The U.S. economy remains in the doldrums and Obamanomics is making matters worse, as every day seems to bring another dose of bad business news. Not for the faint at heart, here are the Top 10 Scariest Economic Developments:
1. Jobs surge, but only at McDonald’s: The Labor Department’s June unemployment report shows anemic job growth and that the jobless rate ticked up to 9.1%. Even worse, of the 54,000 jobs created, fully half were people hired by the McDonald’s fast-food chain. With jobless benefits starting to end for some, there is little hope for millions of unemployed Americans.
2. National debt exploding: Under 44 Presidents, it took America 235 years to rack up some $10 trillion in debt. Since taking office, President Obama has added another $4 trillion to the nation’s debt, with annual trillion-dollar deficits projected for years to come. Without meaningful deficit reduction, the United States is on a path that leads to interest payments on the nation’s debt exceeding total federal spending by the end of the century.
3. Housing slump continues: A recent report shows that the housing market continues to decline, as Obama administration efforts for distressed homeowners have done nothing to help. The Standard & Poor’s Case-Shiller housing index showed that prices in 20 key U.S. markets fell 3.6% in the past year and are now at 2002 levels. The only market in which prices rose is, not surprisingly, Washington, D.C., where the growth of the federal government is a boon to the local economy.
4. Economy stalls: The Commerce Department’s revised report on the gross domestic product (GDP) shows that the economy grew at an anemic 1.8% rate in the first quarter of 2011, and economists are trimming their forecasts for the rest of the year. With increased government spending failing to jump-start the economy, a double-dip recession looks more likely.
5. Price of oil skyrocketing: When Obama took office, the price of oil was $1.61 a gallon. With the Middle East turmoil, the decline of the dollar and the administration’s lack of an energy policy, oil has soared to $4 a gallon. How about letting oil companies drill in America instead of subsidizing Brazilian offshore drilling?
6. Implementation of ObamaCare: Despite lawsuits by states and waivers given to the President’s supporters, ObamaCare is still being implemented in baby steps across the nation. A study published in the McKinsey Quarterly found that 30% of companies say they are likely to end their health care coverage and dump their employees into the government exchanges. Businesses that will keep their plans face exploding costs because ObamaCare is failing to contain health care price increases as advertised.
7. Democrats resist spending cuts: Negotiations over extending the federal debt ceiling are at an impasse as Obama and congressional Democrats continue to resist seeking meaningful spending cuts to help rein in the red ink. Amazingly, since 2000 the amount the federal government spends annually has doubled after spending sprees by Presidents Bush and Obama. While the debt ceiling needs to be raised with a deadline approaching, Republicans are absolutely correct to insist on slashing government spending.
8. Credit rating threatened: Moody’s recently said that it is considering lowering America’s Triple-A credit rating because of the impasse over increasing the debt ceiling. Moody’s action came after Standard & Poor’s lowered its outlook in April for the U.S. to “negative” because of the lack of a long-term deficit reduction plan. A lower credit rating could compel the Treasury Department to offer higher yields when it sells its T-Bills, with higher interest rates for U.S. consumers sure to follow.
9. China dumps T-Bills as dollar declines: China gobbled up Treasury bills when the U.S. ramped up its deficit following the 2008 economic crisis, but now has divested 97% of its holdings of short-term U.S. government securities. China held a total of $1.175 trillion of the securities last October as the Obama administration’s deficits skyrocketed. Those holdings have now fallen to $5.69 billion, and China has also started to sell off its long-term Treasury bonds as the decline in the dollar is eroding their value.
10. Consumer confidence down: Consumer spending is considered the engine of the U.S. economy, accounting for about two-thirds of the nation’s GDP. But a survey from the business-advisory firm AlixPartners found that 63% of Americans said they feel “not good” or “bad” about the economy, up from 49% from a year ago. And those surveyed said they will delay by at least a year making major purchases on vacations or buying a new car. Not good news for a certain President seeking reelection next year.