A few days ago, I saw a had-line from a well-known economic writer which read: “First the Good News.” The article focused on a lot economic news that became good (or shall I say, less bad) in recent months. Let me now focus on the bad news, which will paint a realistic picture of the economy:
•To keep up with a healthy recovery, the economy needs to have a net gain of 150,000 jobs each month. We are not close to that. (Losing ‘only’ 11,000 jobs in November was largely due to thousands of part-time jobs that people got for the shopping season. Wait until the season ends to get a clearer picture of the job market).
•A big junk of ‘new jobs’ in recent months, don’t pay as good as jobs did in the past. With weaker pay, more people have less to spend and less to pay off mortgage and credit card debt. Both are demaging to the economy.
•The highest the unemployment rate went following the last recession, was 6.3%; few people liked it. Now it is at 10% and IS still rising. It pulled back in November cuz it jumped too fast in October. But all in all, the UR is still on the rise, too high for this economy to keep on growing strong.
•Consumer Sentiment indexes rose in early December, which was good news. However, it happened because people got fooled with the Unemployment Rate “going down.” Wait a month or two when the UR will rise again, and consumer’s sentiments will tank again, and with it their appetite to keep this economy going.
•Despite some general retail sales statistics that appear good, retailers claim that the current shopping season is weaker than last year. Plus, to those who it DOES match last year’s numbers, it is still a mess considering that any statistic of 12 months ago was in the midst of the crisis, hardly an era that one would measure success against it.
•Credit is still difficult to get these days. This keeps the economy, and consumers’ moods, down.
•The 2009 federal deficit was $1.4 trillion, triple the $455 billion of a year earlier, which in itself was three times larger than the 2007 deficit of $163 billion. These deficits kill the US dollar, which in turn keeps oil prices higher than it should be, and it also increases the interest people need to pay when they want to borrow money. Both kill the economy.
All in all, in a year from now, the US will still be in trouble
Economically speaking, (yet one should now decide what the word ‘trouble’ means). Politically speaking, the economy will bring trouble for the Dems next November. The only thing that can really help the economy and the Dems, is more tax cuts. The Republicans’ idea of putting into the Stimulus tax credits for home buyers, helped stabilize the Housing Market, and thus helped the economy in general. More tax cuts will do even more to kick the economy into a lasting recovery.
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