Posts Tagged ‘Economy’

Obama Sets Economic Record–For Failure

Tuesday, January 3rd, 2017

So did President Obama save us from the financial crisis and rebuild America’s economic strength?

Most media would have us believe that’s the case. As we previously noted, CNBC’s John W. Schoen reported that, “Obama’s biggest parting gift to Trump may be the economy,” since the unemployment rate has dropped to a nine-year low of 4.6%. AP’s Josh Boak repeated the statistic in an article, “Obama leaving behind much stronger economy.” And there are many, many other examples.gdp

Washington Post columnist Catherine Rampell wrote recently that the president-elect will be taking office with “among the most favorable economic conditions … imaginable.” She clearly does not have a very vivid imagination.

Yet other statistics bear out that Obamanomics has been an economic bust, not a boom. Consider the lack of economic growth. In the 85 years for which the U.S. Bureau of Economic Analysis has calculated the annual change in real gross domestic product (GDP), the period from 2006 through 2015 is the only 10-year period during which annual growth never reached 3%. Before now, the longest period during which the economy failed to grow by at least 3% was the four-year period from 1930 to 1933. That is, during the Great Depression. (more…)

Real News about Fake News

Monday, December 12th, 2016

Don’t laugh, but the same journalists who have been writing about our booming economy, our amazing progress against ISIS (make that ISIL), Hillary’s dedication to her country and the coming end of the world due to climate change are now claiming that “alt-right” news sites are making things up.

Washington Post columnist Eugene Robinson, who has never written a negative word about any Democrat or a positive word about any Republican, says “cynics” writing on sites like Facebook, Reddit, Infowars and Inquisitr “concocted ‘news’ stories out of whole cloth during the campaign in an attempt to destroy Hillary Clinton and those closest to her.”pbuq0z6zz0yo9jd412f36q

As if Hillary didn’t do enough to destroy Hillary.

Conspiracy theorists came up with a crazy story about alleged sex trafficking out of a pizza parlor frequented by Clinton Campaign Manager John Podesta and it led to an attempted shooting. Now Robinson has come up with a conspiracy theory about the conspiracy theorists he criticizes. No doubt Hillary Clinton would have been elected president, if people just reported the truth (except about her, of course).

If Robinson’s column isn’t “fake news,” what is? (more…)

Trump’s Not Reagan or Obama

Monday, December 5th, 2016

Donald Trump is not Ronald Reagan. That should be obvious, but many optimistic conservatives are drawing parallels and predicting economic nirvana over the next four years.

That’s unlikely to happen, but, conversely, the incoming president is not Barack Obama, either. The Obama presidency has been disastrous on many fronts, creating economic stagnation, a doubling of the national debt, and foreign policy disasters, such as the lifting of sanctions against Iran and Cuba in return for pretty much nothing.trump

We’re not about to join the media in bashing the president elect for choosing cabinet members that do not share U.S. Senator Elizabeth Warren’s ideological views, but we’re also concerned that the stock market’s post-election surge is yet another case of irrational exuberance.

Stocks were already overpriced before the election, yet the market was up 5.4% for the month of November. That’s not going to continue for four more years.

Stephen Moore, a senior economic advisor to the Trump campaign, is not surprisingly among those comparing Trump with Reagan. As he wrote in RealClear Policy, “After the election of Ronald Reagan in 1981, the U.S. Economy experienced one of its greatest booms in history. The growth rate averaged nearly 4 percent for seven years 1982–89. And the stock market rose from less than 1,000 on the Dow to more than 10,000 over the next two decades. This was a period of wealth and job creation that the nation and middle class had seldom seen before. All the liberal critics wrongly said it could not and would not happen. (more…)

An Election Post Mortem

Monday, November 14th, 2016

You can’t play sports without losing sometimes and, in losing, you learn something about grace and how to act under pressure.”                                  John F. Kerry

The silent majority has made its choice. Working class white males bonded with the billionaire from New York City and, as a result, we have a new president who is not a Democrat (though he was), not a woman and, thankfully, not politically correct.

Donald Trump, though labeled as a racist by Democrats, also drew more votes from blacks, Latinos and Asians than previous Republican nominee Mitt Romney.trump-donald

Supporters of Hillary Clinton did not take her surprise defeat well. In fact, they may have reacted with more constraint if bubonic plague had been introduced to their water supply. Clinton supporters swooned. I’m still not sure what the vapors are, but Hillary fans had cases of them in droves. It was like a scene from “Contagion” or “The Day the Earth Stood Still.” Panic was widespread.

