Go get the MSM a Kleenex. We hear all about the economy from the media that’s been trying to talk it down for several months. What do I mean by “talk it down”? Well it’s simple. We all play a small part in the economy. Together we are the economy. Our economic activity helps the economy grow. If you have a good job with good income, you buy things. Even if those things are imported you are providing jobs for the people that import the goods, the people that offload the goods at the dock, the truckers that bring the goods to the stores and the clerks that sell you the goods. If the mainstream media convinces you and a few million of your best friends that the forecast is bad then you stop buying stuff. If enough people stop buying stuff the clerk loses his job or perhaps the trucker and then he can’t buy stuff and then it’s a self fulfilling prophecy. Soon you have a recession.
For those who may not be familiar with what a recession really is, it’s when the overall economy (as measured in gross domestic product or GDP) declines for 2 straight quarters. What that means is that you don’t know whether you are in a recession until you’ve been in it for 6 months. And by that time you might actually be out of it. You’d only know after an additional 3 months. So there has been a lot of speculation about whether we are in a recession or headed for one mostly fueled by the sub-prime mortgage mess and the general chaos in credit markets. It certainly has had a dampening effect on Wall Street but the stock market is not the economy. The question was how to what degree the crisis in the lending markets would be contained or spread to other sectors of the economy.
Well there’s good news as reported by Larry Kudlow at NRO’s Corner. He’s the Economics Editor at National Review. Here’s what he says:
While modest gains in retail sales and industrial production suggest temporarily slower growth for the U.S. economy, these indicators are not signaling recession. In particular, Friday’s 0.1 percent production increase — which comes to 2.4 percent at an annual rate over the past 3 months and 2.3 percent over the past 12 months — removes the recession scenario. It’s slow growth, but it’s growth nonetheless.
To get a true recession reading, the production index would have to fall for 4 to 6 months in a row. That’s not happening. Despite some monthly declines over the past half year, the production reading for January was 114.2 — exactly where it was in July and September of last year. Looking inside the January index, there was a 0.3 percent increase for consumer-goods production and a 0.4 percent rise for business equipment. Both are solid numbers.
Meanwhile, the just-released January retail sales report defied the recessionistas with a better-than-expected 0.3 percent gain. Retail sales are climbing at a 2.7 percent annual rate over the past 3 months and a 3.9 percent rate over the past year.
Trade exports also continue strong, with the new December number showing a huge $144 billion gain. Out on the campaign trail, Hill-Bama mutters protectionism at every stop. But export trade has grown by nearly 50 percent — or 9 percent yearly after inflation — for the past four years. The real export sector now accounts for nearly one-third of U.S. gross domestic product, yet more proof that the global economic boom is alive and well.
On the political front, Kudlow offers some advice that John McCain would be wise to take:
Hill-Bama is campaigning on a populist platform of taxing businesses and rich people. This fiscal nymphomania will create new government bureaucracies on infrastructure and energy totaling a couple hundred billion dollars. It’s beyond the pale.
For the fiscally tightfisted Sen. John McCain, and his crusade against unnecessary spending and earmarks, there is a great opportunity here. McCain can build on his pro-growth corporate-tax-cut proposal with a broad-based tax-reform plan. This approach would lower tax rates across-the-board and broaden the base by removing unnecessary exceptions and loopholes. In effect, while Hill-Bama copies Western Europe’s failed economic playbook, McCain can replicate the tax-reform success over in Eastern Europe.
Whether it’s national defense, homeland security, or economic growth, the key to a McCain victory over Hill-Bama in November is to compare and contrast two visions of America’s future. The contrast couldn’t be greater. Hill-Bama trashes corporations. But Sen. McCain understands that by lowering tax rates on corporations, vital capital will be unlocked, leading to business expansion and job creation.
Speaking in Warren, Ohio, this week, Sen. Clinton singled out oil, credit-card, insurance, pharmaceutical, investment, and student-loan firms in a massive attack on business. She’s attacking corporations that employ 23 million people and, by the way, pay higher than average wages. In other words, Clinton is attacking 23 million jobs. This is the forgotten middle-class. And they know that if politicians curb or confiscate the profits of their companies, it is they, the workers, who will be harmed.
This is what Hill-Bama fails to understand. This is why Hill-Bama policy would be so damaging to the economy. Corporations are profitable, sure. But wage earners get 70 percent of the profits; investors share the remaining 30 percent.
And these companies pay a colossal fortune in taxes. Exxon Mobil is a perfect example. Over the last three years, Exxon Mobil has paid an average of $27 billion annually in taxes. $27 billion! As my friend, economist Mark Perry, points out, while corporate profits receive a lot of media attention, the corporate taxes paid on these corporate profits are largely overlooked. Dr. Perry also points out that Exxon Mobil pays as much in taxes annually as the entire bottom 50 percent of individual taxpayers — a full 65,000,000 people.
