So, U.S. consumer confidence unexpectedly plunged in January to its lowest level in more than a year. Then the U.S. economy unexpectedly posted a contraction in the fourth quarter of 2012 — for the first time since the recession — “defying” expectations that any meaningful economic growth is in our future.
If the economy were as vibrant as President Barack Obama has told us it is, a belt tightening in a single sector of government surely wouldn’t be enough to bring about “negative growth.” But one did. Unexpectedly. No worries, though. Pundits on the left tell us that this contraction was good news — possibly the best contraction in the history of all contractions. The White House blamed Republicans and, I kid you not, corporate jet owners because — well, who else? But mostly, the left is bellyaching about the end of temporary military spending and a brutal austerity that’s enveloped a once great nation.
There’s a small problem with that argument. There is no austerity. In the fourth quarter of 2012, Washington spent $908 billion, which was $30 billion more than it spent in the last quarter of 2011 and nearly $100 billion more than it spent in the third quarter of 2012. Taxpayers took on another $400 billion in debt during the quarter. If this is poverty, can you imagine what robust spending looks like?
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If we took the argument at face value, though, it means this: The left is contending that George W. Bush’s wars have been propping up the economy for years. They believe that spending, no matter where we “invest,” is tantamount to economic growth — that trillions in deficit spending ostensibly meant to “stimulate” the economy is really meant to artificially inflate the gross domestic product. If this were true, the only question we should have is: Why don’t we spend five times as much and grow the economy fivefold?
Meanwhile, on Earth, the economy has averaged 150,000 new jobs a month for the past two years — even with the Federal Reserve pumping in tens of billions every week — barely enough to keep up with new entries into the labor force, much less the exodus from it. The unemployment rate has hovered around 8 percent for a year. The only thing growing is Obama’s popularity. And really, isn’t that the most vital thing for America?
White House spokesman Jay Carney says that “we continue to be poised for positive economic growth and job creation.” Poised? Yes, we’re always poised. Something, someone, may be getting in the way. With the payroll tax holiday expiring and new taxes on the way (via the fiscal cliff deal and the institution of Obamacare), it seems unlikely the next few quarters will feature impressive growth.
We can measure the failure by using benchmarks set by not Rush Limbaugh or Fox News but the administration. In 2009, the White House projected that GDP growth would average 4.6 percent in 2012. The next year, the White House projected that growth would reach 4.3 percent on average last year. In 2011, it downgraded to an average of 3.6 percent. Wrong again. Last year’s growth was actually 2.2 percent. And that number was achieved by injecting billions in monthly debt for an array of liberal hobbyhorses.
The GDP numbers may still be revised. But if we weren’t waist-high in the worst recovery since the 1800s, none of this would matter. We’d be discussing 4 or 5 percent quarterly growth rather than 1 or 2 percent, whether we cut some military spending or not. Today stagnation is the normal — and totally expected.