Consider this quote from the Telegram & Gazette’s Dianne Williamson: “Yes, it hurts. It’s spirit-crushing. I’ve heard from many people who expressed surprise at the visceral emotional pain they felt upon learning that a slick, opportunistic demagogue has been chosen over a smart, capable and accomplished woman who has devoted her life to public service.” (more…)

Do You Like Being Told What to Do?

Monday, August 15th, 2016

Listen, this whole system of yours could be on fire and I couldn’t even turn on the kitchen tap without filling out a twenty-seven B stroke six … bloody paperwork.                                                                                                                                                            Harry Tuttle in “Brazil” 

Americans didn’t used to like being told what to do.  We fought the Revolutionary War so that we wouldn’t have to take orders from England.  We fought the Civil War to end slavery and make every American free.  We fought two world wars to hold on to that freedom.

And then along came big government.  Medicare to help the old.  Medicaid to help the poor.  Food stamps and medical leave, help for the disabled and guaranteed wages, regulations to reduce pollution and prevent financial wrongdoing.  And much, much more.88468_Words-and-Actions-by-Eric-Allie-Caglecartoons-515x356

Some of it was good.  Some of it was needed.  But much of it wasn’t.  Do we really need more than 80 federal welfare programs to provide money, food, housing, medical care and social services to low-income Americans?  Wouldn’t maybe three or four be more efficient?

It’s difficult to pinpoint exactly when regulations got the better of us.  You could argue that it goes back to 1930, when the protectionist Smoot-Hawley Tariff Act helped cause the Great Depression and the New Deal made the impact worst.  You could argue that it was during the ’60s, when the Great Society programs and the War on Poverty took place.  As we (and many others) pointed out last year, during the 50th anniversary of the War on Poverty, after spending $20.7 trillion (based on 2011 dollars), the poverty level today is essentially unchanged at about 15% of the American population. (more…)

Can We All Be Greeters at Wal-Mart?

Monday, July 11th, 2016

Job reports typically report on jobs as if they are a commodity; a job is a job, whether you’re a CEOs or a greeter at Wal-Mart.

So it’s good news that 287,000 new jobs were added to the economy in June—assuming you believe government statistics—but it’s bad news if the jobs are so mediocre, illegal immigrants wouldn’t work them. Older workers

First, let’s consider the numbers. In May, the experts predicted that 160,000 new jobs would be created, but the U.S. Bureau of Labor Statistics reported that only 38,000 were created. The unemployment rate dropped to 4.7%, though, because 458,000 workers dropped out of the labor force and were no longer counted in the statistics.

For June, experts predicted that 175,000 new jobs would be created, which is 112,000 fewer than the BLS reported. At the same time, the BLS revised the May figure downward to just 11,000 new jobs. The question no one seems to be asking is why there was so much volatility between May and June. How does the economy add virtually no jobs one month and then produce 26 times as many jobs the following month? Even the stock market isn’t that volatile.

The report prompted headlines such as, “U.S. employment rebounds strongly in June, calming fears of economic slowdown” (The Washington Post), “Job growth surges in June as employers add whopping 287,000 jobs” (USA Today) and “Jobs Roar Back With Gain of 287,000 in June, Easing Worry” (The New York Times).

And, by the way, the unemployment rate increased from 4.7% to 4.9% in June, primarily because some Americans rejoined the work force.  (more…)

“When Free Enterprise Dies, America Dies With It”

Monday, May 16th, 2016

Public ownership has historically been the lifeblood of the American economy. Going public produced funding for growth, while providing investors with an opportunity to share in the company’s success.

Not anymore.

In the peak year of 1996, more than 1,000 companies went public.  This year, we may not have 100 initial public offerings (IPOs). To date, only 39 IPOs have been filed—a 52.4% decrease from last year. Only 20 IPOs have been priced, which is a 65.5% decrease from last year. Only $3.3 billion has been raised from IPOs, a decrease of 68.8% from last year, according to Renaissance Capital.

