You’ll be seeing many variants of this headline today: “Economy growing, but not jobs.” Like so much of recent economic reporting, it’s deceptive. It suggests a kind of balance between two things of equal weight and importance, one good (economic growth) and one bad (unemployment). Such a deception implies that except for a difficult jobs situation, other key elements of the economy are improving.
No. Alas, no.
Our overall economy remains very sickly, a jump in quarterly GDP notwithstanding. The flood of home foreclosures continues, and a “second shoe” in the real estate bubble involving commercial properties has begun dropping — failures that will hit many local banks that largely escaped the home mortgage bust. Bank failures this year, already past the 100 mark, will likely see a big rise in consequence.
The long list of other major drags on the economy (GDP growth notwithstanding) include home sales like car sales that depend on government subsidies; still in-the-tank consumer confidence; small business lacking access to credit; and state governments whose budget shortfalls were kept in check by a federal infusion this year, facing estimated budget shortfalls of hundreds of billions dollars in the next fiscal year or two.
Looking at the overall economic picture, the really, really scary thing about our national economy today is how little we’ve gotten from the trillions of dollars the government in Washington has already spent to “save the economy.” What we’ve gotten, in essence, is a stock market bubble, a bonus bonanza for the likes of Goldman Sachs, and an economists’ happy quarter or two of smiley face. What we haven’t gotten is an economy that has been reanimated in any fundamental sense, Worse still, to achieve this awful deal, the federal government has pretty much used up its ability to stimulate further. The huge new debt it has run up also means it will either have to sharply reduce services in coming years, or print more money to pay off its obligations — i.e. monetize and spawn inflation.
This country somehow had to pay for its long run of over-consumption. There was no way to get around that. But the mechanisms our economic masters chose to make the needed economic adjustments were terribly misguided. They were geared more to preserving what was wasteful, foolish, and served the interests of a financial elite, rather than the interests of the rest of the population.
GDP growth was 3.5 percent in the last quarter. That was today’s big economic news, But ask yourself: Do you feel more prosperous than you did the quarter before? More secure? More confident about your economic future and the futures of your neighbors? More enthusiastic about the nostrums coming from Washington because of this 3.5 percent number?
Do you feel that way? I don’t.