- - Sunday, December 1, 2013


Retail shops have been doing whatever it takes, including working on Thanksgiving, to entice a few more customers into stores and online outlets. Even after the final “cyber Monday” sales are tallied, the Christmas-buying season may not have gotten off to a big enough start to revive an economy that’s been dragging for the past five years.

The trick for gauging market performance is to watch purchases of big-ticket items such as automobiles and washing machines. When the mood is one of confidence, the public is willing to part with its cash for these big-ticket items. When times are tough, it holds out on replacing durable goods until the last possible moment.

The numbers from October show consumers are holding back, and that signals a weakness that’s also reflected in the latest downward revision of economic-growth numbers. The Philadelphia Federal Reserve Bank says the gross domestic product will expand at a meager 1.7 percent for the year. When there’s no economic expansion, there’s no room for new jobs.

The holiday season is when retailers hope to earn a big chunk of the year’s profits, and they ought to be staffing up. The latest figures show this isn’t happening, as hiring has hovered at around 180,000 or so monthly, and the numbers aren’t expected to increase much beyond that level by year’s end. In addition, the big discounts that big-box stores have used to lure customers are going to hit their bottom line. Lowered corporate profits may warm the hearts of the Occupy Wall Street crowd, but the lackluster performance is what’s keeping the official unemployment rate stubbornly stuck around 7.2 percent, leaving millions in the cold.

The true level of joblessness is far worse than this number suggests. Labor-force participation is hitting historic lows as Americans simply give up looking for work. Dropouts aren’t counted in the official figures, yet most people aren’t fooled by the happy face painted by the Labor Department’s reports. In a recent poll, six in 10 Americans were worried about losing their jobs, a level of insecurity that is worse than existed in 1975. Pessimism about job prospects drove consumer confidence to a seven-month low last month, according to the Conference Board.

The Federal Reserve will cite lower growth as justification to continue running the monetary printing presses with massive $85 billion monthly bond purchases. Outgoing Fed Chairman Ben S. Bernanke has been leading the charge to expand the money supply for an unprecedented duration, yet the policy has utterly failed to “stimulate” the economy. There is no reason to think that easy money will achieve a different result assuming Janet Yellen is confirmed to take the helm.

Monetary stimulus by its nature can’t do much more than provide a short-term boost. Maintaining near-zero interest rates for years on end merely punishes retirees and frugal savers by ensuring they receive no return on their money. What cheap borrowing does is mask the destructive effect of the Washington wastrels who’ve racked up $17.2 trillion in debt.

The changing of the guard at the Fed ought to be an opportunity to jettison the misguided monetary-stimulus schemes. Congress and President Obama ought to come up with a New Year’s resolution to get serious, enact a budget and limit the onslaught of new regulations on business. There could be no more cheering gift to the American economy this holiday season than a moratorium on oppressive federal red tape. It’d do far more to fill the stores than offering toasters at a $10 discount.



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