The choice is clear: Jimmy Carter-style big-government spending, taxing, and regulating all over again. Or supply-side free-market capitalism that can endure the inevitable negative shocks, shorten the cyclical downturns, and fuel the engines of economic growth.
It’s unbelievable to me that anyone would fall for that liberal mumbo jumbo about corporations being bad. But there’s a lot of dumb people out there thanks to our government public education monopoly (and they want to turn healthcare over to the same types of bureaucrats that run our schools). I just hope John McCain can put away his “soak the rich, profit is evil” rhetoric and realize that he is a Republican for at least the time being.
My advice to you fine folks. Continue to live your economic lives in a sound manner and when your tax rebate check comes as part of the stimulus plan in May or June, spend it on something nice.
Henry, I work for a non-profit that manages Unemployment Insurance costs for employers. I can assure you, that in California, the UI rate is still within the historical low. The Dems and the MSM are pushing the recession model, but the numbers disagree.
The disconnect I see is while Kudlow makes valid points, the problem lies in how in spite of these resources current policy has failed to:
a) end the Iraq disaster which the majority of this country wants an end to.
b) 47 million of our fellow Americans are without health insurance and the healthcare system is in distress.
c) there is the mortgage and housing crisis affecting millions of people now and the financial markets.
All the political spin will not change these harsh realities. So there has to be some fundamental adjustment in policies and priorities, especially if as Kudlow states the financial resources are there and if we are not in a recession as is stated. Whatever you want to call it, we are still economically overextending ourselves in the war disaster, and we have one of the worst real estate markets in recent history, and we have the other socioeconomic issues of health care, and education. We are in some kind of economic distress whether you want to call it a recession or not. There is another problem more basic and human called denial.
I also do not believe for a second that Bama Hill want a return to the Carter era or repeat Western European style econ management that did not work. They do have brains and know their history. They are not going to repeat the mistakes of the past. If they do, they will not be in office past the next election cycle.
Henry –
“…spend it on something nice – OF COURSE, WHY
NOT – It was our money to begin with. -S-
Shalit. Yes.
Gabriel. Of course you don’t understand. You are a liberal. There’s a fundamental difference in what we see as the role of government. I believe the government should be as small and unintrusive as as possible. The constitution makes no mention of mortgage bailouts or health insurance. That’s for us the citizens to figure out. The government just screws things up MORE. I’m not even going to attempt to debate with you. I don’t know why you waste your time here. 99.9% of our readers don’t buy your bleeding heart liberal rhetoric and the other .1% are people like you looking to get a rise out of us. It’s truly tiresome and I have an itchy trigger finger.
Shalit. Yes.
Gabriel. Of course you don’t understand. You are a liberal. There’s a fundamental difference in what we see as the role of government. I believe the government should be as small and unintrusive as as possible. The constitution makes no mention of mortgage bailouts or health insurance. That’s for us the citizens to figure out. The government just screws things up MORE. I’m not even going to attempt to debate with you. I don’t know why you waste your time here. 99.9% of our readers don’t buy your bleeding heart liberal rhetoric and the other .1% are people like you looking to get a rise out of us. It’s truly tiresome and I have an itchy trigger finger.
I am not asking for anyone’s agreement. I am here to share, consider, and challenge my own views. I would prefer people to think for themselves than automatically agree or disagree.
Granted, government should be as small as possible, and least intrusive. But what is the role of government in the face of things like the mortgage meltdown, or the fact that 47 million of its citizens do not have health insurance? Or a war that the majority of the citizenry does not support? And the problem grows worse with time.
And taking the smallest, least intrusive government possible example, would such a government support an embargo on a foreign country that does not work or restrict its own citizens movement to travel there?
Ron Paul who is a libertarian, really espoused the kind of government you are talking about, small and the least intrusive on the individual. Why did the Republicans and conservatives not flock to him?
“only real gold withstands the hottest fire” – Chinese proverb
There’s a lot of what Ron Paul says that has merit, but a lot of it, particularly on the economic side of things is quackery. He also has support from 9/11 truthers and white supremacists. Ron Paul has a newsletter that was filled with racist rhetoric. In short, he’s not a credible candidate.
The role of government should be to stay out of our lives as much as possible. If every other country in the world has socialized universal healthcare it still would not be reason for us to have it. In fact I would argue that those people that want that type of healthcare should consider moving to one of those countries. America should provide an alternative to those dubious policies. Why do Canadians emigrate to America every day? Canada is an advanced industrial country. They have universal healthcare and a lot of the social programs liberal like. Why don’t you move to Canada. It’s quite nice there. I’d rather we continue to be the country people want to come to rather than leave.
