Thursday, June 2, 2011
Americans Cut Spending as Economy Shrinks
Americans Cut Spending as Economy Shrinks
by Roger Hedgecock
It's a mystery to me why Nobel Prize-winning economists are surprised by the continuing bad news coming out of the anemic American economy.
Lower consumer spending, falling home values, increasing unemployment claims—it's all so "unexpected" to the economic elites who confidently stated that the Great Recession was over last June. A government-led, debt-fueled "recovery" was well under way. Thank you, Obama!
The annual growth rate of the gross domestic product (GDP) was predicted to be near 4% at this point in the "recovery," according to the Obama economists. Instead, Obama concedes, the economy has flatlined at 1.8%. When the true "growth" figures are calculated, the real number is below zero.
At this point in the recovery, after the equally severe 1981-1982 recession, GDP growth was more than 7% and unemployment was falling fast. Thank you, Ronald Reagan!
To everyday Americans, it's increasingly apparent that government policies meant to "spread the wealth around" are making the very rich (and well-connected) richer and the rest of us poorer. Obama's economy is failing.
Even in the midst of a brutal war with the drug cartels, Mexico's annual economic growth rate is 5.5%. In Indonesia, a 6.5% annual growth rate is deemed too slow. The Indonesian government rolled out a new economic plan last week designed to get the economy growing at a 9% rate, through more private investment, reduced government red tape and lower taxes.
There's an easy way to understand the failure of the Obama economy. Ask people. Is your family cutting back? What impact has higher food and gas prices had on your personal budget?
I asked these questions the other day on my Facebook page ("The Roger Hedgecock Show").
Some people reacted with Depression-style humor.
Darren said, "[My wife and I] are cutting the budget everywhere we can. We're actually sharing deodorant now! It works, I'm dry—but I've completely lost the ability to parallel park."
Os said, "I'm selling the kids to save money."
Richard said, "[Cutting back on] health care ... we only use it for gunshot wounds and snake bites, just like the 19th century :)."
Most people described how they have had to cut spending money on things and activities they really liked and miss.
Benjamin said, "Cable. Restaurants. Movies. Sports events."
Philip said, "I'm a recently out-of-work carpenter who drives a truck that gets only around 16 mpg and now I don't drive anywhere unless I have to. I feel like I'm house-shackled by gas prices. I'm a total beach nut, but now it costs $20 to $30 to make the round trip to my favorite beach spot."
Arthur said, "We have cut many things—have you seen the price of bacon?"
But Randy said, "Taxes. That’s what I've cut."
The failing economy affects government too. Income to government from taxes is down, but spending is up. Hence the annual deficit and the accumulating mountain of debt. Maxed out the government credit card? Get another one. Raise the debt ceiling. Americans see Obama failing to cut spending the way everyone else has had to.
At the same time, to make matters worse, higher costs for business owners lead to higher prices for customers.
Debbie said, "[I'm] increasing costs to service customers to compensate for increased gas costs. Sorry, but the cycle goes round and round."
Some posts were just desperate.
Mike said, "I am underemployed to boot, so I will be happy if I can pay the rent before they kick me out, and catch up on my bills. No fun."
Peter said, "Batten down the hatches, the storm is upon us."
On the other hand, Sheridan might just be the new American consumer that Obama wanted all along.
Sheridan said, "We haven't gone to a movie in about a year, we flush less, we use our gray water for landscape irrigation, we got rid of the lawn, we buy more whole foods, bake our own bread, wash the cars ourselves, do our own oil changes, take very short showers, turn off every light except the one or two we are actually using, make some of our own dog food, we eat out maybe once a month ... stopped using the AC or the heating, the only new clothes we bought in the last year were socks and underwear ..."
Sheridan may be describing the perfect environmentally sensitive poster family for the Obama Era. But his litany describes a falling standard of living more akin to the plight of Cubans after the 1959 revolution than Americans used to the blessings of Lliberty.
Posted by Brett at 10:32 AM