Friday, April 3, 2015

And now for some economic news,...

As the budget battle rages, President Obama is urging congress to go on a spending spree and he is promoting more free stuff from the government, such as free college for all and free child care for working parents and more spending on infrastructure. He is calling his welfare state policies "middle class economic."

In his State of the Union address in January President Obama took credit for a rebounding economy saying, "Tonight, after a breakthrough year for America, our economy is growing and creating jobs at the fastest pace since 1999…The shadow of crisis has passed, and the State of the Union is strong…At this moment—with a growing economy, shrinking deficits, bustling industry, and booming energy production—we have risen from recession freer to write our own future better than any other nation on earth." He also said, ""Our unemployment rate is now lower than it was before the financial crisis."

The unemployment rate is lower because so many people are no longer in the work force; not because they found jobs. The labor force participation rate is the lowest it has been since 1978. People who do not want to retire are taking early retirement, women are dropping out to stay home with children and many people have just given up looking for work.

From the Bureau of labor statistics.
The Federal Reserve has projected zero economic growth for the first quarter. See the green line in the chart below.

 As a percentage of the GDP, our national debt is greater than at any time other than World War II.

The National dept as a percentage of GDP

 The National debt continues to climb.

A look at the federal budget shows that over half of the budget is spend on social security, medicare and medicaid and other safety net programs.  9% of the budget is interest on the debt and that percentage will grow as the debt grows, yet President Obama is critical of every effort to curtail spending and wants to spend more.

Meanwhile, Food stamp use is at an all time high.

It is pretty depressing, and I have lost faith in the American people to think that they are smart enough not to think there is no end to free stuff.  I am afraid America's days as a great nation are behind us and I am not hopeful that there is time to turn things around. We must keep trying, but the future looks pretty gloomy. If Obamacare takes root and is not overturned, that will be a larger constituency for more spending and less austerity and measures that inhibit economic growth. At some point, our currency will not be the worlds reserve currency and our cost of borrowing will increase.  With more spending, and more debt and more regulations of economic activity, economic growth will fall. Then, the debt will cause painful inflation.

Will somebody tell me I'm wrong and cheer me up?

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