James Pethokoukis

Politics and policy from inside Washington

10 reasons why the US economy will stay weak

September 25, 2009

From David Goldman’s Inner Workings blog (the actual post of chock full of charts, expanded explanation):

10. Exports are down by a quarter from their June 2008 peak.

9. Credit growth remains negative.

8. Weakness in existing home sales show that despite record low mortgage rates, screaming bargains in lower-priced homes, and tax breaks, the housing market continues to weaken.

7. The Fed’s Household Wealth Survey for the second quarter sounds impossibly optimistic.

6. Total consumer credit outstanding is still falling, and at the fastest rate since World War II.

5. Business are still reducing inventories, and at the fastest rate on record.

4. The Fed is caught between a rock and a hard place. Monetary stimulus remains out of control.

3. Dollar devaluation has helped about as much as it’s going to.

2. The effect of fiscal stimulus will come to an end: no more cash for clunkers, bailouts of bankrupt municipalities (by taking over their spending requirements), tax subsidies for mortgages, and so forth.

1. Barack Obama. By toying with a trade war with China in order to appease his organized-labor constituency, Obama has taken a giant step away from a prospective solution.

Comments

So, you’ve posted this because you believe it or because it ends with Obama-bashing. The only consistency in your blog is just that… not very constructive. Nor is blindy saying tax-cuts are the key to everything, because tax-cuts don’t close $1.7 trillion deficits. Sorry, they just don’t.

As for the last point in the article, the expanded explanation makes some interesting points (as opposed to just the Obama-bashing, where you left it.) But I don’t really see how the author believes that Asian countries would want to pay for American expertise to modernize their infrastructure. Frankly, America is not a world leader in construction, and only barely so in telecom. I don’t see how/why America would at all be an instrumental or even peripheral player in such an expansion in Asia. The fact is south-east Asia went down that road before, and it came to a abrupt halt in the 90s – now they do it their way, and do it better to boot.

Posted by the Shah | Report as abusive
 

You are naive if you think unemployment is only 9.7%. In order to compare unemployment from the 80s to unemployment in the 00s you have to calculate it the same way. In the 90s the government decided to not include individuals that were discouraged from finding work and dropped off the radar. If you add those individuals back in, the actual unemployment rate is 16.7%. That is why the economy is continueing to tank. And until unemployment changes, our consumer economy is not going to recover. See stats at http://www.shadowstats.com/

Posted by litesweet&crude | Report as abusive
 

America is coming out of a gruelling recession. Criticising Obama and pinning all the blame on his policies are neither fair nor objective. Here is a President who is capable, intelligent, pragmatic and sincere. So give him the support to take America to the heights. A strong compassionate America is a boon to the rest of the world.

 

I can sum it up in one reason….. It’s because we do not adhere to the wisdom of our constitution.

Posted by jason | Report as abusive
 

Capable, intelligent, pragmatic, and sincere? Are you kidding me? Those terms usually are not consistent with socialism. You might want to study up a little.

Posted by Frank | Report as abusive
 

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