Economic Update - Continuing Our Fiscal and Economic Death Spiral

A little while ago we did a series of posts on the economic condition of the country. We looked at a bunch of statistics and trends combined with the opinions of a wide range of expert people who are connected to the world of finance, the government, and the economy in different ways.

Our conclusion coming out of those posts is that the country is really in dire financial shape. From runaway debt to embedded high unemployment to failed government programs, we certainly seemed to be in a death spiral from an economic perspective.

We thought it might be a good idea to update those posts by looking at the latest statistics, trends, and expert opinions to see if things had gotten any better, anywhere, anyhow. The following is the results of our research, it is not for the weak of heart or weak of stomach:

- According to an Associated Press report from June 14, 2012:

• The country's weekly first time unemployment benefit applications volume rose 6,000 to 386,000, an increase from an upwardly revised 380,000 the previous week.
• The four week moving average of this statistic also rose and is at its highest level over the past six weeks.
• Only 96,000 jobs per month, on average, were created in the past three months, down from an average of 252,000 in the previous three months.
• GDP was only up 1.9% in the first quarter of 2011 and is not expected to do much better int he second quarter, down from 3.0% in late 2011.
• Retail sales fell .2% in May, the same amount they fell in April and the first back-to-back drops in two years.

- According to another June 14, 2012 Associated Press report, this one on the nation's housing market:

• Mortgage lenders increased the number of homeowners they initiated foreclosure actions on, a total of  109,051 homes in May.
• The 109,051 is an increase of 12% over April and up 16% versus May, 2011 according to foreclosure listing firm RealtyTrac Inc.
• The concern is that as more and more foreclosed home come onto the market, the glut of available home options will continue to bog down the housing industry into the foreseeable future.
• Over the past twelve months, the number of homes being foreclosed rose on an annual basis, the first time this has happened since January, 2010.
• 33 states saw their annual rate of foreclosures go up last month.
• In all, 8.7 million American homes have entered foreclosure proceedings since 2007.

A June 8, 2012 Moneynews interview with Martin Feldstein, a Harvard economist and head of the Council of Economic Advisers under President Ronald Reagan, talked about his views on the economy:

• The chance of the country slipping into another recession is about one in three.
• Any further action by the Fed such as quantitative easy, dropping interest rates, or the so-called Operation twist is high unlikely to have any impact on the economy.
• The Fed as already printed and injected $2.3 TRILLION worth of false wealth into the economy with no positive results so a third quantitative easing is unlikely to help either.
• Mr. Feldstein feels the economy is actually weaker than most economists say it is.
• The Euro crisis and the sad economic shape of many European countries along with the weakening economies in Asia will lead to a drop in U.S. exports, a further drain on the economy and what had been a bright spot earlier in the year.

- The Economic Advisory Committee of the American Bankers Association recently put forth their economic views: 

• GDP growth will be only about 2.2% in 2012.
• Unemployment will not get below 8% any time soon.
• Economic conditions could deteriorate if the political class does not handle the year end tax rate and spending issues or if the Euro crisis gets worse than expected. 

- Steve Forbes recently opined that while the recent $125 billion going to bail out Spain's banks will provide some temporary relief to their crisis, it does not solve the long term Euro problems. 

- In  a June 9, 2012 Reuters article: 

• The credit rating agency Fitch warned that the U.S. risks another credit downgrade, this one by Fitch, if the country does not get its fiscal house in order and implement a "coherent" plan.
• Specifically, the rating agency stated: "The United States is the only country (of four major AAA-rated countries) which does not have a credible fiscal consolidation plan."
• Another credit agency downgrade would increase our nation's borrowing costs which would increase our national debt which would lead to further credit downgrades which would further increase our borrowing costs....
• Additionally, Fitch announced it would immediately reduce the credit ratings on Cyprus, Ireland, Italy, Spain and Portugal if Greece were to exit the Eurozone.
• Also, Fitch stated that other European nations would have all of their ratings put on a negative ratings watch list, setting a six-month time frame for a potential downgrade.

- The Associated Press reported on June 12, 2012 that the country's budget deficit through the first eight months of this fiscal year is $844.5 billion. This puts the Obama administration and Congress on track to incur over a TRILLION in additional debt this year. This would make it four years in a row that over a TRILLION in deficit spending was incurred. Consider what $844.5 billion really means:

• This $844.5 billion put an additional $7,200 worth of debt on every American household.
• The government's end of year deficit of $1.17 TRILLION will add $10,000 in debt burden on every American household.
• This $844.5 billion deficit was incurred by having the Federal government overspend $5.1 billion it never had EVER DAY since January 1, 2012.
• This $844.5 billion deficit was incurred by having the Federal government spend $213 million it never had EVERY HOUR since January 1, 2012. Disgraceful fiscal irresponsibility by every Washington politician, especially since we have already identified hundreds of billions of dollars the federal government loses, misspends, or loses to criminal fraud every hour of every day every year.

