Monday, December 5, 2011

Economic Realities vs Economic Wishes

Politico, an online political news magazine that is showing more left leaning bias, noted this in their report about last week's announcement that the national unemployment rate had dropped to 8.6%...
The unemployment rate surprisingly dropped to 8.6 percent in November — the lowest in two-and-a-half years — as the country’s long-stalled economy flashed new signs of strength amid uneasiness about a broader global downturn...

...Unemployment now stands at its lowest level since March 2009 — a clear political plus for Obama but something of a mixed bag considering 13.3 million Americans are still jobless and the sovereign debt crisis unfolding in Europe could tip the world into a recession.

“Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression, but the pace of improvement is still not fast enough,” said Alan Krueger, chairman of the president’s Council of Economic Advisers.

Other sites and commentators are less reserved.  They are touting the drop of the unemployment rate to the lowest level since March 2009 as a clear sign that the Obama economic policies are finally starting to take hold - and that the President is going to enjoy a stronger economy as he enters the last 11 months of the Presidential race.

Left unsaid, of course, is the fact that the main driver behind the new 8.6% unemployment number is not the 120,000 new jobs added during November, but the 315,000 unemployed who were dropped from the calculation because they were seen by the Department of Labor as to have 'given up' on their job search activities.  This is a nearly completely unprecedented high number for a November.  Also left unsaid - that many of those 120,000 new jobs were likely seasonal hiring.

Today, we have a pair of new economic indicators that do not support any level of enthusiasm towards the effects of the President's policies on the economy.  As Hot Air notes in their report, these indicators have economists warning of a new round of economic slowdown in the United States.

The first indicator comes from the Department of Commerce on durable goods orders:
New orders for manufactured goods in October, down two consecutive months, decreased $1.6 billion or 0.4 percent to $450.0 billion, the U.S. Census Bureau reported today. This followed a 0.1 percent September decrease. Excluding transportation, new orders increased 0.2 percent. Shipments, up five consecutive months, increased $2.6 billion or 0.6 percent to $455.4 billion. This followed a 0.3 percent September increase. Unfilled orders, up eighteen of the last nineteen months, increased $1.8 billion or 0.2 percent to $885.9 billion. This followed a 0.6 percent September increase. The unfilled orders-to-shipments ratio was 6.07, down from 6.08 in September. Inventories, up twenty four of the last twenty five months, increased $5.6 billion or 0.9 percent to $607.1 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.1 percent September increase.

The second indicator comes from the November's results of the service sector:
The economy showed signs it was decelerating, with an index of service activity pointing to slower growth in November while new orders for factory goods declined in October for the second straight month.

The Institute for Supply Management said on Monday its services index fell to 52.0 last month from 52.9 the month before. The reading was below economists’ forecasts for 53.5, according to a Reuters survey.

Consider this evidence of an economic slowdown in conjunction with the recent downgrade of 3rd Quarter GDP growth from 2.5% to 2%.

These indicators provide the appearance of an economy that is continuing to slowdown from a very anemic recovery as the policies of the President continue to fail to ignite a real turnaround or growth. To me - we are seeing the effects of the natural efforts of the economy / marketplace to bounce back from the 2008-9 recession - but these efforts are being strangled by the economic policies of this Administration which inhibit and discourage economic growth.  These include the failed stimulus / jobs bills, the misdirected tax policy, excessive government regulations - which are only increasing, and more 'meddling' in the marketplaces to establish 'social justice'.

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