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Recovery report card. White House misses mark

July 22, 2010

By Dr. Eric Fuits,
EconInternational

In 2009, the administration’s economists promoted stimulus spending by putting out some bold projections of the impacts of the stimulus on U.S.

Unemployment. For example, the attached chart shows that the administration’s economists expected that, by now, the stimulus would have reduced unemployment to 7.3 percent.  Instead, the Bureau of Labor Statistics reports that employment is now 9.5 percent.  While the unemployment rate is lower than last month, this is because so many people have given up looking for work.  Those people are out of the labor force and do not count toward the most widely used unemployment number.

The second chart shows the monthly performance of the S&P 500.  The figures used in the chart include dividends (most stock return charts, such as Google and Yahoo do not account for dividends in their stock index numbers).

The past two months have seen stock market returns  decline by 13 percent.

Caution should be exercised in looking at the month-to-month movements of the stock market.  Even so, stock returns are ultimately driven by expectations of future corporate earnings.  It seems we have entered an era of uncertainty that is taking a toll on the stock market.

  
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Bob Clark July 22, 2010

The White House has been doing the exact opposite of what is needed to spur the economy, this being deregulation. Instead we get a 2700 page Healthcare bill fraught with business investment uncertainty and a 2300 page Financial Reform bill also fraught with business investment uncertainty. On the latter, today, we read Ford Motor company had to pull a bond offering it needs for helping consumers finance new cars. The reason is the Financial Reform bill is causing the rating agencies to deny the use of their ratings.

Two things are helping the economy from being even worse. The Fed’s easy money policy of near zero interest rates, and the other is strong Asian economic growth.

I’d grade the Bama and his Democrat cohorts a D. It would be a D minus if it weren’t for their early action of continuing the Bush administration policy of throwing out the credit life lines (TARP two and FDIC protection limits).

One can only hope Republicans take back one or both Houses, and Bama shifts to the center from the left ala clinton 1994. Political gridlock was pretty nice between ’94 and ’00.

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