* Inordinate Stimulus, Undue Debt and Global Warming Foolishness Caused the Recession
* By: Larry Walker, Jr. *
Despite Obama’s optimism, the Economic Cycle Research Institute (ECRI), the same organization which successfully predicted the last recession, and which over the last 15 years has gotten all of its recession calls right while issuing no false alarms, has recently opined that a 2012 recession is now inevitable.
According to ECRI, the four basic metrics that define an economy are gross domestic product (GDP), personal income, broad sales and employment. GDP peaked in the 2nd quarter of 2010, and has since been cut in half. Personal income and broad sales have closely tracked GDP. And although there has been a firming in jobs growth, when the four are taken together, the data confirm that the economy is slowing. We are heading into recession.
Employment is a lagging indicator.
Many mistakenly believe that if jobs growth gets a little better, then consumption, production and income will all improve; but in the real world jobs follow consumption, production and income. In other words, as consumption, production and income improve higher levels of employment follow. But since consumption, production and income are all on the decline, the jobs market will soon follow.
Case in point: During the recession of 2001, which lasted from March until November of 2001, employment peaked at an all-time high of 132,529,000 jobs in February, a month ahead of the recession. Six years later, during the recession of 2007, which lasted from December of 2007 through June of 2009, the number of jobs hit a new all-time high of 138,023,000 in January of 2008, the month following the start of the recession.
At the other ends of the spectrum, during the former recession (March 2001 – November 2001), the number of jobs didn’t reach a bottom of 129,840,000, until June of 2003, some 19 month’s after the recession ended. While during the latter malaise (December 2007 – June 2009), the jobs market hit a bottom of 129,244,000, but not until February of 2010, a full 8 month’s after the recession ended.
So which came first, the chicken or the egg? In other words, does a slow down in hiring lead to a slow down in hiring? Or does the tanking of GDP, personal income and broad sales lead to recession, and recession to the loss of jobs? I think we know the answer.
What's sad is that the U.S. never fully recovered from the recession of December 2007, yet here we go again. Just look at employment. As of the February 2012 Employment Situation Report, employers logged in a total of 132,697,000 jobs, which is just 170,000 more than we had in February of 2001. Yet over the same period of time, the civilian non-institutional population has grown by some 29,692,000 persons. So as the working age population has grown by over 29 million, the number of jobs has grown by a mere 170,000. The handwriting is on the wall.
The point is that any improvement we are seeing in today’s employment situation isn’t necessarily cause for celebration, at least not for Mr. Obama, as it is likely the end of his (temporary) stimulus based, debt laced, global warming panic induced, anemic recovery. If you still don’t get it, go back to the top and re-read paragraphs 1 through 3, and it might help if you follow the links.
To be continued…