The Broken Economy

Throughout the long and stagnant years of his presidency, Barack Obama has never missed an opportunity to congratulate himself for doing a swell job of managing the economy.  He did it again during the State of the Union address, proudly boasting of having “broken the back of the recession.”  Meanwhile, the recession was dragging its hyper-alloy combat endoskeleton up behind him, its red camera eyes fixed with merciless intensity on the jobs it came to terminate, reaching for our throats with its bloodstained metal talons.

As part of the endless spin, the Associated Press put together a report celebrating an economy that has “consistently gained speed since hitting a rough patch in the spring,” as measured by a strong 3.5 percent growth in GDP for the fourth quarter of 2010.  Within hours of this report being published, the real GDP numbers were revised downward, to a much less exciting 3.2 percent.  This comes one day after the latest “unexpected” surge in unemployment.

Reporting on the economy is tricky, because politicians and the media understand that the reporting itself affects the economy.  The press does a very good job of talking the economy down under Republican presidents – remember how they moaned about unemployment numbers under Bush that now seem like an impossible daydream of prosperity in the Age of Obama?  They couldn’t wait to help Bill Clinton sell his “worst economy of the last fifty years” drivel against Bush the Elder, whose economy certainly did have serious problems.  It really was recovering during the 1992 elections, but you’d never have seen the kind of perky “clear sailing ahead” kind of coverage Obama’s horrible economy routinely receives.  Not one piece of bad economic news in 1992 was reported as “unexpected.”

A lot of the spin consists of tactfully leaving out details that would sour the public on President Obama’s policies even further.  For example, the AP report mentions that “It takes about 3 percent growth just to create enough jobs to keep pace with the population increase.  By some estimates, growth would have to be closer to 5 percent for a full year to drive down the unemployment rate by 1 percentage point.”  What they’re not telling you is how much higher GDP would have to grow, in order to restore all the jobs lost under Obama.  It would be essentially impossible for it to grow that much in the next two years, unless American corporations secure the patents on working cold fusion reactors and immortality drugs.

The AP also helpfully suggests that “A cut in workers’ Social Security taxes, higher stock prices and wage gains from a slowly healing jobs market should make people feel better about spending.”  Well, it looks like “slowly healing” means “bleeding to death” as far as the job market is concerned, and while I’m all in favor of tax cuts, does anyone think the tiny amount of extra money from that Social Security tax trim is going to inspire consumer spending binges?  It’s more likely people will work on reducing their debt, especially since consumer credit is becoming hard to come by.  Have you noticed the limits on your credit cards being reduced?  Tried to get a mortgage lately?

Higher stock prices are good, but it should be remembered that the stock market will always adjust to economic doldrums, sooner or later.  If the current combination of rising stock prices and terrible unemployment were happening under President John McCain, the news would be full of bitter carping about heartless companies finding ways to make money without hiring people.  There would be a lot of truth to that observation – they can find ways to make money without hiring people.  Employment comes with opportunities for expansion, not desperate efforts to dodge crushing regulations, minimize soaring labor costs, and take advantage of fat government subsidies.

Economic activity is strongly shaped by public perception – but it’s also shaped by the tremendous power of our activist government.  Giving voters accurate information and reasonable forecasts is crucial, if they are to cast informed votes, but when the reality is grim, leaving out the cheerleading only makes things worse.  We should never root against the American economy, no matter who is President.  It would be great to see real, sustained growth, right now.  It would also be great if voters in the next election consider more than just the economic news from the last few months of 2012 when they judge this government’s interference with the private sector.