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The recovery is losing steam, fast

By Neil Irwin

Another day, another lousy piece of economic data. The 27.2 percent fall in existing home sales in July was far below analysts' official expectations (though in line with some of the whisper numbers that close watchers of housing data were expecting).

And financial markets have again taken notice; money continues gushing into safe U.S. Treasury bonds, sending the yield on those bonds to 2.52 percent as of 11 a.m. (it reached as low as 2.48 percent earlier this morning).

There's a pattern here, and it's not a good one. Virtually every major economic indicator to come out in the past two months has been disappointing in one way or another. Retail sales. International trade. Weekly jobless claims. The monthly employment report. Housing starts.

In fact, of the major data releases, the only one I can think of that has been decent over the past couple of months was last week's industrial production report.

When the economic data first started turning soft earlier in the summer and it looked as though the recovery could be losing steam, I tried not to leap too far into major conclusions. Data is often uneven at economic turning points, and economic recoveries sometimes move in fits and starts.

But as the third straight month of weaker data comes to a close, the brutal reality is that all the indicators are pointing in one direction. The data are all either coming in in line with diminished expectations, or surprising in a negative direction. It's not an uneven recovery-- it's not much of a recovery at all.

Goldman Sachs economists wrote in a report Monday that analysts have been too slow to mark down their forecasts for growth in the second half of the year to match the new reality. They're now forecasting that the GDP will rise in the second half at a mere 1.5 percent annual rate, well below the 2.4 to 2.7 consensus that mainstream forecasters are still holding to.

Forecasters already expect second-quarter growth to be revised down to 1.4 percent Friday (Goldman is even more pessimistic, expecting a revision to 1.1 percent.)

The U.S. economy should grow at a 2.5 to 3 percent annual rate in the long run just due to population growth and higher productivity. So 1.5 percent growth would mean that the gap between what the nation is capable of producing and what it is actually producing would be widening, rather than narrowing.

The scariest thing is that they might be right.

By Neil Irwin  |  August 24, 2010; 11:52 AM ET
Categories:  U.S. Economy  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Sales of previously occupied homes plunge
Next: Plunge in home sales not pretty, but necessary for real recovery

Comments

There never was a "recovery"!

Posted by: CA57 | August 24, 2010 12:19 PM | Report abuse

No worries everyone, Barry says it's the "Summer of Recovery" so it must be so. Got Hope?

Posted by: island1 | August 24, 2010 12:20 PM | Report abuse

Get this failed socialist nightmare administration out of here!

Posted by: Ehbirge | August 24, 2010 12:38 PM | Report abuse

I think Irwin is basically correct. It's true that numbers go up and down, so that it's irresponsible to draw sweeping conclusions from numbers that only reflect a moment in time. Economic data is much more about trends. And I agree that 3 months of pretty uniform bad news on the economy can legitimately be considered at least the beginning of a trend.

The bottom line is that the 'stimulus' barely pulled the economy out of official recession, but did little to change the long term dynamics of the economy. So its effect was short lived, and, by most accounts, pretty unimpressive. With most of the stimulus money spent, the economy of recent months may well be a more accurate picture of where we really are, rather than the picture provided earlier in the year by the very modest bump from the stimulus and other govt initiatives. To me, the real breakdown in forecasting is in assuming the earlier year numbers were durable beyond the stimulus. They weren't, and aren't. And let's not forget that even the modest good news we were seeing earlier in the year was nothing to crow about. Growth was still anemic. Home prices weren't really recovering. Jobs weren't really coming back.

Posted by: Anonymous | August 24, 2010 12:45 PM | Report abuse

And still NO HELP for Small Business as Obama REFUSES to help!!!!

From Newswire an hour ago:

Obama Refusing to Back Private Sector Jobs Bill

FOR IMMEDIATE RELEASE
August 24, 2010

Petaluma, Calif. – President Barack Obama is refusing to back a bill that could create millions of jobs in the private sector. The bill, the Fairness and Transparency in Contracting Act, H.R.2568, was introduced by Georgia Congressman Hank Johnson last May. The American Small Business League (ASBL) wrote the original draft of H.R. 2568. The bill is designed to stop the federal government from diverting over $100 billion a year in federal small business contracts to Fortune 500 firms and many of the largest businesses in Europe.

Since 2003, a series of federal investigations have found billions of dollars a month in federal small business contracts have been diverted to firms like Lockheed Martin, Boeing, Northrop Grumman, Raytheon, General Dynamics, Bechtel, Dell Computer and Xerox. Corporate giants from around the world that have received U.S. government small business contracts include Rolls-Royce, British Aerospace (BAE), French giant Thales Communications, Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA, which is located in Italy and has 73,000 employees. A recent investigation by Stars and Stripes Magazine found the federal government had awarded over $41.6 billion in small business contracts to “miscellaneous foreign contractors.” (http://www.stripes.com/blogs/ombudsman/ombudsman-1.8931/behind-the-media-contractors-veil-1.110840)

H.R. 2568 would stop the federal government from reporting contract awards to publicly traded firms and foreign owned companies as small business awards. The bill is based on language in the Small Business Act, which states that a small business must be “independently owned” in order to receive federal small business contracts.

