Thursday, August 13, 2009

Green Shoots Wilting In The Summer Heat

Last Week Obama and the Democrats were clamoring that the economy was turning the corner. The pathetic pawns in the media hailed the drop in the unemployment rate as proof the labor market was stabilizing. The administration was hailing the 1% contraction in GDP as proof the economy was rebounding. The Democrats were hailing the loss of 247,000 jobs as proof their stimulus package saved the economy. The problem is that even the cash for clunkers program couldn't save retailers.

After all the good news last week the other shoe dropped today. Retailers continued to contract and sales declined .1% even with a cash for clunkers program responsible for selling big ticket autos. Take away the autos from the ill fated program and their was a .6% decline in retail sales. Last month their was an increase. This month there was yet another loss. Retails sales were not the only bad news today.

While sales of existing homes increased giving hope, there was also a significant rise in foreclosures. What this means is yet a further decline in the value of peoples homes. The loss of real value is affecting peoples ability to continue paying for a home that is worth less than the mortgage they are paying. Not only are people still in over their heads but unemployment is still high and increasing.

I am not sure how the unemployment rate declined last month. Someone needs to explain how unemployment declines when states are adding people to the unemployment rolls. Their are an awful lot of States that reported an increase in unemployment yet the Federal report says there was a decline. Not sure I believe the government when it says the unemployment rate fell. The jobs in the country contracted. States reported higher unemployment rates and yet the Department of Labor says the unemployment rate dropped. Who are they trying to fool? At any rate unemployment is high and will go higher in coming months. People are going to continue defaulting on mortgages at unusually high rates until unemployment eases.

I would have to say that beyond the rhetoric from the administration and the fawning media, the fundamentals of our economy are bad. The economy is teetering on the brink of collapse. The First time claims for unemployment remains stubbornly high and was much higher than expected this week. Continuing claims also remains high at over 6 million people. Many people are out of unemployment benefits they are normally entitled to and are receiving extended benefits. It doesn't seem to be working except for people are stopping the search for employment. This stop in the search is probably what accounts for the unexpected decline in the unemployment rate. Although I wouldn't put it past the administration to cook the books to make the economy look better than it really is doing.

Those green shoots of spring are not really bearing much fruit. In fact the economic news is just as dire and it appears the green shoots are wilting in the summer heat. The stimulus was a disaster. Health care is fast becoming a disaster. Cap and trade is a fiasco waiting to happen. Finally Obama's promised immigration reform is just another nail in the economic recovery's coffin. Even Obama is showing signs of wilting in the heat of the summer. Obama's lofty rhetoric has turned into busing in supporters to townhalls and lying about the support his plans have throughout the country.

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