Fox clown spins the economic numbers:
When good news goes bad
by Neil Cavuto
townhall.com
For contrast, here is some down to earth analysis:
What a real recovery looks like
Jobless claims were down a tiny bit last week, but it doesn't stop the headlines from reading "down sharply" or "lowest since February". Not that it means much in the din of all this applause, but 389,000 new claims is still about 50% more EVERY WEEK than during the previous expansion.
Meanwhile, credit card delinquencies set a new high, MCI is going to lay off another 2400 workers, despite being the #1 computer maker Dell is cutting prices, and more services jobs are heading abroad.
Every tiny bit of positive economic news has been an excuse to jump on the recovery bandwagon, whether it's a company beating earnings estimates (never mind whether those earnings were better or worse than before), or an economic indicator rises into an arbitrary "good" region (new claims below 400,000!) in the previous month, or even whether some knucklehead on TV just says so.
Maybe it's because after three years in economic purgatory, we're still are optimistic to a fault. Maybe it's because we're desperate. But neither positive thinking nor prayer do a recovery make.
Here's what we should look for in a real economic recovery. First, consumers need to have fixed their overspending ways from the previous boom. In every recession in the 20th century, consumers have cut their ratio of debt to disposable personal income. This gave them a reservoir of money to increase spending when the Fed reduced interest rates. In this recession, consumer's debt to disposable income actually increased, so the wherewithal of consumers to abruptly increase spending is much smaller, if any. Even a fixation on monthly payments rather than debt levels can't camouflage that even monthly debt service is higher now than before the recession.
Secondly, businesses need to increase profits, and do so through increasing sales. Increasing profits by cutting costs is not stimulating the economy any more than consumers cutting spending would stimulate the economy. Sales growth in this quarter's earnings reports continues to be anemic and as I referred to earlier is much worse after the weaker dollar had been factored out.
Thirdly, the increase in sales and profits leads to higher employment. There has never been a recovery where total employment didn't surpass it's previous peak. Today, we're not even close. More than 2.5 million jobs need to be created to get to the level of February 2001, and at the rate they've been created over the past year, mathematically that will never happen. Even generating jobs at the rate of a strong economy, we would need ten months just to get back where were nearly three years ago.
Finally, the increase in employment leads to even more consumption growth. Again, we're not even close. Growth in personal consumption expenditures, year-over-year, has improved to 2.8%, but this is still below the 3% level for most of 2002, and nowhere near the improvement from 1991 to 1993, when consumption growth climbed from negative territory to over 4% a year.
I will grant we've seen somewhat of a recovery, albeit a very mild one. But it is a recovery that has shown no characteristics of being self-sustaining. On top of this there are significant roadblocks in our way. A costly foreign entanglement, massive state budget deficits, rising interest rates and a tottering currency all need to be overcome. Predictions of recovery now are little more than wishful thinking.
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