If President Obama were to sign H.R. 2568 into law, or pass by executive order, over $100 billion in existing federal infrastructure spending would be redirected to legitimate small businesses in the private sector. Since the bill requires no new spending or tax increases, it is deficit neutral. The Obama Administration had estimated that for every billion dollars in infrastructure spending, 40,000 new jobs would be created. Based on those projections, if H.R. 2568 were to become law, over four million new jobs could be created. (http://www.nytimes.com/2008/12/07/us/politics/07radio.html?hp)

The ASBL points to H.R. 2568 as being far superior to the Obama Administration’s $30 billion small business lending bill. As opposed to a one-time infusion of $30 billion in loans, H.R. 2568 would inject over $100 billion a year in federal contracts into the small business economy for decades to come.

Contact:
Christopher Gunn
Communications Director
American Small Business League
cgunn@asbl.com
(707) 789-9575
Posted by American Small Business League

Posted by: question-guy | August 24, 2010 12:53 PM | Report abuse

And still NO HELP for Small Business as Obama REFUSES to help!!!!

From Newswire an hour ago:

Obama Refusing to Back Private Sector Jobs Bill

FOR IMMEDIATE RELEASE
August 24, 2010

Petaluma, Calif. – President Barack Obama is refusing to back a bill that could create millions of jobs in the private sector. The bill, the Fairness and Transparency in Contracting Act, H.R.2568, was introduced by Georgia Congressman Hank Johnson last May. The American Small Business League (ASBL) wrote the original draft of H.R. 2568. The bill is designed to stop the federal government from diverting over $100 billion a year in federal small business contracts to Fortune 500 firms and many of the largest businesses in Europe.

Since 2003, a series of federal investigations have found billions of dollars a month in federal small business contracts have been diverted to firms like Lockheed Martin, Boeing, Northrop Grumman, Raytheon, General Dynamics, Bechtel, Dell Computer and Xerox. Corporate giants from around the world that have received U.S. government small business contracts include Rolls-Royce, British Aerospace (BAE), French giant Thales Communications, Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA, which is located in Italy and has 73,000 employees. A recent investigation by Stars and Stripes Magazine found the federal government had awarded over $41.6 billion in small business contracts to “miscellaneous foreign contractors.” (http://www.stripes.com/blogs/ombudsman/ombudsman-1.8931/behind-the-media-contractors-veil-1.110840)

H.R. 2568 would stop the federal government from reporting contract awards to publicly traded firms and foreign owned companies as small business awards. The bill is based on language in the Small Business Act, which states that a small business must be “independently owned” in order to receive federal small business contracts.

If President Obama were to sign H.R. 2568 into law, or pass by executive order, over $100 billion in existing federal infrastructure spending would be redirected to legitimate small businesses in the private sector. Since the bill requires no new spending or tax increases, it is deficit neutral. The Obama Administration had estimated that for every billion dollars in infrastructure spending, 40,000 new jobs would be created. Based on those projections, if H.R. 2568 were to become law, over four million new jobs could be created. (http://www.nytimes.com/2008/12/07/us/politics/07radio.html?hp)

The ASBL points to H.R. 2568 as being far superior to the Obama Administration’s $30 billion small business lending bill. As opposed to a one-time infusion of $30 billion in loans, H.R. 2568 would inject over $100 billion a year in federal contracts into the small business economy for decades to come.

Contact:
Christopher Gunn
Communications Director
American Small Business League
cgunn@asbl.com
(707) 789-9575
Posted by American Small Business League

Posted by: question-guy | August 24, 2010 12:53 PM | Report abuse

My greatest concern is that the US may be experiencing their version of Japan's "lost decade" of the 90s.

Posted by: garylloyd | August 24, 2010 1:01 PM | Report abuse

The only "recovery" our country has seen since Dear Leader was inaugurated is the word itself, buried in his scripted speeches and in the propaganda doled out by Pelosi, Reid, Biden, their minions, groupies and the Mainstream Media.

Posted by: JAH3 | August 24, 2010 1:08 PM | Report abuse

Tighten your belts, it's going to be an interesting ride. If home prices start to plunge again it could get really bad. Remember, the Great Depression happened after nearly everybody thought we were out of the woods and austerity was put into place. We now appear to be in an eerily similar position.

Posted by: zackool | August 24, 2010 1:08 PM | Report abuse

You got to love the conservative hyper critics, well maybe not. They stand in the way of any efforts made by the government to aid recovery and then chant that the failed recovery is due to the government. They vote in block against aid to small business and then come on these boards and say that it is Obama who doesn't want to help small business. They droll on about the free market and the private sector but the private sector banks are sitting on billions of dollars and private employers are not hiring despite the need for new personnel.

The GOP is hoping for a failed recovery that will help them. They are putting good of the US economy second to their party interest. The stimulus worked! Too bad the conservatives have done everything in their power to undo it and to prevent more aid at this very critical time.

Posted by: Anonymous | August 24, 2010 1:13 PM | Report abuse

Can we get back to talking about the mosque?

Posted by: Anonymous | August 24, 2010 1:16 PM | Report abuse

The White House announced today, " Ignore the economic data. According to the President the "Summer of Recovery" is going nicely on Cape Cod. His vacation has created at least two new jobs on the Cape and demonstrates how hard he is willing to work for the American people."

