Not So Great Expectations

The Obamadministration is desperate to find anything that it can claim as a success - today it is the economy. The economy is beginning to show signs of life. The economy grew 3.5% in the July-September quarter. The White House propaganda machine was quick to claim credit for the growth on behalf of the Obama's economic policies. Unfortunately the data are against the White House's claims. The White House claims that the growth is evidence that the Stimulus is working. The facts are, of the nearly $800 billion in stimulus money that Congress appropriated, only $173 billion of it has been spent and of that only $47 billion has been spent on what could be called "shovel ready" programs, roads and other infrastructure jobs. The rest went to social spending and tax refunds to non-tax payers. The cash for clunkers program spent $3 billion and now we are finding that it had less of an impact than first estimated. Only 125000 of the nearly 700000 cars sold can be credited to the program. Only about a point and a half of the 3.5 points can be attributed to this one-time program. The only government initiative, and it is not really the government, it is the Fed, working are the low interest rates, which is helping with borrowing by businesses. The low interest rates are all Bush initiatives not the Obama's. The other piece of evidence against the White House's claims of glory is that historically, recessions typically last between 18 to 24 months and we are approaching the end of this recession so one expects the economy to begin trending upward. The real damning bit of evidence, though, is that Americans continues to lose jobs. One would have expected job loss to level off or start decreasing but it actually ticked up more than expected. In the coming years we will be paying for the $800 billion that was appropriated via borrowing so this growth really is an artificial blip in the long term.