thing that kept the economy from moving into contraction. Applying just a little common sense reveals that Obamacare really sent the economy into decline.

Yes, health care spending increased sharply. But much of it likely was incurred by the millions of new Medicaid patients roped into the system by and the state exchanges (at least the ones, unlike Oregon’s, that work). Long-term studies have shown no significant improvement in medical outcomes in that program. That extra spending, higher Obamacare-caused insurance premiums (buried in the “financial services and insurance” line item in the GDP report, but likely responsible for almost all of its increase), and higher outlays on utilities during the rough, non-global warming winter caused all other forms of consumption to flatline.

In layman’s terms, Americans during the first quarter more than likely spent a whole lot of extra money on things which on the whole didn’t make them any better off, keeping them from purchasing many useful things they ordinarily would have bought. In the real world, Americans’ standard of living noticeably declined.

At first glance, Friday’s employment report from the Bureau of Labor Statistics seemed like good news. The economy added 288,000 seasonally adjusted payroll jobs, and the unemployment rate dipped to 6.3 percent. Again, a surface scratch reveals a largely ugly reality.

As has been the case throughout the nearly five years of alleged recovery, a wildly disproportionate number of the jobs added went to those in low-wage occupations, including temporary help services (24,000) and “food services and drinking places” (33,000) — a line item which, based on a report from the left-leaning National Employment Law Project, should be renamed “fast food services.”

So 1.1 million of the 7.8 million net jobs added since the recession as officially defined ended in June 2009 have gone to temps. Employment in that sector has increased during that time by 63 percent, while payroll job growth in all other occupations has grown by a paltry 5.2 percent. Those who argue that employers haven’t changed their staffing behavior as a result of Obamacare routinely ignore this ongoing structural change in the workforce.

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All Comments   (7)
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We seem to be moving into the "service economy" all the pundits and "experts" were touting a few years ago. We're supposed to make a living taking in one another's laundry.

We have discarded some 40% of our production capacity (a phenomenon known as the "giant sucking sound"). Our leaders and pundits subscribe to the Idiot's Theory of Economics, which holds that the role of producing goods doesn't matter -- that it is irrelevant whether we retain our factories, capital, and jobs, or whether those things are packed up and shipped to foreign countries. As a result, China has become wealthy, and we are $18,000,000,000,000 in debt.

And we continue to lose production, as shown by this story from the Lexington Herald-Leader, April 3, 2014:
  Clothing company Fruit of the Loom announced Thursday that it will permanently close its plant in Jamestown and lay off all 600 employees by the end of the year. The Jamestown plant is the last Fruit of the Loom plant in [the] state...
   The company said it is moving the plant's textile operations to Honduras to save money. . . .
   At one time, Fruit of the Loom had more than 11,000 manufacturing and
corporate employees at its plants in Jamestown, Frankfort, Campbellsville...

We produce less and less, we consume more and more, and we borrow to cover the difference. We have, in Pravda's words, a "produce in China, sell in the West" policy. And when Pravda knows more about economics than we dol, we're in trouble.

43 weeks ago
43 weeks ago Link To Comment
What's so hard to understand?
Business taxes up means business shrinks.
Business regulations up means business shrinks again.
Income taxes up means less personal buying, shrinking business again.
Extend and expand unemployment benefits, paid by businesses, causes more shrinkage.
Maybe after 6 years of such stupidity, our elected leaders might try the reverse, but since there is no penalty to them, why should they care? After all they successfully play the voters for chumps and win reelection 96% of the time despite their overt contempt for the public.
I say vote them all out. Wipe the slate clean. Warn the new leaders that unless they do a lot better, they will be recalled; don't wait for reelection. Tie their salary to the median American wage earner salary. Better yet let their salary plus perks be no greater than the bottom quartile American wage earner. Maybe that might give them a real incentive to improve the economy.
43 weeks ago
43 weeks ago Link To Comment
For many years I worked in commission sales in companies that also gave generous bonuses to the non-commissioned staff. Since EVERYONE was a "stake-holder" in the companies success...guess what...we were ALL HIGHLY MOTIVATED to see the company succeed. Ever since then I have said that "everyone needs to work on commission" or at least have the overwhelming majority of their compensation tied to "performance based" bonuses...NONE more so than ALL Elected Officials!! There I fixed it!!
43 weeks ago
43 weeks ago Link To Comment
Apparently everything following, "What's so hard to understand?"

I think part of the problem is, there's enough leeway in our economic system that what in any other country would almost immediately become a major financial crisis, here it can be dealt with. How many Solyndra's could the UK accommodate before a national crisis occurre? Not many. Here, they keep playing the same (failed) games, because the Feds are always able to cover the loss. And so these Pols are empowered and enabled to keep trying their failed policies, because someone will always bail their arse out if it goes wrong.
43 weeks ago
43 weeks ago Link To Comment
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