Posted by: Anonymous | August 24, 2010 1:24 PM | Report abuse

I would suggest a three pronged strategy to economic recovery. Firstly, a housing stabilization program (where the government would receive first rights home equity in return for making part of the monthly mortgage payment for those facing foreclosure). Secondly, a temporary investment bank to lend to those borrowers who otherwise would be able to borrow during normal economic times, but can not now due to risk averse banks. Thirdly, to a limited extent and depending on how the first two programs work out - a stimulus program. By the way, the first stimulus program is still expected to have an effect, there was a delay because stimulus work needs to be planned first to avoid waste. The first two programs would be revenue/expenditure neutral (debt to be paid back by eventual revenues). The goal should be 5% unemployment and 3% inflation rate before the above programs are closed.

We seem to be close to a deflationary period hence the need for the above strategy.

By the way, incurring debt is not bad in the short run if there is low inflation and the purpose is to reduce unemployment to more normal levels. There has been huge debt incurred since the Great Depression and the Second World War, and the American economy has still thrived.

For those advocating tax cuts, keep in mind that people may just hold on to their additional money thereby not stimulating the economy and not reducing unemployment. Therefore, I believe my strategy is much better for economic recovery.

Posted by: Anonymous | August 24, 2010 1:24 PM | Report abuse

The three pronged strategy to economic recovery above was my suggestion, I forgot to sign in.

Thanks,

Thinker19

Posted by: Thinker19 | August 24, 2010 1:29 PM | Report abuse

This is a fantastic opportunity to make money.

Go short on equities.

In disaster lies opportunity.

Posted by: Anonymous | August 24, 2010 1:34 PM | Report abuse

Uhh, I think it would be: "The 27.2 percent fall in existing home sales in July was far ABOVE (more than) analysts' official expectations" (of falling sales)

Posted by: LawsLuvr | August 24, 2010 1:37 PM | Report abuse

tell me again why "the worst recession since the Great Depression" is supposed to be all better now. People complaining that the President's plan has failed are pretty f'ing stupid if you ask me. The Depression lasted 10+ years and this Recession is going on what 3?
Folks we've got 2 more years of unwinding assets, restoring balance sheets, passing legislation & creating new markets...that's what happens when you bet the farm (and lose), you don't get to clap your heels together 3x and magically float away to greener pastures...

And all this after everyone (President included) said "It's going to take awhile..." well it hasn't been "a while" yet. This of course is of little consolation to the unemployed but I was part of the Unemployed back in 2001 and my sympathies are there but the vast majority of those without jobs do have options. Not the options they love but you don't get what you want when capitalism rears it's ugly head, but damn sure better do what you need to do

Posted by: Anonymous | August 24, 2010 1:37 PM | Report abuse

The only people doing better since January 2009 are the Obamas, government employees and illegal immigrants.

Posted by: Anonymous | August 24, 2010 1:48 PM | Report abuse

what a shock, you follow up a Fannie Mae and a "Community Reinvestment Act" inspired housing crash with a regulatory, tax and spend, stove-pipe economy nightmare and...the economy sucks.

Posted by: dummypants | August 24, 2010 1:48 PM | Report abuse

Duh! This has been reported on Fox News for a year now. There is no recovery.


About the only good thing to come out of the Socialism we have been forced into is that the American people now know what Socialism is. And are repulsed by it.

Posted by: FormerDemocrat | August 24, 2010 1:53 PM | Report abuse

The sky is falling --- The sky is falling !!

Posted by: Anonymous | August 24, 2010 1:55 PM | Report abuse

An anonymous poster used the term, "risk averse banks." It is not the banks that are risk averse, it is the FDIC. Their bank examiners are seizing and selling off banks that have too much assets in what the FDIC considers "risky loans." This is happening while these so-called risky loans are current and before a single dime of Federal insurance money is necessary. The FDIC seized 140 banks in 2009 and has seized 108 in the first half of 2010 alone. When they do this, the depositor assets are transferred to the buying bank, but the stock holders in the seized bank are left empty-handed, their shareholder equity gone.

The dirty little secret of this recession is that it is our own Federal government that is preventing a recovery. When banks, esp. small community banks, are threatened with such seizures, they tighten lending on home mortgages, squeezing the housing market and the construction industries. They cap the line of credit they extend to small business, shutting off business expansion and new hiring. And they lower credit card ceilings while raising interest rates, cutting off consumer spending.

Tim Geithner and the entire Obama economic team is perpetuating this recession. They all need to go.

Posted by: hisroc | August 24, 2010 1:57 PM | Report abuse

Oddly, if you go to the mall on the weekend you still can't find a parking space.

Posted by: hoos3014 | August 24, 2010 1:59 PM | Report abuse

Oh for crying out loud!!!! PRESIDENT OBAMA IS NOT SOCIALIST AND THE UNITED STATES IS NOT A SOCIALIST COUNTRY!!!! Gas is not even $3 a gallon and we are the ONLY industrialized country IN THE WORLD including your beloved SOCIALIST Israel that has no Value Added Tax. Only ignorant imbeciles, those who have never traveled outside of the US or a Mexican resort and people who watch FOX NEWS would believe that utter TRIPE. In Germany gas is $7 a gallon, thats Socialism. BTW "Socialist" Germany has a lower unemployment rate than the U.S. and a trade surplus. "Socialist" Canada has a budget surplus and higher GDP growth. Looks like the problem is that we havent implemented ENOUGH Socialism in this laissez faire free markets running amok boom and bust Frankenstein of a Chimerica the Republicans insist on perpetrating on the American people.

