Tag Archives: Recession

Obama’s Recession Recovery: Reagan and Bush

I’m very excited to see the economy continue to strengthen.  I’m happy when folks spend money.  I like seeing my local restaurants have waiting lines of an hour or more.  I enjoy it when people feel optimistic.

However, Obama isn’t driving the recovery; he’s dampening it.  Reagan trounced him and I’m not even normalizing for a smaller work force.  Bush beat him by 40% or so, and again, the economy was smaller then.

The Economy Set To Improve

Every year the Associated Press interviews top economists and asks them for their thoughts on the coming year.  This year we have good news:

The three dozen private, corporate and academic economists expect the economy to grow 2.4 percent next year. In 2011, it likely grew less than 2 percent.

The year is ending on an upswing. The economy has generated at least 100,000 new jobs for five months in a row — the longest such streak since 2006.

The number of people applying for unemployment benefits has dropped to the lowest level since April 2008. The trend suggests that layoffs have all but stopped and hiring could pick up.

While a 2.4% growth rate isn’t as large as we would like to see, it does represent a better than 20% increase over last year’s numbers.  As long as we continue to grow, every little bit helps.  However, the employment picture doesn’t seem to look ay brighter for next year that for this year:

Unemployment will barely fall from the current 8.6 percent rate, though, by the time President Barack Obama runs for re-election in November, the economists say.

Not only has this economic crisis been deep but it’s been wide.  We’re gonna be looking at elevated unemployment for years to come.

Homeless: Contributing Factors

Disclaimer:

This is a topic that earns conservatives a bad name.  Or rather, this is a topic that liberals are easily able to use in order to give conservatives a bad name.  This is an unfortunate reality, for IN reality, it is the conservative that gives more to charity than the liberal:

The fact is that self-described “conservatives” in America are more likely to give—and give more money—than self-described “liberals.” In the year 2000, households headed by a conservative gave, on average, 30 percent more dollars to charity than households headed by a liberal. And this discrepancy in monetary donations is not simply an artifact of income differences. On the contrary, liberal families in these data earned an average of 6 percent more per year than conservative families.

So, with that said, let me make it clear that what I describe as policy in no way or manner represents my individual and specific view of the actual person, their plight, human spirit and personal tragedy.

Okay, now, onward.

I caught a Reuters article recently.  Specifically detailing the impact of the recession on our children; our homeless children:

In a report issued earlier this month, the National Center on Family Homelessness, based in Needham, Massachusetts, said 1.6 million children were living on the streets of the United States last year or in shelters, motels and doubled-up with other families.

That marked a 38 percent jump in child homelessness since 2007 and Ellen Bassuk, the center’s president, attributes the increase to fallout from the U.S. recession and a surge in the number of extremely poor households headed by women.

To be sure, we have work to do.  The problems surrounding kids who don’t have hoes is bad.  And getting worse.  I don’t think there’s a soul alive who who disagree that something, anything, has to be done.  But it’s important to acknowledge that the thing, the “anything, is going to come in two forms:

  1. Direct assistance to the displaced families right now.
  2. Actions that will prevent the homeless condition from occurring in the first place.

While noble, I am less interested in the first, as a matter of policy, than I am in the second.  Consider this:

As her mother sat in a homeless shelter in downtown Miami, talking about her economic struggles and loss of faith in the U.S. political system, 3-year-old Aeisha Touray blurted out what sounded like a new slogan for the Occupy Wall Street protest movement.

“How dare you!” the girl said abruptly as she nudged a toy car across a conference room table at the Chapman Partnership shelter in Miami’s tough and predominantly black Overtown neighborhood.

There was no telling what Aeisha was thinking as her 32-year-old mother, Nairkahe Touray, spoke of how she burned through her savings and wound up living in a car with five of her eight children earlier this year.

Think of that.  This woman is trying to care for a family of 9 on her own.  Ms. Touray is 32 years old and has 8 children.  In comparison, I had yet to be married at 32.  And now, as a professional married to another professional I have two children.  Without making any judgements as to decisions or life circumstances, as a 32 year old professional, I’m certain that I would have struggled caring for 8 kids.  Even making it to work would be difficult if not impossible.

