Today, the initial jobless claim numbers were released for last week. The news: The same as the last few weeks. The numbers are up. Further, the rolling four week average for unemployment is also up. Tomorrow, the unemployment rate for June is scheduled to be released. Economists expect the unemployment rate to increase to 9.8% from 9.7%. I believe it will be closer to 10% again. People are saying that we are in a jobless recovery. Are we in a recovery at all? Is this the beginning of a double dip recession? Or, is the longest continuing recession since WWII continuing?
These are all sobering questions. However, is there an answer at all?
In some of my earlier columns, I have alluded to the basic economic principle that the economy is cyclical. The recession will last until the economy itself corrects. Massive stimulus bills, in my opinion, will just alter the cycle in the wrong way. It may make things temporarily better, but in the end it will make things worse. In this case, there is evidence that that is exactly what is happening.
There are a number of economists who feel stimulus spending in the Great Depression is what turned it into the Great Depression. There are members of the EU now telling our President to stop the spending for the same reason. However, he is not listening. Maybe the leaders of the EU know what they are talking about. The unemployment rate in Germany just dropped to 7.5%. Today, the Euro strengthened against the dollar. In fact, a report came out today saying that even Greece is in a better position that the US right now.
There is further evidence that the economy is not in a growth period. At least, the American populace does not believe so. On Tuesday, the Consumer Confidence Report came out and showed that the index had fallen ten points in the last 30 days. Every major economist was predicting that number to be far lower. Since that report on Tuesday, the Stock Market has lost more than two percent of its value.
Car sales for June were way done from May although the year to year numbers are better. (They couldn’t get much worse). Housing sales have been down since the First Time Home Buyer Credit expired about 60 days ago. This is almost exactly what happened to auto sales when the Car Buyer Credit ended last year: More evidence that stimulus creates fake economic blimps. Unfortunately, I also believe the same will be true of the unemployment rate when the temporary construction jobs and temporary census jobs expire. We may be looking at 12% national unemployment in a year. Remember, in an earlier column I pointed at that 410,000 jobs out of 440,000 created last month were temporary Federal jobs.
So, how do we get out of this mess: Just leave it alone! Stop creating fake blips in the economy by spending money we do not have. Just stop. Enough is enough. An hour ago, I was listening to Chris Christie, the ballsy governor of New Jersey, on Sean Hannity’s radio show. He is fighting constantly with the Democratic Legislature in that state. The man makes a lot of sense and in my opinion could become the standard bearer of our party shortly, especially if his policies start to work.
He has recently been criticized for empowering the rich by vetoing a tax on NJ residents with more than $400,000 a year in taxable income. The Democrats are all over him for this position. He stated that once you raise taxes on the rich, the is nothing to stop raising them on all of the other classes as well. Further, these are the people that create jobs. He is also being called a traitor by the teacher’s union. His answer to them is also simple. Fifty five percent of people in NJ either lost their jobs or had pay decreases as a result of this recession. Why should those 55% pay for the teachers to get pay increases with no loss of benefits. They must bear the burden as well. This guy makes sense!
His position is based upon the following: New Jersey is bankrupt. So, what is his position on how to get people back to work and the economy back on course: Lower taxes, smaller government, less spending. These are tried and true conservative positions. It worked when Ronald Reagan was President for the country. It will work for New Jersey now!
If only President Obama, Speaker Pelosi
and Senator Reid would listen!
PS: Here is a link in commemoration of July 4 weekend. A July 4 article will be put up tomorrow or Saturday.
Copyright 2010 by Frank T. DeMartini. Permission to copy will be given freely upon request.