Posted by: Anonymous | August 24, 2010 2:08 PM | Report abuse

Vote to re-elect Obama. He can only go up from here.

Posted by: nyx567 | August 24, 2010 2:16 PM | Report abuse

what "recovery?" Is the Post still spinning WH press releases?

Posted by: silencedogoodreturns | August 24, 2010 2:19 PM | Report abuse

"The FDIC seized 140 banks in 2009 and has seized 108 in the first half of 2010 alone. When they do this, the depositor assets are transferred to the buying bank, but the stock holders in the seized bank are left empty-handed, their shareholder equity gone.

The dirty little secret of this recession is that it is our own Federal government that is preventing a recovery. When banks, esp. small community banks, are threatened with such seizures, they tighten lending on home mortgages, squeezing the housing market and the construction industries. They cap the line of credit they extend to small business, shutting off business expansion and new hiring. And they lower credit card ceilings while raising interest rates, cutting off consumer spending"
This actually sounds like tough but wise medicine to get our financial house in order, eliminate risk from the market, and encourage Americans to save and live within their means. The short term results are painful but necessary for the long term health of the economy. No one guaranteed that the rebound from this recession was going to be quick or easy. The American public has grown so impetulent and the President's political opponents are quick to seize on this collective impatience and will do anything to get back into power and reintroduce the very policies that landed us into this recession in the first place.

Posted by: Anonymous | August 24, 2010 2:21 PM | Report abuse

The only answer is two fold. Bring back local manufacturing (yes, assembly lines) and tell unions to shut-up for a three year period in work-rules dictates and benefits increases. We will pay more for our goods and services but it will be to help OUR unemployed and not those of the world's. That's how OUR economy can grow. Oh yes, don't worry, our exports will be fine because we feed the world an they have to eat. They also have to pump oil that we can buy on the open oil market. It is time to stop listening to "interdependent world-wide commerce" siren song from Harvard economists. It's not working! Period!

Posted by: newssenior | August 24, 2010 2:35 PM | Report abuse

Ridiculous lefties and Uncle Ben supporters, how's that "change" thing working for ya?

Posted by: Anonymous | August 24, 2010 2:36 PM | Report abuse

We need to follow Krugman's advice: more stimulus! More stimulus! We need it now, before the November elections, because if the Republicans gain any kind of control then the economy is headed for a major contraction again.

Posted by: Anonymous | August 24, 2010 2:59 PM | Report abuse

As "anonymous" says it is not about socialism except that the growing unions restrict membership and employment. Open those gates through right-to-work rules and see employment grow.

It is not about socialism but about government butting in to micro-manage the economy and see it hide under the bed out of uncertainty and fear.

It is not about socialism but about open-trade with countries that do mot meet economic or social equality or fairness needed for "fair" trade.

The Republicans must promise to increase trade barriers from those countries and bring back manufacturing. Is there anyone there who does not believe that a country with over three hundred million people like the U.S. can't make up its own economic zone and employ its people?

Posted by: newssenior | August 24, 2010 3:00 PM | Report abuse

There has been no recovery and it will get worse. The "summer of recovery" is just another 0bamba lie, very sad indeed. With the "Socialist in Chief" 0bamba in the White House, sorry, I mean on vacation on Martha's Grapeyard what do you expect? He's destroying America from within. "We the people" will start the very difficult task of taking back "our" country and government in November. We live in the greatest country in the history of the planet (even though 0bamba hates America and is anti-American). We will come back better because that is what freedom and Americans do. We will prevail once we get the government out of our way like our founders envisioned and our Constitution dictates, bet on it....

Posted by: kennethy692008 | August 24, 2010 3:02 PM | Report abuse

Holy crap, the economic recovery is losing steam? I didn't know that, Obama didn't notice that, Pelosi denies it and Reid just went to sleep. Neil, thanks for alerting us. Here I just went out and bought a home I couldn't afford hoping that Obama would help me pay for it. What are we going to do now? I know prez lets spend some more of my money and if that doesn't work, sell the western part of the U.S. to China for two zillion dollars.

Posted by: Anonymous | August 24, 2010 3:11 PM | Report abuse

The economic recovery is losing steam? I didn't know that, Obama won't admit to it, Pelosi denies it and Reid just can't remember that we had a stimulus. Thanks Neil for alerting everyone. What do I do now. I just bought a home I can't afford, hoping that Obama would pay for it. I turned in my old clunker of a car for a new one that I also can't afford. I guess the only thing to do is to accept socialism and become a serf to the almighty messiah.

Posted by: Anonymous | August 24, 2010 3:18 PM | Report abuse

Summer of recovery will stick with Obama and the Democrats like malaise stuck with Jimmy Carter, no more taxes with Bush one, I have not had sex with that woman with Clinton and mission accomplished with Bush two.

Posted by: magellan1 | August 24, 2010 3:19 PM | Report abuse

Obama-nomics = deaf, dumb and blind servitude to failed socialist policies.

Posted by: bob59 | August 24, 2010 3:22 PM | Report abuse

What we really need are more tax cuts. They seem to have worked so well that I think we should just eliminate all taxes and go to the honor system. You pay whatever you want. This has worked so well in so many other areas, such as environmental protection, worker safety, and food production, and most importantly Republicans love the idea of "voluntary compliance."

With this new regime I feel assured that the government will actually collect much more in tax revenue than it is able to collect under the current tax structure. And under a program of “voluntary compliance” all those prickly IRS agents can be relieved of duty and we can shrink government and reduce costs while substantially increasing revenues.

