Now They Tell Us
Now that Barack Obama is safely ensconced in the White House for another four years, several items which should have been noticed or revealed before Election Day have come to the fore. Collectively, they tell us two things: that the pre-election economy was worse than voters were led to believe, and that the prospects for meaningful improvement under the current regime are bleak at best. Additionally, in at least one instance, economic activity itself was likely manipulated.
The probable gamesmanship occurred at Government/General Motors, which is still effectively under Obama administration control, still on track to saddle U.S. taxpayers with a loss of $25 billion or more, and still losing market share.
Despite already-bloated inventories at its dealers, GM's production lines ran full throttle during September and October. Thanks to that ramp-up and unimpressive sales growth, retail inventories grew by an astonishing 99,000 in October and November. Dealers received five vehicles for every four they sold during those two months, bringing their on-hand stocks from an already unsustainable 689,000 in September to an absolutely ridiculous 788,000. GM estimates that its dealers have a 4-1/2 month supply of full-size pickups -- if the economy doesn't tank.
It seems all too likely that a presidential campaign which used "GM is alive, Osama is dead" as its campaign theme ordered or pressured GM executives to keep the assembly lines running all-out regardless of the business consequences. The campaign of challenger Mitt Romney should have been paying closer attention, as half of GM's inventory spike occurred and was reported before Election Day. But instead, it let itself get distracted by mostly irrelevant noise about Chrysler's plans for its Jeep brand in China. It even missed touting Chrysler parent Fiat's announcement that it plans to manufacture a new Jeep model for the North American market in Italy.
Earlier this week, almost a month removed from election-related visibility, the Wall Street Journal reported that the company “is taking steps to cut excess production," specifically citing a plant in the critical swing state of Ohio, and "signaled there may be more to come.” Imagine that. If the economy sputters badly, layoffs could easily begin occurring at GM and throughout its supply chain.
News in the housing market, particularly concerning sales of new single-family homes, suddenly went from pre-election exuberance to post-election bleakness. The Census Bureau's final pre-election report told us that new-home sales had reached a seasonally adjusted annual level of 389,000. The administration's press apparatchiks dutifully reported that figure as the highest in 2-1/2 years. The Associated Press, aka the Administration's Press, told readers and subscribing outlets that the news was "further evidence of a sustained housing recovery that could help lift the lackluster economy."
Oops. The bureau's post-Thanksgiving release revised September's number down by over 5 percent to 369,000 and also reported a slight October decline. Overall, it showed that the housing market has gone nowhere during the past eight reported months. Actual monthly sales during the past five months have badly trailed 2009, when most observers thought that things were already as bad as they could get. Those who believed that clearly underestimated the Obama administration's ability to perpetuate misery throughout a sector which would have long since recovered if it had simply been left alone. The AP's still overoptimistic reaction to the September revision was to insist that "the housing market (is) starting to recover more than five years after the bubble burst," and to push a large portion of the blame for October onto Superstorm Sandy.
Readers are going to be seeing a lot of Sandy-related excuse-making during the next several months, and -- who knows? -- maybe even the next several years. Already, Sandy is being peddled as the reason why the ADP-Moody's November private-sector employment report came in with only 118,000 jobs added. Mark Zandi, chief economist at Moody’s Analytics, claimed that the number would have been 86,000 higher if it weren't for Sandy. Logically then, the December catch-up added to a supposedly typical month with 200,000 jobs added should cause the next ADP-Moody's report to show a gain of almost 300,000. Wanna bet, Mark? November's jobs report from the government released on Friday, though presented as pretty decent by the press, really wasn't.
Now even the press is turning dour on the economy, as if lousy conditions totally invisible before November 6 have suddenly (and of course, "unexpectedly") appeared to ruin things. But so are Obama and Democratic legislators, who while demanding economy-retarding, job-killing pound-of-flesh tax increases and insisting that entitlement spending stay off the table for another ten years, want to add "tens of billions of dollars of ... stimulus measures" to any deal to prevent the January 1 "fiscal cliff."
The only things which seem likely to arise out of all of this are trillion-dollar deficits as far as the eye can see, continued lackluster or worse economic growth, and indefinitely higher than acceptable levels of unemployment and under-employment. Oh, and one more thing, courtesy of Howard Dean and despite the administration's insistence to the contrary: tax increases for everyone.