There’s a lot of what Ron Paul says that has merit, but a lot of it, particularly on the economic side of things is quackery. He also has support from 9/11 truthers and white supremacists. Ron Paul has a newsletter that was filled with racist rhetoric. In short, he’s not a credible candidate.
The role of government should be to stay out of our lives as much as possible. If every other country in the world has socialized universal healthcare it still would not be reason for us to have it. In fact I would argue that those people that want that type of healthcare should consider moving to one of those countries. America should provide an alternative to those dubious policies. Why do Canadians emigrate to America every day? Canada is an advanced industrial country. They have universal healthcare and a lot of the social programs liberal like. Why don’t you move to Canada. It’s quite nice there. I’d rather we continue to be the country people want to come to rather than leave.
The U.S. is my country. As nice as Canada may be, like Linda Rondstadt sang, “I’m so glad I’m living in the USA”. And in finding solutions to the problems we have, we do not have to go to extremes. Is it possible for us to have a healthcare safety net that provides some basic level of healthcare insurance while maintaining free market choices? We have one for public safety, we have one for public education. Can’t we use our knowledge and experience to fashion something that works for all of us with respect to health care? – without going to extremes? And I am not asking you to agree or disagree. I am just asking you to think about this. Because this is what our country is facing now. The problem is not going to go away, nor can it be brushed aside much longer. And band aid solutions will not work either.
The political parties each attract their share of the extreme – on the left, the Guevara doting folks, on the right, racists and conspiracy theory folks. We do not have to indulge them or should their presence tarnish our political leaders. Neither Obama, Clinton, or McCain embrace these people.
As someone who works in the MSM, lets not forget that the media conglomerates are part of this economy. It doesn’t help them and their profit margins one bit to “trump up a recession”.
If people stop buying things, then business start hurting and when businesses start hurting they stop advertising. And when they stop advertising then people in the MSM lose their jobs.
Angel,
What you say would make sense if the people doing the the talking about the economy were the shareholders or the executives of the media companies. They are not. Instead it’s a bunch of liberal Democrats that hate America. If you don’t know that by now, what can I tell you? You think the producers and journalists at, let’s say, 60 minutes, think that they are going to lose their jobs if they talk down the economy? That would make them smart. They are not. As I mentioned when it happened, ABC news had a chance to begin to tell the story of the real Cuba when it delved ever so slightly into it with a 3 minute segment by John Stossel. A more thorough look would have been controversial (since Cuba doesn’t get any straight coverage) and generated ratings for sure. But instead they went with the “safe” way of reporting the story that wouldn’t ruffle any feathers. In other words they don’t always do what’s in their best interests. The same can be said for any person.
Gabriel,
I don’t accept that certain problems that you insist exist, really exist. And the ones that do exist have better solutions than what you and your candidates suggest. Sometimes the solution is to do nothing and let the market sort it out. The problem with believing that all of these so-called problems require government intervention is that every time a government program is created it can only be funded by reaching further into our pockets. Money is property and this fundament lack of respect for personal property is disturbing today.
Even within the United States there are states that handle different issues differently. That’s the way it should be. If you don’t like the way your state handles health care you can move to another state. But I guarantee you that you will be moving to a state most people are fleeing. The states with the highest taxes are the ones with declining populations. That’s why the libs want everything to be a federal program.
Don’t come in here and patronize us with your freshman year of college view of the world. It’s just ridiculous.
Angel,
What you say would make sense if the people doing the the talking about the economy were the shareholders or the executives of the media companies. They are not. Instead it’s a bunch of liberal Democrats that hate America. If you don’t know that by now, what can I tell you? You think the producers and journalists at, let’s say, 60 minutes, think that they are going to lose their jobs if they talk down the economy? That would make them smart. They are not. As I mentioned when it happened, ABC news had a chance to begin to tell the story of the real Cuba when it delved ever so slightly into it with a 3 minute segment by John Stossel. A more thorough look would have been controversial (since Cuba doesn’t get any straight coverage) and generated ratings for sure. But instead they went with the “safe” way of reporting the story that wouldn’t ruffle any feathers. In other words they don’t always do what’s in their best interests. The same can be said for any person.
Gabriel,
I don’t accept that certain problems that you insist exist, really exist. And the ones that do exist have better solutions than what you and your candidates suggest. Sometimes the solution is to do nothing and let the market sort it out. The problem with believing that all of these so-called problems require government intervention is that every time a government program is created it can only be funded by reaching further into our pockets. Money is property and this fundament lack of respect for personal property is disturbing today.
Even within the United States there are states that handle different issues differently. That’s the way it should be. If you don’t like the way your state handles health care you can move to another state. But I guarantee you that you will be moving to a state most people are fleeing. The states with the highest taxes are the ones with declining populations. That’s why the libs want everything to be a federal program.
Don’t come in here and patronize us with your freshman year of college view of the world. It’s just ridiculous.