This will cause the economy to shoot through the roof because all the money that is now going to taxation will be spent on investment in productive industry and none of it will be spent on risky speculative financial investments or sent to overseas or off-shore tax shelters or investments.

I addition, I know this idea will work because these ideas represent pure Republican ideology taken to its furthest limit. And nothing works to create jobs like Republican ideology. We have eight years of the Bush administration, and 2/3rd of the Obama stimulus package as poof of just how well these tax cut ideas work, so I know I am on solid ground.

Posted by: Prakosh | August 24, 2010 3:49 PM | Report abuse


darn right, they may be right. 2011 is going to be terrible. I hope they extend unemployment for 53 more weeks, just too get us poor folks a chance to get on our feet and save our homes.

Don't count on anything getting better for another 18 months.

Posted by: TheBabeNemo | August 24, 2010 3:52 PM | Report abuse

We all know there has been no economic recovery at all in this nation when measured by any rational standard. America is dealing with unprecedented incompetence not witnessed during the Great depression. The economic team at the White House is simply observing the decline of the world's greatest economic engine. Barack Obama will be known in history for his lack of action to reinvigorate and expand private sector jobs during a major national crisis.

Voters will soon realize that prior political service on the part of many politicians count for little in problem solving. Incompetence is ruling this administration along with Congress and many in either party will not confront the President and speak the truth about this incredible decline.

If on the other hand this destruction of the American economy is not incompetence but instead a planned course by this President he must be replaced in 2012. Many professional politicians have done little to end this economic misery and they must be replaced. A change is coming big time in 2012.

Dr. Alan Phillips

Posted by: ctw46 | August 24, 2010 3:55 PM | Report abuse

Tax cuts for hte rich should take care of it.

Posted by: Please_Fix_VAs_Roads | August 24, 2010 3:59 PM | Report abuse

Take your dirty stimulus money and put it in my pocket, please: A study of contrasts.
March 2009
WASHINGTON — South Carolina Gov. Mark Sanford is expected Wednesday to become the first governor to formally reject some of the federal stimulus money earmarked by Congress for his state.

August 2010
…Mr. Sanford quietly signed a bill passed by the Legislature that expanded eligibility for unemployment benefits. The move paved the way for the state to claim $97.5 million in stimulus money to bolster its financially ailing unemployment insurance trust fund.

Sanford’s reversal attracted little notice, and the move makes South Carolina the 33rd state to expand jobless benefits. It appears that when all the bellyaching over deficits and the grandstanding is over, what becomes important is alleviating constituents’ suffering.

Article is here:
http://allisonkilkenny.com/2010/08/take-your-dirty-stimulus-money-and-put-it-in-my-pocket-please/

Posted by: Anonymous | August 24, 2010 4:02 PM | Report abuse

Well. This is how it feels like to go through purge, cleansing of our system, after incredible excess, unbelievable indulgence consuming anything and everything in excess. And we do need to come down to earth, face reality, suffer the consequences of our bad behavior and start to rebuild once all of the excesses are purged. It's not going to happen overnigh. People who whine and harp about the recovery not taking place fast enough clearly has absolutely no clue as to the extent and severity of the damage done to the system. Remember? Not so long ago, our country was about to fall off the cliff? I wonder what would have followed if that was allowed to happen.

Posted by: Anonymous | August 24, 2010 4:05 PM | Report abuse

Well, Mr. Irwin, it appears that a relatively unknown mathematician in Oregon has an economic model vastly better than anything the bobble heads on Wall Street or Washington can come up with. Not to worry, next week is pretty much of a repeat of this week. Things wont get REALLY bad until October, when the markets simply collapse. That wont seem so bad, either, when sometime in mid-December or January, the entire US economy collapses. The risk line show that sometime in the next two weeks Congress extends the Bush tax breaks and that will drive unemployment off the charts. You see, we're in a death spiral where unemployment is driving lower consumer spending which drives businesses to seek ever lower production costs (outsourcing) which drives more jobs lost which drives even more vicious scouring of the globe for cheaper production costs, etc. Government money, in the form of tax breaks and grants, to businesses causes even more harm because most of that money has been fueling jobs and factories in China and India and the other emerging Asian economies. It also fuels ever greater government debt, weakening the dollar and *has* led to inflation -- it is 6.8% right now, the government and YOU merely aren't reporting it, but it is due, past due, really, to soar in the next few months. Jut about everything Wall Street and Washington are doing, right now, is likely the worst things they could possibly do. We are in so much trouble. The risk lines all point to a series of major collapses early next year that are going to make the Great Depression look like a walk in the park.

Posted by: mibrooks27 | August 24, 2010 4:06 PM | Report abuse

Obama can't blame these numbers on bad weather, but he'll come up with something.

Posted by: Anonymous | August 24, 2010 4:22 PM | Report abuse


There is no economy. There never was. Barry's minions had to wait until the very end of summer to tell you what you already know: the Summer Of Recovery was a crock all along.

Posted by: Anonymous | August 24, 2010 4:39 PM | Report abuse

OK people, before you use the word "socialist", PLEASE learn what it means. From a textbook, NOT FOX news. Honestly, you sound ignorant!