Again, my interest in the conditions of the poor and homeless in America are more focused on preventing single 32 year-old women from having 8 children.  To put this in perspective, if you were to take ALL families in 2011, the percent of them that have 7 or more members is 2.6%.  When you look at only female householder, the percentage of families with 6 members is 2.8%.  In a perverse fact of life, the problem gets worse as women find themselves raising the family alone.

Certainly I can’t know the journey that Ms. Touray has taken to get to where she is.  Her life could be one of immeasurable bad luck and unbelievable twists of fate that have led her to where she is.  However, I suggest that another theme exists.  One that we can change.

That is, there is a significant portion of our population that makes misinformed and bad decisions that ted to put them in cohort groupings that lead to poor outcomes.  Is it perfectly allowable that a single woman would want to make it on her own and raise a family of 8 children?  Sure, without a doubt.  However, if a trusted friend or sister were to seek your advice on her decision to embark on this path, what might your counsel look like?  Would you caution her?  Might you recommend that she obtain an education?  Perhaps secure income?

Something.

What would you counsel your own daughter to do?

And if THAT answer is different than, “I’d do nothing.  However, I would continue to lavish untold amounts of mine and my neighbor’s money in order to support her.”, then I ask you:

Why aren’t we making YOUR answer policy?  Why aren’t we telling our Ms. Tourays of the world that it’s generally not accepted wisdom to create a condition where you are single with 8 kids?  In fact, why is it so “insulting and disparaging” even to merely suggest such advice?

Good News For The Market

This news alone should drive the market 200 points:

Rep. Barney Frank (D-Mass.) will announce Monday that he is not seeking re-election, a spokesman said Monday morning.

Frank, the ranking member of the House Financial Services Committee was the architect with Sen. Chris Dodd (D-Conn.) of the sweeping financial reform bill that bears their names.

If there is any one single individual who is the face of blame for the housing bubble and the resulting recession, it’s Barney Frank.

Very good news that this man is retiring.

Cost of Separation

Consider eating out.  Going to a restaurant and having dinner–lunch would work, breakfast too.  The way it works today is that a small short term “contract” is enacted.  You sit down and order, the joint brings you food and you have to pay for it.  This is understood to be a contract because if the place doesn’t bring you what they said they would, you have legal recourse.  Ina similar manner, should you choose not to pay, they have recourse as well; it’s illegal to d”dine -n dash”.

And this works well.  Based on this arrangement, I’m willing to try new places as often as I’m moved.  If something opens near me, I almost always try it.  Further, in a quest to find more and better restaurants in a specific genre of food, I’ll expand my radius and drive further to experiment.  However, what if it didn’t work this way.  What if the arrangement was different.

Suppose that if you wanted to try a new eatery you had to commit to eating there once a week for a year.  In short, by agreeing to eat there just once, you were legally bound to eat there 51 more times.

Do you think you would try more or fewer new restaurants?

It’s obvious.  We would all eat at fewer new restaurants.  Not only that, but we might find that as a result of such a restriction, fewer new restaurants would be opened in the first place.  In other words, the general overall “eating out” experience would be diminished.

The exact same is true of jobs.

As it becomes harder and harder for me separate from my labor, I’ll buy less and less of it.  It’s pure and simple.  It’s as true of labor as it is of restaurants as it is of cars.  And it’s being demonstrated around the world:

(Reuters) – Employers burned by the cost of laying off workers in the last crisis are uneasy about taking on permanent staff amid faltering economic growth putting pressure on the current workforce, a staffing industry executive said on Thursday.

Demand for temporary workers often acts as a leading indicator for overall economic growth, as firms hire flexible workers at the start of a recovery and cut staff ahead of a downturn.

Staffing firms Randstad, USG People and Manpower have warned of slowing jobs growth in Europe as the region’s debt crisis hammers consumer and business confidence.

“What has happened in this recession is that the psychology of hiring has completely changed,” said David Arkless, president of global corporate and government affairs at Manpower Group.