In January, not a single U.S. company went public. And there was no polar vortex to blame. Through the first quarter, there were only 11 IPOs, which is the worst start to a year since 2009.

So tell me again about the booming economy.

In the past, the number of newly public companies far outweighed the number of companies that converted from public to private ownership, failed, merged, were acquired or were delisted because they no longer met exchange requirements. In recent years, though, the number of companies no longer trading on U.S. exchanges has been increasing just as IPOs have been decreasing. Public Companies

In fact, the U.S. now has half as many publicly listed companies trading on its exchanges as it did in 1996. As the chart shows, America had 7,322 in 1996 and, as of last year, that number had dropped to 3,700. That’s 1,000 lower than in 1975, a date well before the boom in IPOs. (more…)

Let’s Ignore the Central Banks

Monday, April 11th, 2016

What if we all decided to ignore the central banks?

Granted, they have provided material for this blog non-stop from the day it started.  They keep financial journalists, economists, analysts, pundits and other financial fortune tellers employed.  They keep the stock market pumped up when it can’t achieve new records of its own merit. They appear be the only people in the world tasked with managing the economy (even if they are mismanaging it, rather than managing it).

So why should we ignore them?

They’re frequently wrong.  The Federal Reserve Board, our country’s central bank, has a history of causing, not solving crises.  Former Fed Chair Alan Greenspan is not even mentioned in “The Big Short,” but some give him top blame for causing the 2007 housing bubble and the financial crisis that followed. Benchmark

“Alan Greenspan will go down in history as the person most responsible for the enormous economic damage caused by the housing bubble and the subsequent collapse of the market,” according to The Guardian.

Noting the plunging housing prices and high unemployment in 2013, when the article was written, The Guardian reported that, “The horror story could have easily been prevented had there been intelligent life at the Federal Reserve Board in the years when the housing bubble was growing to ever more dangerous proportions (2002-2006). But the Fed did nothing to curb the bubble. Arguably, it even acted to foster its growth with Greenspan cheering the development of exotic mortgages and completely ignoring its regulatory responsibilities.”

(more…)

Set. Down. No Hike.

Monday, March 21st, 2016

The economic outlook can be summed up in five words: Everything’s great, except what isn’t.

We’ll lead with the “everything’s great” part, as seen through the filter of the Federal Reserve Board.  As Fed Chair Janet Yellen reminds us after every meeting, the Fed has two goals—lowering the unemployment rate and stabilizing prices.

The Fed’s target unemployment rate is 4.7% to 5.8% and, if you believe the U.S. Bureau of Labor Statistics (see below re: why you shouldn’t), the Fed has accomplished that goal, as the current rate is at an eight-year low of 4.9%.  The Fed’s target inflation rate is 2% and, depending on how you measure inflation, it’s close to that number.Stock Prices

“The Fed’s preferred measure, the personal consumption expenditures price index, rose 1.3% in January from the previous year, and so-called core inflation—which excludes volatile food and energy prices—was 1.7%,” The Wall Street Journal reported. “The consumer-price index rose 1% in February from a year earlier, but core CPI was up 2.3% for the year, the largest 12-month increase since May 2012.”

So the Fed could have logically declared its mission accomplished and begun to gradually increase interest rates, as was expected after December’s initial miniscule rate increase.  So why was the vote at last wek’s meeting 10-1 against a rate hike? (more…)

Mutually Assured Destruction

Monday, March 14th, 2016

Iran, North Korea and the world’s other despots may be able to take over the world without going nuclear or even firing a single shot.

That’s because much of the free world seems bent on destruction from within, done in by a Keynesian death spiral.

Apparently, no one believes in capitalism anymore.  Instead, central bankers, who now control the economy in most of the world, are hell-bent on continuing to dig the negative-interest-rate hole ever deeper, until it is impossible to climb out.

While central bankers have only made matters worse with their easier-than-easy monetary policies, they’re so deeply invested, and so far down the rabbit hole of negative interest rates, they can’t turn back. Draghi

It may not be working, but admitting as much would bruise many strong egos, scare investors and sink stock prices.  So they keep digging.

A Bigger Bazooka

A year ago, Mario Draghi, head of the European Central Bank, announced the start of an asset-purchasing program similar to the Federal Reserve Board’s quantitative easing (QE) program through which the ECB would spend €60 billion a month on Eurozone government bonds.

(more…)