Posted by: CAC2 | August 24, 2010 4:52 PM | Report abuse

Prakosh - well said

Posted by: Anonymous | August 24, 2010 4:54 PM | Report abuse

Oh, and question-guy, a press release from a special interest group is not the same thing as news. Just FYI.

Posted by: CAC2 | August 24, 2010 4:55 PM | Report abuse

"OK people, before you use the word "socialist", PLEASE learn what it means. From a textbook, NOT FOX news. Honestly, you sound ignorant!

Posted by: CAC2 | August 24, 2010 4:52 PM

Bob59 Stop throwing around the word "Socialist." You don't even know what it means. To suggest that Congress destroyed the economy in a matter of one year is absolutely absurd.

Posted by: Anonymous | August 24, 2010 4:19 PM
=========================================
I'll answer both of your posts here:

We all know what Socialism is, it's what Obama called "change".

Everyone in socialist economies but the political fat cat elites get spare "change". Spare change health care, spare change promises of prosperity, shovel loads of manure from propaganda media,....

It's the economy we have today, the beginnings of a welfare state...a ghetto economy.

It's the same system Obama wrote about in his book, "Dreams of my father". His father was a socialist. Obama is an organizer for socialism, he's creating the United Ghetto of America, where he and his cronies are ghetto lords flying around in private jets, riding in limos & living in mansions at our expense.

Socialism has destroyed the European economy two times in the past 70 years (Hitler's National Socialist Party & recent socialist governments), it destroyed China before capitalism was let in, destroyed the former Soviet Union, and is represented by dictatorships in North Korea and Venezuela. Wherever a Socialist economic model is adopted the country's economy is guaranteed to fail. The people who suffer are the productive working class taxpayers and successful businesses.

I see you're writing as "Anonymous", at least come up with a handle.

I don't let anyone tell me what to think, what to read, or what I see with my eyes.

Posted by: bob59 | August 24, 2010 5:07 PM | Report abuse

I am surprised that the weakness of the recovery comes as such a, well, "surprise" to so many people.

Going into 2008, the U.S. had reduced its personal savings rate all the way down to zero. And this in a country where defined benefit pensions have been basically eliminated, at least in the private sector. Retirement here is self funded, and totally underfunded. We knew that this had to change - much less consumer spending, much more consumer saving.

On the flip side of the balance sheet, personal debt was growing during the last economic boom, even among older Americans who were nearing retirement. Again, we knew this had to end, and we knew consumer spending would suffer as a result.

In short, when the housing bubble burst in 2008 and the inevitbale recession followed, the American consumer could NOT possibly help power any meaningful recovery.

Maybe it was the bailout that led people to think that we could quickly return to 2005/2006 prosperity. But the bailout was only intended to keep the financial panic of 2008 from turning into another 1930's style depression, with 25% unemployment.

It did that. We don't have 25% unemployment. Anybody who says this recession is the "same" as the 30's is on serious drugs.

But we are NOT going back to 2005 level consumption anytime soon, either.

SO.

For a few years (maybe five, maybe even ten?) all of you little girls out there will have to do without your $5,000 TV's, your trips to Disney, your new SUV's, your premium cable package. And your I-Phones/I-Pods/I-Vibrators/I-Whatevers.

Think you can do it, Francine?

Posted by: trenda | August 24, 2010 5:38 PM | Report abuse

The brutal truth is that out here in the real world we could have told everyone 3 months ago that things were slowing down and the pain was growing again! Yet Obama and the Democrats insisted on telling us about their "Recovery Summer" fantasy! No the data is showing that we may be heading into a another dip! Obama and the Democrats have done everything wrong. Unfortunately, they'll be able to enjoy their Vinyaaard vacations while the rest of us stand on the UNEMPLOYMENT line. We need massive political change in Nov to get a Congress that will focus on the economy instead of some radical left wing agenda!

Posted by: valwayne | August 24, 2010 5:50 PM | Report abuse

NEWS FLASH PUMPING BILLIONS INTO THE ECONOMY DIDNT WORK!!!!!! Whaaaaaaat???

Guess Obama wasnt the savior you were looking for. So sorry, guess you're stuck with him for another 2 years... that's what you get for believing the words of a crafty silver tongued socialist bent on the radical change of the American way of life.

Maybe you've had enough of the Republican/ Democrat merry-go-round?! Or are you people still duped by two corruption rampant parties that only care about ruling over and dictating how YOU should live your lives?

THIS should be a wake up call to you people! But it wont, you people will still keep voting for the same ole parties giving the same ole empty promises. Congratulations, you wanted change, here it is.

Posted by: jdubyaa | August 24, 2010 5:54 PM | Report abuse

Posted by: Anonymous

The GOP is hoping for a failed recovery that will help them. They are putting good of the US economy second to their party interest. The stimulus worked!

With a ridiculous post like that I don't blame you for remaining anonymous.

Anyone who now defends Obama fiscal policy is a certified kool-aid drinker or brain dead.

Posted by: Anonymous | August 24, 2010 5:54 PM | Report abuse

Posted by: Anonymous

The GOP is hoping for a failed recovery that will help them. They are putting good of the US economy second to their party interest. The stimulus worked!

---------------
With a ridiculous post like that I don't blame you for remaining anonymous.

Anyone who now defends Obama fiscal policy is a certified kool-aid drinker or brain dead.

Ooops . . . thought I was signed in.

Posted by: reddog62 | August 24, 2010 5:56 PM | Report abuse

Anonymous said: "The GOP is hoping for a failed recovery that will help them. They are putting good of the US economy second to their party interest."

