Impressions from a Declining Country
Sometimes the order in which one processes information can create broader impressions than the individual items suggest. For just such an experience, first watch Steven Crowder’s short video about the crumbling, desolate city of Detroit, whose condition he attributes to the loving manipulations of big government.
Now consider this news:
Almost two months ago, the Commerce Department cheered the announcement that the third quarter GDP had grown at an annualized rate of 3.5%. The Obama administration hailed it as a sign that their economic policies had spurred real growth. Even when Commerce sharply revised the number downward a month later to 2.8%, the White House continued to argue that the lower number still meant that the US had turned the corner, even after a number of critics asked how Commerce could have missed the number so widely. …
Today, Commerce backtracked even further. The annualized growth number for Q3 turns out to have been 2.2%, a revision of over a third from its original estimate two months ago…
… The Cash for Clunkers program and the first-time homebuyer tax credit was estimated to have contributed as much as half of the original Commerce estimate of 3.5%. Assuming that to still have contributed at least 1.5% of the final GDP, that leaves a rather pathetic 0.7% growth in Q3 without it. It’s barely a recovery at that level.
And this morning, we learn:
November saw a dramatic increase in the number of houses sold in Rhode Island — up 61.1 percent compared with November 2008, according to statistics compiled by the Rhode Island Association of Realtors.
Part of the increase can be explained by a one-month-only $8,000 tax credit that expired at the end of November. Part of it may be related to the false prediction of growth. No doubt, there’s also a genuine improvement of buyer mood; people who have been in the market for a home are more comfortable with the probability that prices are at or near their new bottom and that interest rates aren’t going any lower. University of Rhode Island Economics Professor Len Lardaro puts it thus: “we’re [now] in a typical recession, not a free-fall, like we were in a year ago.”
Nowhere, however, has anybody explained what specifically is going to turn things around. Even up to the Commerce Department, it seems as if economic forecasts are taking as an assumption that 4% or so is simply “normal” growth, to which the economy will return as a function of its essential nature. The picture that is actually beginning to emerge more resembles an old car, and all variety of government officials, economists, and media cheerleaders are standing around trying various tricks and gimmicks to get the beast moving — not the least by employing positive thinking: “It’s just about to go, now!” It whines and whirs and sputters, but it isn’t turning over. And it’s cold outside.
Of course, economic movement is only necessary for certain destinations. We can trust, for example, that Detroit will come to us. Rhode Islanders should be especially aware of the fact that, by contrast, economic turnaround and improvement must be pursued, not awaited