We interrupt the White House’s post-speechifying lovefest with a quick note about the economy: Yes, Virginia, it’s failing once again and you can’t reduce deficits without growth in jobs, wages and thusly tax revenues. Cutting spending reduces aggregate demand, which results in job losses, which results in fewer tax revenues, which results in higher deficits and more spending cuts. Ad nauseum.
One might think the Ivy League nitwits currently gulping down the refined air of the Rose Garden and it’s environs would get this. One might also ponder the possibility that even completely self-interested careerists might look at the economy as a fair guesstimation as to national sentiment down the road, if only for their own sakes. It seems one would be wrong to do so.
So here we are, with almost the entire First World’s leadership putting their respective populations on a strict diet of austerity. And lo, what do we see? Why, we see plummeting GDPs in nice countries like the UK, coupled with rising unemployment and Neo-Liberal “reforms.” Here in the US, the real budget austerity hasn’t even fully kicked in yet and we’re already heading south for the economic winter. From Calculated Risk, via the derisively pointed Decline Of The Empire:
From MarketWatch: Q1 GDP estimates slashed post-trade data (ht jb)
Morgan Stanley slashed their estimate to 1.5% from 1.9% after what they called “a very weak report.” RBS Securities cut their estimates to 1.7% from 2% …And from Catherine Rampell at Economix: G.D.P. Forecast for First Quarter Slides
Today, after an especially weak report on February’s trade deficit, the [Macroeconomic Advisers'] economists lowered their first quarter G.D.P. estimate to a sorry 1.5 percent annualized.So Macroeconomic Advisers’ forecast has gone from a “paltry” 2.3% to a “sorry” 1.5%!
The advance GDP report will be released on Thursday April 28th. Still time for more downgrades. What comes after “paltry” and “sorry”? Putrid?
Add in oil that is trading in a range of $106 – $112 or so:
Add in all the various state and local budget cuts and higher resulting unemployment from those and we have a tightly configured downward spiral ahead of us.
Simply put, all this kabuki about the deficit has nothing whatsoever to do with said deficit. By continuing to froth in bi-partisan language, Obama is effectively placing himself at the head of the Parade of Economic Destruction. The thought occurs that POTUS is merely the CEO of Operation Shock Doctrine.