In the past firms hired temporary workers at the start of a recovery and gradually took on more permanent staff. But now, even in sectors and companies that are growing, employers are mindful of the huge costs of downsizing in the last recession and reluctant to take on permanent staff, he said.

“Employers are saying this could kill my company if I do the wrong kind of hiring now and it turns into a double dip recession,” said Arkless. “They are stretching the human element of their company to breaking point because they are so scared of hiring any more people right now.”

We all wanna make sure that our workers have it good.  However, when we mandate too much good, they get nothing.

This Is Obama’s Economy

‘Nuff said.

Recession Recovery: Unemployment – Obama, Bush, Clinton and Reagan

I have posted on a comparison of the last major recessions.  The first such comparison featured the GDP growth as we march through that recovery.  Each President; Obama, Bush, Clinton and Reagan had a shot at a recovery.

This post will feature the unemployment rate as we continue from recession to recovery.  This specific comparison, or feature, will look at the raw unemployment rate.  All data is taken from the BLS.gov website.

So, what does the data show?

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Recession: Obama, Bush, Clinton and Reagan

We are now 7 quarters into our recovery from the previous recession.  I have long thought it time to conduct a review of this current recovery as compared to previous recoveries.

I have gone back to the previous 4 recessions and their recoveries.  Above is a graph showing the growth of GDP for each recovery starting with the date in which the NBER calls each recession cycle.

The numbers above reflect the GDP growth in current dollars. Further, I have only gone out 12 quarters, or 3 years.  Anything past this and I think we have normal economic cycles taking place that have little to do with the recovery efforts put in place during the recessions described.

There has been little secret that the current administration holds the previous administration responsible for the recession.  However, if that is true, the current administration is responsible for the recovery.  So, how has it done?

At this point, the Obama’s recovery is only slightly ahead of any of the other 3.  The current quarter represented a 4.0% increase in GDP over the previous quarter.  The only other recovery that had a worse showing was the Reagan recovery of 1982; it had a 3.9% increase.  However, unlike the Obama recovery, the Reagan recovery had significant growth for the first 6 quarters.  Obama’s recovery has not shown that degree of success.

Reagan vs Obama

Here is the direct comparison:

The visual is clear, the Reagan recovery was much more vibrant than the current Obama recovery.  While Obama did better this quarter, the lack of growth in the preceding quarters is disappointing.

Obama vs Bush

Perhaps a more damning comparison, at least for this specific political cycle, is the comparison of Obama vs Bush:

Here the Obama recovery is very similar to the previous Bush recovery.  However, the pressure is on.  Beginning in the 8th quarter on, Bush had a very impressive record of strong GDP growth.

We’ll see if Obama is able to match that record.

Chance of Recession

I’ve been a reader of Mark Perry’s for years and years.  I love his stuff.  One of my favorite installments that he runs is the “Chance of Recession”.  Here, he highlights data delivered by the New York Federal Reserve bank.

The bank does a  neat analysis of some different values and comes up with the chance that the economy will be in recession in the next year.  The data isn’t perfect, but the rough strokes are enlightening.

Let’s look.

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Too Big To Fail

HBO has the documentary “Too Big To Fail” playing right now.  Ive watched it twice now and I have some thoughts.

  1. The whole “For profit” meme is prevalent.
  2. There is a massive lack of backdrop regarding market incentives.

First, the show is top notch.  The acting is A grade and the quality of the production is excellent.  This is a great movie.

I’m a big believer in incentives.  People tend to look out for their own self interests.  Always have, always will.  And this isn’t bad – wolves and cows and sparrows and gophers do the same thing.  But we NEED to acknowledge that fact.

“Too Big To Fail” does a remarkable job at showing the thinking going on at the time of the failures.  But I get the feeling that the message is wrong.  That the message is “Greed”.

There is certainly enough to go around.  However, I think the message of intervention and policy is underscored.  Not one time in the show is it mentioned WHY these institutions would make these loans.  For sure, there is talk about Fan and Fred being nationalized….but there isn’t a whiff about the impact they had on the market thinking.

The movie is worth watching.  However, understand, it’s got a Left leaning slant.

And does a good job making that case.