Every day at 2 PM Eastern time, Gallup.com publishes summary data of polling related to the economy. I visit daily, as it is free. My single favorite statistics are whether people see their firms hiring or not hiring (layoffs or a hiring freeze leading to fewer workers), and daily spending as self-recalled without counting routine recurring monthly bills etc. Of the two, the jobs data is the most important. About 16 months ago, as unemployment started a rapid rise, the ratio of hiring:not hiring moved from a pre-recession 4:1 to close to 2:1. Almost a year ago, it went to a bit below 1:1, that is, more firms not hiring or net firing than net hiring. About 2 weeks ago, that ratio began to move just a bit in the favorable side of things.
Today this number is back to -1, meaning marginally more people seeing their firms reducing headcount than gaining workers. There has only been one quarter of GDP growth, and much of that was of the "command and control" nature, with the government saying to people: borrow and spend now, or you may never get such a good deal again. The homebuyer tax credit, which is really what the administration cares about because of the benefits it gives the financial community, looks to be in an extension mode, and the Fed continues to buy mortgage-backed securities.
The administration has also responded to various analyses of the cost per job saved or created by the "stimulus" bill (ARRA). From Politico.com:
. . . Jared Bernstein, the chief economist and senior economic advisor to Vice President Joe Biden, said he is confident that the stimulus bill “saved or created over a million jobs, and we’re on track to save or create the 3.5 million jobs we estimated over the life of the recovery act.”
The article continues:
That boils down to a cost per job of $92,000, Bernstein said.
Different analyses give different numbers. Let us say $100,000 per job. What am I missing? Isn't this a money-loser? Wouldn't unemployment insurance have been less expensive? How about Christina Romer's own research that tax cuts have a much greater economic multiplier effect than government spending?
Why are various measures of consumer confidence deep in traditional recession, not recovery mode? Do the people not know their own job situation and that of their family, friends and neighbors, and what they see their employers doing?
Has Team Obama given a scintilla of thought that perhaps their efforts have been making the economy worse, in part by saying how terrible things were when they came into power and then with all the "stimulus", bailouts, etc.? Perhaps their economists were correct when they predicted an 8.5% peak unemployment rate if the administration had done nothing!
Maybe, just maybe, the economy is not following the script because the administration is focused on solutions for a traditional industrial recession caused by inventory imbalances and deliberate Fed tightening, not one caused by gross malfeasance and incompetence in the financial markets. One in which Goldman Sachs can "earn" $9 B in one quarter while the economy continues shedding jobs rapidly.
If the stockholders and their bondholders of Team Finance simplify their balance sheets, dump all Level 3 mark to "whatever" assets, provide proof of balance sheet strength, then the smart money may well return to the U. S. from its unproductive use in Swiss gold vaults and want to reinvest in the U. S.
Till then, perhaps all that's happened is that the winds have died down from hurricane strength to tropical storm strength but remain, doing damage all the same.
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