The President and the Fed Chairman got together to talk about the economy.
“I think in our discussions we share the view that the economy is strengthening, that we are into recovery, that it’s actually led by some interesting sectors, like manufacturing, that we haven’t seen in quite some time,” the president said. “But what we also agree is that we’ve still got a lot of work to do.”
According to the Economic Cycle Research Institute,
After falling for six weeks, the uptick in the level of the Weekly Leading Index suggests some tentative stabilization, but the continuing decline in its growth rate to a 56-week low underscores the inevitability of the slowdown,” said Lakshman Achuthan, managing director of ECRI.
So, if by “strengthening”, the Administration means “tentative stabilization”, then kudos all around. Makes me remember fondly debating what the “definition of is is”.
The truth is that this economy is a “dead man walking” (I’m not ready to call the next recession, but speak to me in 6 months). And the economic opportunities in Delaware are even worse. Regrettably, these facts won’t stop our elected leaders from sucking more life out of the weak economy that is left.
Delaware’s State government sees revenues rising as far as the eye can see. Which means we need to grow government spending and make humorous excuses as to why a 6.5% increase isn’t really a 6.5% increase (See Delaware State University Professor and oft quoted political expert Dr. Samuel Hoff’s extremely funny justification in today’s News Journal). The short-sightedness of our government continues to astound me. However, mis-judging risk is a widespread human trait. Fortunately, I’ve been less sanguine than our State sponsored DEFAC forecasters for almost a decade, for example, here’s what I wrote last September in this blog:
While the national and global economy will be rebounding strongly [over the next 6-12 months], Delaware’s economy won’t move much because we have no remaining growth industries in the State. State revenues, on the other hand, will benefit from the Corporate taxes paid by global companies benefitting from the global economic growth. Delaware will become increasingly dependent on these external taxpayers as the internal economy continues to idle (as if already paying for ~45% of our budget was dependent enough — try 60%).
In short, the State government can expect a good year, but the average Delawarean can’t.
Seems like I hit the nail on the head — if I do say so myself.
So, back to Washington. I think that the President and the Fed Chairman realize that further Keynsian “stimulus” is politically dead. Even the Europeans have no stomach for more debt. Therefore, it is easier to pretend like the economy is strengthening than to look completely out of step with the rest of the G-20.
Truth is, I think that no new “stimulus” is a good move (even if he was forced into it). An even better move would be an Executive Order imposing a 6 month moratorium on new rules/regulations and eliminate about 1,800 pages from the “Protect The Wall Street Fat Cat Act” masquerading as financial reform. In Delaware, adopting the Governor’s plan to reduce future employee retirement benefits and issuing an Executive Order creating a moratorium on new hires would be good starts. But why bother…
It’s summertime, and the living is easy…
