“Recovery Bummer”

[Ragnar]

FT.com / US / Economy & Fed - Fed set to downgrade outlook for US

The Federal Reserve is set to downgrade its assessment of US economic prospects when it meets on Tuesday to discuss ways to reboot the flagging recovery.

Faced with weak economic data and rising fears of a double-dip recession, the Federal Open Market Committee is likely to ensure its policy is not constraining growth and to use its statement to signal greater concern about the economy. It is, however, unlikely to agree big new steps to boost growth.

The latest poor reading came in Friday’s monthly employment report, which showed the US private sector creating only 71,000 jobs in July – not enough to keep up with population growth, let alone bring down the unemployment rate. That followed news a week earlier that growth in US gross domestic product slowed from an annualised rate of 3.7 per cent in the first quarter to 2.4 per cent in the second quarter.

“Given how low inflation already is, and given the potential for the recovery to falter, we expect Fed officials will highlight downside risks and signal a bias to ease in the FOMC statement,” said Jim O’Sullivan, chief economist at MF Global.

Hot Air Rasmussen: Consumer confidence hits year-long low

Both the consumer and investor indices are now lower than the same time last year. At 70, the consumer index is down six points from last year’s 76.4, while the investor index is down 2.7 points from last year’s 80.2 to 77.5. The employment index isn’t as bad, at 68.7 from last year’s 57.8, but still down from June’s 73.8.

It’s not Recovery Summer at all, but instead the dawning realization by Americans that all the Obama administration has in its playbook is gimmicks and spin — really expensive gimmicks and spin.

 

[Howard Roark]

It’s not Recovery Summer at all, but instead the dawning realization by Americans that all the Obama administration has in its playbook is gimmicks and spin — really expensive gimmicks and spin.

Wanna lay some of those gimmicks on us?

 

[Ragnar]

It’s not Recovery Summer at all, but instead the dawning realization by Americans that all the Obama administration has in its playbook is gimmicks and spin — really expensive gimmicks and spin.

Wanna lay some of those gimmicks on us?

Well the "Stimulus Bill" would be the biggest and comes with it's own subset of strange gimmicks.

"Cash 4 Clunkers" stands out as well, off the top of my mind. (small version of the same Keynesian failure that the stimulus will prove to be)

 

[Paulie]

I love the argument that inflation is low NOW, so it's ok to continue giving money away for free to induce "growth".

As if somehow all this free money isn't going to come home to roost beyond the control of the Fed at some point in the future.

 

[Ragnar]

Crap, didn't see how close we were to Sunday Night Football...


Quickly...

Hot Air Chart of the Day: Cash for Clunkers

The data show that the government stimulus did increase sales — but that the following month, sales dropped in proportion to the spike. The three-week incentive program simply moved sales from the future into the present, and did nothing to increase organic demand even in a relatively short run. Sales had already begun to rebound in the spring, even with the Cash for Clunkers proposal moving through Congress.

What this chart doesn’t show is the poor timing of the program. C4C hit as dealers would have been discounting vehicles anyway, in order to make room for the new models that arrive in September. Instead of hitting the point where demand might flag, the C4C program overlaid an incentive-rich period in the sales cycle for auto dealers. That killed demand when the new models did arrive, which likely forced dealers and manufacturers into pushing hard on incentives that may not have been needed otherwise.

And, since I just finished rereading The Law by Bastiat...

[ame=http://www.youtube.com/watch?v=gG3AKoL0vEs]YouTube - ‪The Broken Window Fallacy‬‎[/ame]

(be back later... sorry)