"This economy is going to come on. I'm confident it will."
- President Bush
More than 3/4 of Americans think we are in a recession. Fortunately the Bush Administration has been able to prove the vast majority of Americans wrong this week, because all the numbers it released say that the economy is still growing.
Well, it is still growing as long as you don't look at the numbers too closely.
The headline number yesterday was Strong Consumer Spending. It was twice as high as market estimates.
Nonfarm payroll employment was little changed in April (-20,000), following job losses that totaled 240,000 in the first 3 months of the year, the bureau of Labor Statistics of the U.S. Department of Labor reported today. The unemployment rate, at 5.0 percent, also was little changed in April. Employment continued to decline in construction, manufacturing, and retail trade, while jobs were added in health care and in professional and technical services.
I was a little surprised at the total lack of coverage of the GDP report yesterday on the political blogs (the econ blogs had a few things to say). I suspect it was because most people expected GDP to be significantly negative (I sure did) and yet here was this positive number.
Some people will just say the numbers are cooked, but as I keep pointing out, as long as the bias is regular (like a clock that is always 10 minutes slow) the data gives a lot of information.
On February 20, 2003, President Bush first coined the term Ownership Society while campaigning for more tax cuts. Bush supporters were quick to latch onto this term and expand its meaning.
In the ownership society, patients control their own health care, parents control their own children's education, and workers control their retirement savings.
Five years later we should measure what the "Ownership Society" means in the real world.
"We're creating...an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property."
- President Bush, October 2004
America and China appear to be locked in a financial embrace turned toxic. If America is running perennial trade deficits and if American consumers are running dire savings deficits, then China appears to be wrestling with the opposite peril: a worsening inflationary spiral caused by a tsunami of incoming ever-cheaper dollars.
I won't pretend to be an expert on China's stock or bond market, but then again finding such discussion of financial conditions in China seems to be just about impossible. What I do know a little about is financial history, and what conditions in stock and even moreso bond markets can tell us about where an economy is going.
With that in mind, it is worthwhile to look at China's markets and ask ourselves, "If this was the US, where would the economy be heading?" The answer (while enviable compared to America's condition) ain't so pretty.
It's the silly season again, and that means that politicians will say one thing while doing another and then pretend they are being consistent. For instance, President Bush made a big deal of opposing the Democratic-sponsored bill for using the F.H.A. to bailout distressed homeowners. John McCain also opposes a bailout for homeowners.
Even when times are good, it's hard to believe that corporate CEOs can look you in the eye and tell you that they've truly earned their outrageous $10 million, $50 million, $100 million or more pay packages.
But this week I saw another round of stories on corporate CEOs getting multi-million dollar "bonuses" even as their companies lose millions of dollars.
If you are open minded enough to consider evidence that runs contrary to received wisdom and challenges your assumptions, read on, I hope you will find this thought-provoking.
Because there is some excellent evidence that, if "It's the Economy, Stupid", then there are some very powerful people who have operated some very powerful economic levers to the benefit of one certain Senator John McCain. And the cocaine they are injecting into the economy is going to hit full force by about election day.
Those very powerful people are the Open Market Committee of the Federal Reserve Bank, including Fed Chairman Ben Bernancke.
This morning's New Home sales, as reported by AP, make it official:
Sales of new homes plunged in March to the lowest level in 16 1/2 years as housing slumped further at the start of the spring sales season.
The median price of a new home in March compared to a year ago fell by the largest amount in nearly four decades.
The Commerce Department reported Thursday that sales of new homes dropped by 8.5 percent last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991.
The median price of a home sold in March dropped by 13.3 percent compared to March 2007, the biggest year-over-year price decline since a 14.6 percent plunge in July 1970.
Of each dollar people earned in 2005, the top 10 percent got 48.5 cents. That was the top tenths greatest share of the income pie since 1929, just before the Roaring Twenties collapsed into the Great Depression
A few truths Johnston expands upon:
Government can have a huge effect on the US economy
The US government has not created free markets but rigged ones
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