Doom, Gloom and The Economy’s 1.25% GDP Growth
If you want to know why this election is important to our prosperity and economy, there are several data points you can turn to.
For me, the biggest concern is that the bad trend of higher taxes and more spending under Obama will continue. Entitlement spending under Obama will grow 60% over the next 10 years and it will eat us alive. More precisely, our public debt/GDP ratio will go past the tipping point of 100% after which we become the next Greece. The 21 new taxes in Obamacare will hurt job creation and those Obamacare taxes are the biggest tax increase in history:
ObamaCare legislation raises taxes by $420 billion between 2010 and 2019 and spends $788 billion to increase health coverage.
Now, it’s far too easy to get so caught up in the doom and gloom to think “Oh, we are in a recession” when in fact we have been in a recovery. Team Obama assures us that all is rosy because we have eked out positive job growth numbers each month for over 40 months (we hit a ‘zero’ number in August 2011, but it was eked by revisions into positive territory). What they won’t own up to is the WEAK numbers on growth, job creation, and fiscal stability. Despite $6 trillion in new debt, the most agressively ‘easy’ money in Federal Reserve history, with their $3 trillion in Quantitative Easing, this was the GDP growth in Q2: 1.25%. From Zero Hedge:
So much for the US recovery (we will never tire of saying that). After the first Q2 GDP revision bubbled up from 1.5% to 1.7%, the sellside brigade was confident that the rate of growth would continue and final Q2 GDP would be in line. Instead, we got an absolute shock of a print, with the final Q2 GDP print coming in at a ridiculously low 1.25% (rounded up to 1.3%), below the lowest Wall Street estimate of 1.4%, and the lowest number since the revised 0.1% reported in January 2011. Here is the final GDP trendline: Q4 2011: 4.1%; Q1 2012: 2.0%; Q2 2012: 1.25%.
The 1.25% GDP growth in Q2 2012 is pathetic and is proof enough that this ‘recovery’ is not adequate. And recent durable goods orders down in August and other monthly metrics shows continued weakness and predictions that 2nd half 2012 will be weaker, as CEOs worry about the fiscal cliff. Job growth of around 120,000 is lower than the increase in working population, which is why more people went on food stamps than got jobs last month. As Rush Limbaugh puts it, “That’s a gnat’s eyelash above a recession”.
We need to remember what this election is about. Obama’s faith in redistribution, higher taxes and boondoggle-spending-as-stimulus is misplaced and dangerous to the economy. Obama’s economic mismanagement is not some theoretical construct that might in some future harm some people down the road. No. His policies are destroying jobs, have destroyed jobs, balooned our debt and is harming economic growth RIGHT NOW.
We say it of all elections: The stakes in this election could not be higher. But then most elections don’t have the financial future of the entire country on the line, or the prospects of a ‘lost decade’ economically on the line, and the current, ongoing dreadful economic data to prove the direness of our current situation. We have to do better, we need a change, and we need to urgently recommit to making that happen. Please share this with everyone you know and ask them: Is this economic data a sign of a good President and a good economic steward? Would you re-hire or fire someone who performed so badly?
We are troubled on every side, yet not distressed; we are perplexed, but not in despair – 2 Cor 4:8