Today, August 3, 2011, marks the one year anniversary of Treasure Secretary Tim Geithner’s op-ed in The New York Times, ostentatiously titled “Welcome to the Recovery.” Read the whole article here.
He might as well have printed that on a banner and hung it over a battle ship for how much he has likely grown to regret those words. “We are on a path back to growth” Geithner declared, as he went to great lengths to justify and praise the stimulus package.
The economic rescue package that President Obama put in place was essential to turning the economy around. The combined effect of government actions taken over the past two years — the stimulus package, the stress tests and recapitalization of the banks, the restructuring of the American car industry and the many steps taken by the Federal Reserve — were extremely effective in stopping the freefall and restarting the economy.
Unfortunately, the headline yesterday was “Sliding Towards Recession.”
Jerry Jasinoski, former President of the Association of Manufacturers, writes in the Huffington Post about the distinct lack of good indicators.
Housing is depressed, 15 million people are unemployed, and there are signs of slowing in manufacturing. The ISM Manufacturing Index fell 4.4 percentage points to 50.9 in July from 55.3 in June, the lowest in a year.
In fact, GDP growth numbers were recently “revised” to show that things are, in fact, much worse. Jasinoski explains,
The recent GDP report shows a much weaker economy than expected, and uncertainty in Washington could slow the economy even more. As unlikely as it appeared at the beginning of the summer, when the Fed was forecasting 3.5 % growth, we seem to be slipping toward another recession, or at least a quarter of negative economic growth.
The GDP report for the second quarter was horrible at only 1.3% and came with a sharp downward revision from 1.9% to a miniscule .4% rate for the first quarter. The biggest surprise was real consumer spending which contracted at an annual rate of 1.3%, the first decline since the second quarter of 2009.
It would be nice for Geithner and the White House to admit that their heralding of prosperity was erroneous. But they won’t. They will also likely not accept that it has been their very policies of regulation and government spending that have done the most to detour recovery.
Let us then look back at their arrogance and resolve that disbanding reality to such an extent is unacceptable from our politicians and government officials.