As a side note, the $844.5 billion deficit incurred in only eight months of fiscal 2012 is double what the Bush administration incurred in its worst YEAR of deficit spending.

- Speaking of disgraces, the Associated Press reported on June 12, 2012 that seven out of every ten teenagers will not be able to find a job this summer. This is the lowest level since the second world war. Unbelievable that about 500 or so politicians in Washington could screw things up so much in the economy that kids cannot even find a summer job in this country. Not surprisingly, it is easiest to get a teenage job in the Washington D.C. metro area.

- The Washington Post reported on June 11, 2012 that the recent recession wiped out nearly two decades of Americans’ wealth, according to recently released Federal Reserve analyses. The Federal Reserve said the median net worth of families plunged by 39% in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992.

Please note that from 2007 through 2010, the time period when the Fed estimated Americans families lost 39% of their wealth:

1. The Democrats controlled the House of Representatives all four years.
2. The Democrats controlled the Senate all four years.
3. The Democrats controlled the White House for two years.
4. The Republicans controlled the White House for only two years and never had control of the Senate or House.

Thus, during this devastating period of wealth being lost, Democrats controlled the major branches of government 83% of the time. While they would probably still blame Bush for reports like this, and Bush is responsible to some degree, the Democrats certainly had the power and position to improve every family's lot and wealth status over the past six years, given their control of government functions, but failed to deliver.

- According to a recent article by famous New York University economist, Nouriel Roubini:

• A global economic storm is set to unleash in 2013 and there are no safe harbors to ride it out.
• The European debt crisis continues to get worse.
• Asian economies are slowing.
• Middle East tensions relative to Iran's nuclear ambitions are likely to get worse.
• The United States has its own major economic problems including weakening economic performance (only 1.9% GDP growth last quarter), tax breaks are set to expire at the end of this year along with automatic spending reductions, a combination that could send the country into recession in 2013.
• "Worse, the risk of a double-dip recession next year is rising: even if what looks like a looming U.S. fiscal cliff turns out to be only a smaller source of drag, the likely increase in some taxes and reduction of some transfer payments will reduce growth in disposable income and consumption. Moreover, political gridlock over fiscal adjustment is likely to persist, regardless of whether Barack Obama or Mitt Romney wins November’s presidential election. Thus, new fights on the debt ceiling, risks of a government shutdown, and rating downgrades."

- According to a June 19, 2012 Associated Press report:

• According to the Labor Department, employers in April, 2012 posted the fewest job openings in five months, not a good signing for hiring trends in the next few months.
• Job openings fell to a seasonally adjusted 3.4 million in April, down from 3.7 million in March.
• The continuing soft economy has resulted in 12.5 million unemployed Americans in April.
• 12.5 million means there was an average of 3.7 people competing for each open job, almost double what the competition for jobs is in a healthy economy, around 2 to 1.
• While job openings are up by almost a third since the Great Recession ended in June 2009, they are still below pre-recession levels of about 5 million per month.
• Fewer people also quit their current jobs according to the report, another negative sign, since less people quitting their job is evidence that workers are not confident that they can find new jobs elsewhere.
• While companies are posting more job openings, they are not filling them all of them since while openings have increased by 13% in the past year, while gross hiring has increased only 4%.

- And finally, consider the recent words of Congressman Paul Ryan, one of the few people in Washington who understands how dire our fiscal situation is: "What is going to happen is, just like Europe, politicians made all of these empty promises, which turned into broken promises. The bond markets turn on and you have a debt crisis, cranking up taxes, cutting benefits for current seniors, slowing down the economy, having a lost decade. I had a hearing with the CBO just today. They are saying that the path we are on, with the debt levels we are incurring, they don’t know how to measure the economy going forward after the mid-20s, -30s because the debt will crash the economy."

Devastating national debt, ridiculous deficit spending, tax and spending crises, incompetent politicians, incompetent politicians' economic programs and intelligence, hard core and persistent unemployment, a moribund housing industry, and a crumbing Euro market. Have a good day!

Oh, also give some thought to voting out every incumbent Washington politician that you can in November, from Obama down to every freshman Congress member. They do not deserve another chance at anything remotely connected to our economy, given their pathetic results listed above.


We invite all readers of this blog to visit our new website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/