Yes, behavior like that is not admirable. Of course in reality there is little the GOP can do about the economy, since the Dems occupy the Presidency, and have controlled both houses of Congress for years. And of course the Dems have spent trillions "helping" the economy with no visible success; indeed, some would say they have made the situation worse.

But now imagine that one of the political parties put the good of their party ahead of the national interest and tried to undermine our war effort overseas, i.e. they talked about taking away funding, talked about setting arbitrary pullout dates, or had one of their party leaders famously announce that "The war is lost!" --- all with our troops fighting in the field! Then imagine months later, when it turned out the war wasn't lost, they then turned around and took credit for the victory.

Naaaay, that could never happen. No party would be capable of that!

Posted by: prosecutor | August 24, 2010 6:03 PM | Report abuse

Add me to the "there never was a recovery" chorus. What a joke that was -- a few quarters of anemic, barely positive GDP growth fueled by massive, hideously inefficient government interventions that have ultimately caused more harm than good. Even the numbers then were highly suspicious, with GDP growth routinely being subsequently revised lower by sometimes 1.5-2% (how can you be this wrong?!), with similar six digit "revisions" to the jobless claims. It was a bloodbath.

The sheer waste created by Obama's cadre of inexperienced ivory tower theorists is nauseating. Take the completely failed $787,000,000,000 "stimulus" bill. Obama could have simply given $500,000 to 1 million unemployed people, and SAVED $287 BILLION DOLLARS. His *own* economic projections showing the so-called "worst case scenario" of NOT passing the stimulus bill were actually BETTER than what happened when he did pass it! In other words, the rationale he used for the stimulus bill actually shows that the stimulus bill is a far worse failure than if he'd just gone with the "worst case" scenario of doing nothing! A cardboard cutout of Obama standing in the Oval Office would -- literally -- make better economic decisions than Obama and his staffers do!

This so-called "recovery" and its related idiotic "recovery summer" are nothing but White House media constructs based on a few sugar highs we got from dumping trillions in borrowed Chinese money on the country. Even there once again Obama gets tripped up on his own narrative and now has to explain why his "recovery summer" is a complete disaster. Again: should have let the cardboard cutout make that decision.

You don't create jobs by punishing companies and the high income people who kill themselves building something out of nothing. You don't rescue an economy by going deeper into foreign debt and adding yet another gigantic Democrat social entitlement program that we will never be able to either afford or kill off. Honest to god, judging by Obama's own rhetoric, you have to think he is doing this on purpose. Even hardcore liberals who assume Republicans and conservatives are evil Christian fascists have got to start realizing that all the social issues they love like gay marriage and human rights (unless Muslims complain) are utterly meaningless if our economy collapses. Obama is pretty far along in helping that happen, either overtly or by omission.

Posted by: zippyspeed | August 24, 2010 6:03 PM | Report abuse

The idea that there is some fixed rate of growth that the economy can count on is not based on any real foundation. It does not account for the exhaustion of resources. It does not account for failure to compete globally. It does not account for disruption due to changes in the nature of work and the requirements for different kinds of labor.
In the last ten thousand years, human beings have gone through two major processes of change that have been unprecedented in the four billion year history of life on Earth both in their extent and in the speed which they happened. One was the adoption of agriculture. The other was the replacement of much of human labor by machines.
As the US completed the process of industrialization during the twentieth century, we had a relatively stable economic growth rate. Of course, even that stability was subject to substantial disruptions. Other countries like Germany and Japan suffered even more disruption as the consequence of World War II. More recently Japan's economy has again experienced a very irregular pattern of growth as a consequence of the dynamics of Japanese society and the consequences of increased global competition.
For the US, the era of industrialization is gone. Instead, the era of an ever growing trade deficit has arrived. The first wave of the post industrial era brought us a nice boom. But now that boom is gone. The consequences of its increases in labor productivity provide another long term disruption to the structure of our economy. Then we have to deal with the wreckage generated by the disasterous government policies that achieved the trasitory 2003-2008 economic boom. Finally, we have to deal with the denial that imagines that some Federal Reserve wand can magically wave all these problems away.
The reality is a great uncertainty in our economic prospects. That uncertainty is compounded by the prospects that the search for political scapegoats could cause even more major damage to our efforts to find a new economic future.

Posted by: dnjake | August 24, 2010 6:25 PM | Report abuse

Ah, zippyseed, you DO rescue the economy by "punishing" the high income people and greedy companies that put profit before country! These cockroaches, these treasonous vermin, bought COngress and the WhiteHouse and, with the help of swine like Rubin, the Clinton's, Geithner, Summers, Bush, Bernanke, Greenspan, Obama, Mitch McConnell, Kerry, Barney Frank, Phil Gramm, et al, dismantled trade tariffs and other walls that had protected US jobs and factories throughout our history. They gamed foreign adventures, selling our most critical technologies to China and India, dismantled our factories and production capacity and shipped it offshore, displaced our own technological talent with dirt cheap Indian slave labor on H1-B and L-1 visas. Your "innocent rich", your multinational corps of Benedict Arnold's, gutted this country, so fouled the nest that gave them birth, that it is problematic if we will survive their predations. While you blather and defend these treasonous monsters, they are lined up through March of next year, renouncing their US citizenship, buying safe havens in "For Sale" European enclaves like Switzerland and Luxembourg and the UK. Your rats understand what is happening and they are deserting the ship! Are you that dumb, that suicidal, that you would defend these creature who destroyed your country? (Or,maybe you'll just move back to India, Huh?).

