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EDITORIAL: Obama’s amazing shrinking economy
How long before Obamanomics can be called a failure?
Question of the Day
America’s economy is backsliding again, and it’s too late now for Barack Obama to put the blame on George. It can’t be his fault, so the weather is taking the fall for the 1 percent decline in the gross domestic product. America, so the explanation goes, couldn’t thrive during the winter because it was cold outside. Where’s that global warming when we need it?
The economists insist that things will be better in the third quarter, though this sounds a lot like the late-summer cry of disappointed baseball fans: “Wait ‘til next year.” However, the economic data suggest that the rosy forecasts are laced with wishful thinking. So long as the White House embraces a toxic mix of burdensome regulation and cronyism, job creation will remain impossible.
Gloom leaps from almost every page of that data. Business inventories are declining. Exports are down. Nonresidential construction is falling.
Some of the decline in construction can in fact be explained by the weather, but it’s difficult to reasonably blame the 7.5 percent plunge on weather alone. Winter comes every year, after all. The estimates of construction performance were optimistic. Something else is wrong.
The malaise that hit construction — old-timers call it “the Jimmy Carter disease” — affects consumer spending, too. Consumers just aren’t buying the durable goods — the cars, furniture and household appliances that are reliable indicators of future good news. The 0.5 percent drop in April marked the sharpest decline in consumer spending since September 2009.
The shrinking economy is accompanied by rising prices, a double-fisted blow for the millions who can’t find work and struggle to make ragged ends meet. The latest figures show inflation at 1.6 percent, the highest level since November 2012. Inflation has been held back slightly by slower growth of health care costs, but that looks like it’s changing soon, and the stagflation of the Carter years is looking like it’s staging a comeback.
The administration deals with the bad news by calling it the “new normal.” It wants to create the illusion that achieving a 2 percent growth rate while 300,000 idled workers are filing for unemployment benefits is a victory. Soon, the bar will be set so low that balloons and confetti will celebrate a bad quarter for not being as bad as the previous one. Under Reaganomics and other strong recoveries, the champagne corks didn’t pop until the growth rate hit 6 percent or even 7 percent.
Those days, sadly, are over. Government tentacles spread wider and deeper now than ever before. A constant flood of regulations paralyze existing businesses and leaves new entrepreneurs stranded on the shore. Resources that could be used to create jobs and satisfy consumer demand are diverted to extract favors from the government. That leaves everyone, except lobbyists and the bureaucrats, to suffer.
Restoring economic prosperity isn’t a complicated task. Instead of the cronyism and regulation at the heart of Mr. Obama’s economic agenda, there’s the free-market approach of cutting taxes and red tape. It has worked before and it will work again. The alternative is a long, hot summer of blighted prospects of jobs and recovery.
About the Author
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