May 2, 2014
U.S. Economy Slides Deeper Into Decline
Donald Lambro
5/2/2014 12:01:00 AM - Donald Lambro
No sooner did the Commerce Department announce that the economy barely grew by one-tenth of one percent in the first three months of this year, than the news media was searching for the toughest words to describe the U.S. economy's demise under President Obama's anti- growth, anti-job policies.
"U.S. Economic Growth Slows to a Crawl," was the way the Reuters news agency put it Wednesday, and even that was being generous. Some said the economy "stalled," or "barely grew" or "hit a wall." Others called the 0.1 percent growth rate "anemic," a word that doesn't do justice to an economy that has all but ground to a halt.
But after one excuse after another for the president's economic failures, some in the news media weren't pulling their punches. Here's the way the Wall Street Journal put it:
"U.S growth nearly stalled in the first three months of the year, fresh evidence that the economic expansion that began almost five years ago remains the weakest in modern history."
"U.S. economic growth stalled to near zero," the Journal said on its website, minutes after the government announced its shocking number.
Even the liberal New York Times, one of the Democrats' biggest apologists, pointed out that the economy's failing grade was actually a continuation of what Americans have been experiencing ever since Obama's first year in office, without any sustained improvement.
"For all the attention devoted to the quarterly fluctuations, the current underlying rate of expansion is not much different from the frustratingly slow trajectory in place ever since the economy began to recover from the Great Recession," the Times said.
"The average quarterly rate of growth since the summer of 2009 stands at 2.2 percent," the newspaper noted, a pathetic, sub-par rate of growth for the largest and once strongest economy on the planet.
The White House was still peddling their belief that the economy would soon pick up in the second quarter and that the slowdown was the result of a harsh winter.
But wiser economists aren't buying the administration's excuses.
Dan North, the chief economist at Euler Hermes North America, a large insurer, told the Times that even if the growth rate picks up in the second quarter, "the annual growth rate in 2014 will most likely still be below the post-World War II average of just over 3 percent."
"We've been living in a sub 3-percent land, and people have gotten used to that as the new normal," North said. "But it's not.
It's anemic."
Yes, a bitter winter took its toll on growth, but it was not the driving force behind a snails-pace economy.
Its precipitous plunge into recession-leaning territory -- defined by two back to back quarters of near minus growth -- was driven by multiple weaknesses across the nation's economic landscape.
U.S. exports plunged 7.6 percent, a victim of Obama's failure to negotiate new trade deals. Business investment fell as many companies cut back on their inventories in the face of a weak economy.
The real estate markets were in decline as higher interest rates and rising prices pushed homeownership beyond the reach homebuyers.
"The housing market has cooled recently as buyers have struggled to afford homes," the Los Angeles Times reported this week.
The Federal Reserve said Wednesday that the "recovery in the housing sector remained slow."
And remember all that inventory businesses bought in the second half of 2013, believing the economy was going to take off? Well, their shelves were still full throughout the first quarter, resulting "in manufacturers receiving fewer orders" in the past three months, Reuters reported.
But the biggest factors behind the economy's decline is the shrinking labor market, high, long-term jobless rates, and stagnant or declining incomes.
"A separate report from the Bureau of Labor Statistics on Wednesday on the employment cost index showed that private sector wages and salaries in the first quarter of 2014 increased at the slowest rate since the bureau began tracking the data in March 1980,"
the Times reported.
Little wonder, then, that the Conference Board reported Wednesday that U.S. consumer confidence fell in April as a result of growing concerns about job cuts and business pullbacks in investment.
There are lots of ways that this economy can be turned around, but Obama and the Democrats are opposed to all of them.
We need revenue neutral, job friendly tax reform that scrubs corporate welfare out of the tax code, broadens the tax base, and lowers income tax rates across the board for businesses and individuals.
The Republicans in the House have a plan ready to go, but Senate Democrats want no part of it. And Obama's too busy trying to raise the minimum wage, even though the nonpartisan Congressional Budget Office says it will kill 500,000 jobs.
We need tax incentives to unlock trillions of dollars in capital investment to expand existing businesses, create new ones and boost employment. In his second term, Bill Clinton signed a GOP-passed capital gains tax cut and his economy took off. Obama and the Harry Reid Democrats flatly oppose this.
We need to enact fast track trade authorization to open up world markets to American goods and services, but the Democrats won't even discuss it for fear of angering their party's union bosses.
Sad to say, but the American economy is on a slippery slope to further decline and it's not going to get any better until we have tough, new leadership in the Senate and the Oval Office.
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