Posted by: Anonymous | August 24, 2010 6:28 PM | Report abuse

This author does not know what he is talking about...he's fool...a wingnut..probably a bigot and a tea partier. Of course the economy is getting better...this is summer palouza..recovery summer..super summer...Obama said so. It must be true Obama said...just ask Krugman he knows...Obama told him too. You guys must just be joshing around...Obama said this was the summer of recovery...I like all my lefty friends are gonna hide our eyes and hold our breath until Obama's promise comes true...Me and Krugman are in it to the end.

Posted by: PSOG | August 24, 2010 6:45 PM | Report abuse

And this clown OBAMA is still blaming Bush.
What a joke.

Posted by: Anonymous | August 24, 2010 6:47 PM | Report abuse

uh oh...i may be passing out

Posted by: PSOG | August 24, 2010 6:49 PM | Report abuse

What "recovery" is Neil Irwin talking about?! He must work for the Washington Post.

Posted by: Anonymous | August 24, 2010 6:50 PM | Report abuse

it may be that god does not play dice with universe, but politicians of both colors are willing to play dice with our future for short term gain.

Posted by: garcia2 | August 24, 2010 7:00 PM | Report abuse

There never was a recovery...stimulus spending just proped up the economy ARTIFICALLY, but the underlying dynamics are still there, structural problems are still not solved and the debt bubble keeps expanding. The only way to get out of this is to accept 10-20 years of high unemployment, economic construction and use that time to build new infrastructure for that the next generations have the basis to thrive on. All other options are just futile attempts to delay the unavoidable. It's just plain funny to see the US follow the same erroneous path that Japan chose 2 decades ago.
No amount of so called "stimulus spending" is going to solve this, it just makes matters worse. Let the economy contract, it is a natural part of the business cycle and use this time to lay the foundation for future growth and solve the huge structural problems.

Posted by: Anonymous | August 24, 2010 7:07 PM | Report abuse

Right-wingers have done everything they can to obstruct the economy for years. They have spent the last three years obstructing everything possible to keep the economy and the American people enslaved to BIG BUSINESS, especially banks refusing to work for or with the American people.

If anyone should be sacked over this turn of events it is the people who have caused this mess - Boehner, McConnell, Graham, etc. The entire republican contingent in Congress should resign in shame. They have been an embarrassment to the American people since January 21, 1969.

Posted by: BigTrees | August 24, 2010 7:14 PM | Report abuse

BigTrees - You're an idiot. The government doesn't have the slightest chance of creating enough jobs to employ even 20% of our population. Government is extragent and inefficient. The old Soviet Union should have been a clue for you delusional clodhoppers. Either the private sector is unleaded or we will fail. Now, doing that in a useful way is entirely a different matter. Doing so behind trade walls, behind tariffs that will both protect those businesses and foster their growth for the good of the country or allowing them to go on a feeding frenzy, as we have done, where they eat themselves and us!) out of existence, is an entirely different matter. The hated Tea Party actually has the best economic policies I have heard of - strong dollar, high tariff walls. Strong dollar means reduced government spending, an end to goody TARP and other bailouts, an end to wildly ineffective programs like Obama's small business incentives or the Bush tax cuts. Both of those simply fueled outsourcing. It means taking the money from those tariffs and very very very high annual fees for "guest workers" and paying off the federal debt, balancing the federal budget. It means ending free trade, ending job outsourcing and getting back to genuine conservative economic principles.

Posted by: Anonymous | August 24, 2010 7:53 PM | Report abuse

Not according to Barry. Things are just sweet. The only problem is that Barry lives on some other planet, not planet earth. Barry and his whiz kids are taking this country to a place it's never been, and the quicker he on a bus back to wherever it is he came from, the better.

Posted by: jemvbcnyc | August 24, 2010 8:01 PM | Report abuse

Now all of the liberal Dems are blaming the lack of recovery on the Repubs. Not one bill or amendment in either the House or the Senate was permitted to come up for a vote. If it did the Dems voted it down. There is no one to blame for this financial situation than Obuma and his minions. Today, Joker Joe Biden said that the recovery is well on its way. He lies as well at the President does.
The Dems can say all they want about the good job that thier bills are doing, but as the saying goes "the proof is in the pudding." It seems funny that most of the emp[loyment talk is about the number of jobs that were "saved." Tell that to the vast number of unemployed. No one seems to have saved their jobs. This administration will go down in history as the least able, the least informed and the least capable of dealing with the problems of the country. Not one of the insiders has ever had to learn what is means to start a business and keep it going. All of these persons have been living off the citizens for too long.

Posted by: Anonymous | August 24, 2010 8:13 PM | Report abuse

That is to assume that the economy had steam...have you noticed that kids returning to school are being asked to bring school supplies. (paper, cleaning, straws, those things a school is to supply) As it relates to banks yes they are struggling in part from uncertainty of regulations, capital requirements, and limited knowledge of marketing will for some time still have issues going forward. bankalchemist.

Posted by: bankalchemist | August 24, 2010 8:18 PM | Report abuse

It does not take a rocket scientist to know that there was NOT A RECOVERY. Obama has failed miserable....

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