The American Observer has an animation showing how US unemployment rates have changed by country between January 2007 and May 2010. Due to the colors chosen to key the map, the animation resembles footage of lights being turned out all over America. If you watch the presentation enough times it begins to look like the spread of a pox over the body of a victim, with adjacent areas changing color as they are infected. There is no visual indication of a retreat in the disease. No intimation of a “recovery summer”. In fact it does not appear to have reached its high-water mark yet.
A Washington Post blog says if you’re waiting for the “summer of recovery” don’t hold your breath. And there’s no telling how much longer you’ll have to hold it. The signs improvement is around the corner are few. Neil Irwin writes, “there’s a pattern here, and it’s not a good one. Virtually every major economic indicator to come out in the past two months has been disappointing in one way or another. Retail sales. International trade. Weekly jobless claims. The monthly employment report. Housing starts. In fact, of the major data releases, the only one I can think of that has been decent over the past couple of months was last week’s industrial production report.”
As if to underscore the problem, the Wall Street Journal reports that stocks have fallen for the fourth straight day, with 9 out of the last 11 days posting downturns. Investors it said “feared a protracted and uncertain recovery.”
Stocks fell in other markets. The Stoxx Europe 600 index closed down 1.7% at 249.44. The U.K.’s FTSE 100 index fell 1.5% at 5155.95, France’s CAC-40 index ended down 1.7% at 3491.11 and Germany’s DAX fell 1.3% to 5935.44.
The worst of it are suggestions that the “stimulus” has proved to be just a palliative. The moment it was withdrawn the underlying condition of the economy manifested itself again. The Los Angeles Times attributed the “unexpected” 27.2 decline in the housing market to the end of a government stimulus program.
White House Deputy Press Secretary Bill Burton acknowledged that the drop-off was likely largely due to the expiration of the home-buyer tax credit and called the 27.2% decline a “tough number.”
“There’s a lot more work yet to do,” Burton said. …
Real estate experts said the tax credits led many buyers to speed up their plans to buy houses, boosting sales this spring, but sapping demand over the summer.
The Administration appears to have accepted that there will be no significant easing in the economic situation before November and their message is now that it is Bush’s fault; and that they haven’t had enough time to undo the damage of the past years. “For eight years before we arrived in the West Wing, Mr. Boehner and his party ran economy and the middle class literally into the ground,” Joe Biden said.
Seizing on the large budget deficit accumulated during the Bush administration, Biden today accused Boehner of returning to the policies that led to the crisis “from which we are still digging out.”
“They gave free rein to special interests to write their own rules at the expense of everyone else, not just the middle class,” Biden said.
But it’s a blame-shifting gambit, not an economic solution. The idea may be to pass ownership of the problem to the Republicans. The difficulty with this approach is that it doesn’t move the liability away from Washington. If there is a groundswell building against incumbents in both parties the administration may be taking cover behind the wrong tree. The point both parties need to fear is if the lights continue to go out after November 2010. That will turn 2011 from a possible year of recovery to a year of epiphany: one that goes, “we’re from the government and we can’t help you.”